Aphria says Latin American asset purchases were within an “acceptable range;” three directors to step down

Two months after commencing its investigation into a short seller report that targeted alleged improprieties behind its Latin American acquisitions, Aphria said Friday a review by a special committee has concluded that the company’s purchases of those assets was within an “acceptable range” compared with similar acquisitions by competitors. The report also identified certain conflicts in the boardroom that weren't properly disclosed. The company’s special committee recommended the company review its board composition, establish a formal process for strategic transactions, and adopt a best practices strategy to manage possible conflicts of interest. Three directors, including outgoing CEO Vic Neufeld, plan to step down at the end of the month, with independent chair Irwin Simon taking on the role of interim CEO.

Canopy Growth CEO won’t let employees invest in other pot companies

In light of Aphria’s release, Canopy Growth founder and co-CEO Bruce Linton said he won’t let his team invest in other cannabis companies to avoid the risk of bad optics when M&A opportunities arise. Linton told BNN Bloomberg in an interview that he wants to avoid the perception of any self-dealing or bias and ensure that everyone at the company is “clean from day one.” Linton said he is looking to buy more companies in the sector, but noted there’s “nothing for us to buy in Canada.” Linton said he has refused around 1,000 deals since starting Canopy Growth.

Canopy, Aurora keep spending big in early days of legal pot 

Although Canopy Growth reported third quarter results that showed stronger-than-expected revenue, the sales figures came amid rising costs associated with rolling out recreational pot in Canada. Canopy wasn’t alone in reporting outsized costs as Aurora Cannabis also faced challenges in ramping up legal pot supply in Canada and, eventually, the rest of the world. One analyst said that despite the strong revenue figures posted by Aurora and Canopy Growth, Canada’s cannabis companies remain in expansion mode.

Hexo enters $65 million debt financing agreement with CIBC 

Quebec-based Hexo said it entered into a syndicated credit facility with CIBC to provide $65 million of secured debt financing. It comes at a rate of interest that is expected to average in the mid-to-high 5 per cent over a three-year term. The proceeds of the loan will be used to partially fund the expansion of Hexo’s Gatineau, Que. facility and improve its newly-leased facility in Belleville, Ont., the company said in a statement. The credit facility is one of CIBC’s initial moves into the cannabis industry, which has typically been serviced by credit unions or smaller financial institutions. Major Canadian banks have traditionally considered the sector to be too risky to become involved in. The Bank of Montreal has also emerged as a major cannabis financing player but other banks, such as Toronto-Dominion continue to wait on the sidelines.

DAILY BUZZ

$6.04  
– The price of a gram of cannabis in Canada, down 5.4 per cent from the prior week, according to the Cannabis Cannabis Spot Index. The index has now moved to the lowest point since legalization and equates to US$2,062 per pound at current exchange rates

Cannabis Canada is BNN Bloomberg’s in-depth series exploring the stunning formaton of the entirely new – and controversial – Canadian recreational marijuana industry. Read more from the special series here and subscribe to our Cannabis Canada newsletter to have the latest marijuana news delivered directly to your inbox every day