Aphria Vs Liberty Health Sciences Stock

Investor interest in marijuana stocks has surged recently after legalization movements have made progress in the U.S. and Canada.

Cannabis became legal in Canada for both medical and recreational purposes in October 2018, opening the door for the industry’s massive growth.

Meanwhile, the medical use of cannabis is currently legal in 33 U.S. states, 11 of which have also legalized the drug for recreational purposes.

Although there are many companies in Canada producing marijuana for medical and recreational consumption, two have attracted particular interest from investors: Aphria [NYSE: APHA], which produces medical marijuana and cannabis oil, and Liberty Health Sciences [OTC: LHSIF], a medical marijuana dispensary.

But comparing the two, Liberty Health vs Aphria, which stock is best?

The Pros and Cons of Investing in Marijuana Producers

The marijuana industry in Canada has a great deal of room to grow after legalization, although opinions are divided about how much growth will actually occur.

Research by Ernst & Young estimates that the Canadian cannabis market will reach US$8.3 billion by 2025, while the cannabis research firm Brightfield group projects US$3.8 billion by 2021. Brightfield specifically cited concerns about lack of supply from licensed producers in the months following legalization, as well as a drop in demand from medical marijuana users.

While marijuana is now legal on the federal level in Canada, there’s no guarantee that the current industry regulations will remain in place forever. It’s possible that in the future, restrictions such as sales limits and age limits will be placed on the recreational use of cannabis.

The good news for medical marijuana companies such as Aphria [NYSE: APHA] and Liberty Health Sciences [OTC: LHSIF] is that these restrictions are less likely to affect them.

Due to the sociopolitical uncertainty and the relative newness of the market, cannabis stocks are fairly volatile as an investment strategy.

Investors with a taste for high-risk, high-reward vehicles may be attracted to these possibilities, while others will feel comfortable putting their money in more stable options.

Is Aphria Stock a Buy?

Any discussion of Aphria [NYSE: APHA] needs to mention the recent scandal that caused Aphria shares to plunge.

In late 2018, Aphria was accused of “self-dealing” by overpaying for assets in Latin America (such as cannabis licenses), while failing to disclose that these assets were owned by the company’s management. Aphria CEO Vic Neufeld stepped down in January following the allegations.

Since then, Aphria shares have not recovered to their pre-scandal highs. However, there are good reasons to be optimistic about Aphria stock.

For one, the company is extremely well-positioned in terms of its domestic and international holdings. Aphria [NYSE: APHA] has signed supply agreements for recreational cannabis with all Canadian provinces and the Yukon Territory.

In addition, Aphria has acquired the German pharmaceutical distributor CC Pharma, as well as subsidiaries and strategic partnerships throughout Europe, Australia, and Latin America.

These international connections will likely serve the company well in the future as cannabis legalization movements continue to gain ground worldwide.

Should You Invest in Liberty Health Sciences Stock?

Aphria [NYSE: APHA] and Liberty Health Sciences have much closer relations than simply operating in the same market.

Aphria fully divested itself of 64 million Liberty Health Sciences shares in September 2018, and Aphria executives Vic Neufeld and John Cervini sat on the Liberty Health Sciences board of directors before stepping down in January 2019.

These links have meant that Liberty Health Sciences stock was also affected by the recent scandal at Aphria. One of Aphria’s accusers, Hindenburg Research, said that it had “uncovered multiple irregularities” about Liberty Health Sciences and called the company “just another extension of the Aphria web of highly questionable deals.”

While Liberty Health Sciences [OTC: LHSIF] also saw a drop in stock prices immediately following the scandal, investor confidence since then has seemed to recover more quickly than with Aphria.

Another bit of good news for Liberty Health Sciences: it’s only one of 14 companies to hold a cannabis license in the state of Florida, where marijuana is legal for medical uses. The company recently announced that it had the second highest sales of smokable marijuana in Florida, where it operates 16 dispensaries. Liberty Health Sciences has also received approval to open a medical marijuana dispensary in Dayton, Ohio.

Aphria Vs Liberty Health Sciences Stock: The Bottom Line

Despite the close connections between them, Aphria [NYSE: APHA] and Liberty Health Sciences [OTC: LHSIF] are two different companies–so which one is the better choice for investors interested in cannabis stocks?

The recent scandal has shaken investors’ confidence in both Aphria and Liberty Health Sciences, but both companies appear to be in a solid position that will make it easier to recover from the allegations. Both Aphria and Liberty Health Sciences have made the right partnerships and strategic connections to support their plans for future growth.

In this tight race between Aphria [NYSE: APHA] and Liberty Health Sciences stock, we tend to favor Liberty. The company’s recent success with its 16 Florida dispensaries (and three more opening soon in Panama City, Pensacola, and Orlando) is a positive sign that it’s well-prepared to expand in the months and years ahead.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.