In the wake of quarterly results that are pushing shares of Aphria Inc. to new two-year highs, the company's chief executive officer is increasingly casting his gaze south of the border. 

Investors and analysts alike are guessing what the Canadian pot giant's next move will be once its deal to merge with Tilray Inc. closes in the second quarter of this year. 

Simon said in an interview that legalization efforts in the U.S. have moved up by about two years, accelerating the company's ability to eventually operate in the U.S. cannabis market. 

Once that happens, "we will have either the ability to buy [or] merge with somebody. We all have the ability to greenfield if we have to do that, because we've got to be in the U.S.," Simon said. 

The company already operates in the U.S. beer market following its acquisition of craft brewer Sweetwater Brewing Co. and will soon control Tilray's hemp food maker Manitoba Harvest, which Simon anticipates will soon get the company's brands into thousands of supermarkets and retail stores. 

But Simon added that he expects legislation allowing federally regulated banks and other financial institutions to do business with cannabis companies to soon pass in the U.S., opening the flood gates for institutional investors to begin investing in the cannabis industry in a "much bigger way." 

He is also open to working or partnering with a major U.S. consumer-packaged-goods company, similar to investments made by Constellation Brands Inc. (which has invested in Canopy Growth Corp.) and Altria Inc. (which has partnered with Cronos Group Inc.)  Simon said a deal would help to "enhance our products in areas that we couldn't do it alone because they have the expertise."

"We're out there if there was the right partnership to do something that we can't do," Simon said. 

Simon's comments come after Aphria reported better-than-expected second-quarter results Thursday as the pot giant’s sales continued to grow in the competitive Canadian cannabis market. 

The Leamington, Ont.-based company said it made $160.5 million in revenue, a 33-per-cent increase from the same period a year earlier. The company also posted $12.6 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), marking a sizeable increase from the $1.9 million reported last year. 

Aphria reported a net loss of $120.6 million in the second quarter, which it attributed to price changes in its convertible debentures, rising general costs, an increase in share-based compensation, as well as expenses related to its craft beer acquisition in November. Aphria added that it expects to report positive cash flow in its next fiscal quarter. 

Analysts polled by Bloomberg expected Aphria to report about $153 million in revenue and $11.4 million in EBITDA. 

Aphria's sales were largely led by its European pharmaceutical distribution business, in addition to its Canadian cannabis operations, which saw a seventh-straight quarter of increasing sales. The company said its average sale price for cannabis edged higher to $4.29 per gram in the quarter, from $4.15 per gram in the prior quarter. That increase is notable, given the influx of other competitors in the crowded Canadian market. 

The company said it remains on track to close its acquisition of Canadian pot rival Tilray Inc. in the second quarter of this year. Once combined, the new company will have a combined market share of 20 per cent in Canada, seven percentage points higher than rival Canopy Growth. 

However, Stifel analyst Andrew Carter said in a report Thursday that Aphria's cannabis revenue growth may slow down in coming quarters.

"We believe it is a key question of whether Aphria can return to consistent market share gains with the current portfolio and increasing competitiveness of the Canadian market," Carter said. 

Cannabis Canada is BNN Bloomberg’s in-depth series exploring the ongoing growth of the Canadian recreational cannabis industry. Read more here and subscribe to our Cannabis Canada newsletter to have the latest news delivered directly to your inbox every week.

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