The two companies had agreed to a 175,000-kilogram supply agreement over an initial five-year term back in September 2018, but Aleafia said Aphria has failed to meet its end of the agreement since it began on May 1, 2019.
Aleafia is terminating its supply agreement with Aphria subsidiary Emblem. The company said that is has the right to be refunded the unused balance of its deposit and that it still has the rights to seek damages as a result of the default.
However, Aleafia doesn't believe the termination of the supply agreement will hurt the company's business, operations or results.
Emblem responded to Aleafia Tuesday.
"We are disappointed that Aleafia has chosen to terminate its Agreement with Aphria Inc. The Company had every intention of fulfilling its obligations under the Agreement," Emblem said. "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. However, the termination of this legacy Agreement frees up significant supply allowing the Company to service its brands that are in high-demand across the country."
Aphria shares were down 2.5% to $5.25 in premarket trading.