Aleafia Ends Supply Agreement With Aphria, Says Company Failed To Meet Obligations

Aleafia Health Inc. ALEF ALEAF said Tuesday that it is terminating a cannabis supply agreement between Aphria APHA APHA and Aleafia subsidiary Emblem Corp.

Per the agreement, Aphria was set to provide Aleafia’s subsidiary with 175,000 kg equivalents of cannabis products, but Alefia said Aprhia has failed to do so.

"Following Aphria’s failure to meet its supply obligations under the supply agreement, Emblem has exercised its contractual right to terminate the supply agreement in accordance with its terms. The termination of the supply agreement by Emblem was made without prejudice to its rights accrued to the date of termination (including its rights to be refunded the unused balance of its deposit) and its rights to seek damages as a result of Aphria’s default and termination thereunder," according to Aleafia. 

The ending of the agreement shouldn’t materially or negatively affect Aleafia's operations, the company said. 

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Aphria said in a a statement that it is disappointed that Aleafia is terminating the agreement. 

"The company had every intention of fulfilling its obligations under the agreement. As a large shareholder of Aleafia, Aphria made good faith efforts to ensure continuation of the agreement understanding it was in the best interest of all parties involved."

The termination of what Aphria said is a "legacy agreement" frees up substantial supply, allowing the company to service brands in high demand nationwide, the company said. 

Both parties are obliged by the contract to negotiate for the next 30 days upon issuing a formal notice of termination. 

If the parties do not settle the dispute, and if Aleafia brings a claim for damages, Aphria said it plans to "vigorously defend itself." 

Aphria said the agreement is not material to its business. 

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Photo courtesy of Aleafia.