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Matt Maurer speaks to Marijuana Business Daily on Aleafia Health's intention to cancel supply agreement with Aphria

Toronto marijuana company Aleafia Health intends to cancel a supply agreement with Aphria, citing a “consistent failure” to meet its obligations to provide cannabis.

The industry has grappled with supply issues since legalization, but until now, few companies have taken action over contractual shortfalls. The dispute between the Ontario-based companies could therefore be a sign of things to come.

Last year, Aphria agreed to provide Emblem (later purchased by Aleafia) up to 175,000 kilograms equivalent (385,800 pounds) of cannabis products over five years.

The first 25,000 kilograms was supposed to be shipped between May 1, 2019, and April 30, 2020.

However, in an Aug. 14 earnings call with analysts, Aleafia CEO Geoffrey Benic said there had been “some issues to date with us not receiving shipments required” from Aphria.

“Yesterday, Aleafia Health notified Aphria that it is terminating the cannabis supply agreement between the two parties after a consistent failure by Aphria to meet its obligations,” Aleafia Health spokesperson Nicholas Bergamini told Marijuana Business Daily.

Matt Maurer of Torkin Manes cannabis law group in Toronto expects to see more companies enforce contracts in the coming months.

“I think we’re going to see more of this, just because it is not uncommon in this industry to see companies not do what they say they were going to do,” he said.

Federally licensed growers of cannabis struggled to scale up their large production facilities in the lead-up to legalization, resulting in significant shortages of high-quality, in-demand cannabis for much of 2019.

This article originally appeared in Marijuana Business Daily. Visit Marijuana Business Daily online to read the complete article. 

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