Cannabis companies such as Aphria Inc. (NYSE:APHA) that are looking to dominate the market believe the billion-dollar market in Canada for illegal vaporizers is still their biggest competitor.
Black market for vaporizers pausing serious competition
On Thursday Aphria CEO Irwin Simon said that the black market is full of vape sales worth around C$1 billion. He added that the illegal market for vape sales is very big in Canada stating the illicit market is perhaps Aphria’s largest competitor.
After the closing bell rung on Thursday the company released its Q4 2019 earnings indicating that it posted a profit as well as issuing guidance for FY 2020. The company reported net income of around C$15.8 million in the quarter or $0.05 per share relative to the C$5 million or $0.43 per share that it reported last year.
Aphria stock jumped 30% in the extended trading session after the company reported a surprise profit as well as the promising FY 2020 guidance. The company is anticipating net revenue of between C$650 million and C$700 million. The CEO indicated that the company was targeting to attain a C$1 billion run rate by the end of the year.
The company is expecting most of its predicted 2020 revenue to be driven mainly by distribution sales from pharmaceutical distribution through CC Pharma. CC Pharma is a German cannabis company that Aphria acquired at the beginning of the year for $21 million in cash to shareholders of CC pharma.
Recreational sales grew by 158% in Q4
Following the legalization of recreational use marijuana in October last year the company has seen its recreational cannabis sales grow by 158% to around C$18.5 million compared to the third quarter. The recreational sales make up around 15% of the company’s net revenue that was around C$128.6 million in Q4 2109.
The company sold over 5, 500 kilograms of weed in the quarter at a cost of C$1.35 per gram almost doubling the 2,636 kilograms sold in Q3. The company’s products are aggressively priced and in locations like Ontario the demand is high and they are bought out immediately a shipment arrives.