Good morning. My name is Denise and I will be your conference operator today. At this time, I’d like to welcome everyone to the Aphria, Inc. Q2 Quarterly Investors Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session for analysts and/or investor firms only. Thank you. Ms. Tamara Macgregor, you may begin your conference.

Thank you, Denise. Good morning everyone and thank you for joining us to discuss Aphria Inc.’s financial results for the second quarter ended November 30, 2020. On today’s call are Irwin Simon and Carl Merton. By now, everyone should have access to the earnings release, financial statements and MD&A, which are available on the Investors section of Aphria’s website at www.aphriainc.com. The financial statements have been filed with SEDAR and EDGAR. Before we begin, please remember that during the course of this call, management may make forward-looking statements. These statements are based on management’s current expectations and beliefs and involve known and unknown risks and uncertainties, which may prove to be incorrect and actual results could differ materially from those described in these forward-looking statements. Please note the text in our earnings press release and the financial filings issued today for a discussion on risks and uncertainties associated with such forward-looking statements. I would also like to remind you that all references to financial figures are in Canadian dollars unless otherwise stated. And now, I’d like to turn the call over to Irwin.

Thank you very much, Tamara, and good morning, everyone. We appreciate you joining us today to discuss our second quarter fiscal year 2021 results. Across geographies, our global teams continue to execute well and advance our leadership position as we build upon our long-term vision to be a leading global cannabis lifestyle, consumer packaged goods company. The strength of our operational financial results demonstrates the diversification of our businesses. We took important strategic steps to focus on our highest priorities, including those we believe will yield high returns such as strengthening our core cannabis foundation in Canada and Europe, and completing strategic M&A which helps us generate sustainable growth for today and well into the future. In the second quarter, we reported net revenue of 160.5 million, an increase of 33% from the prior-year quarter. This was fueled by our best adjusted EBITDA quarter, representing our seventh consecutive quarterly increase in positive adjusted EBITDA. We had a record adjusted EBITDA from our cannabis business, also up for the seventh consecutive quarter. On an adjusted basis, we reported net income of $3.2 million or earnings of $0.01 per share. Our market-leading adult-use cannabis brands remain strong and our international medical cannabis sales are off to a solid start. During the quarter, Aphria maintained its number one position as the top licensed producer in terms of sales to provincial boards across all of our brands in both Ontario and Alberta per Headset reporting data. According to Headset’s retail data for the first half of fiscal 2021, Aphria is the number one licensed producer with a market share of 13%. According to OCS data for the rolling three months of October, November, and December 2020, Aphria is again the number one LP for all category sales with a 16.2% market share. Aphria is the number one LP in the vape category with a 21% market share, and our brands, just to name a few, RIFF, Good Supply, and Solei were number one in dried flower with a 16.8% market share, number two in pre-rolls with a 21.3% market share, and number two in oils with a 16.5% market share in Canada, all according to OCS for the same rolling three-month period. Internationally, we completed our first EU GMP shipments of dried cannabis and cannabis oil to Germany. We also received an import permit in Malta for our first EU GMP shipment of cannabis oil for the Maltese market. In Israel, we completed our first shipment of medical cannabis to Canndoc and we executed a supply agreement with ODI Pharma expanding Aphria’s international presence into Poland. We are leveraging our strength with our medical platform and our multifaceted international operations. This includes our domestic cultivation, import permits, and a significant distribution infrastructure to increase access to high-quality medical cannabis for patients and consumers. We're excited about the long-term potential to grow internationally and in our core Canadian market where our foundation continues to be very strong. As a purpose-driven company, we take great pride in adhering to our core values and are committed to changing people's lives for the better by investing in our products, our brands, and our people, and of course saving the planet. We utilize our industry-leading cultivation and production facilities, along with our R&D and innovations teams to create compelling and relevant product offerings for all of our consumers. At the same time, we did an excellent job managing our costs, with Q2 marking our fifth consecutive quarter of cash cost per gram below $1, and there's room to reduce this even more. The strength of our balance sheet and capital structure enables us to support our growth organically and inorganically, establishing Aphria as a clear leader. While we're pleased with our growth and success to date, we know there's still tremendous potential for sustainable long-term growth. Our transformational journey began well over a year ago, and where we started is very different from where we are today, and probably from where we will be next year at this time. As we look ahead to the next 6 to 12 months and beyond, we will continue to evolve, and our business will remain at the forefront of the industry. We focused on maximizing our growth in net sales, profitability, and importantly, cost containment. We ended Q2 with a pro forma cash of CAN$320 million and we improved our free cash flow by $70 million in the quarter as we move closer to our target of generating positive free cash flow. I want to thank our global teams for their hard work and dedication to delivering these results during these times. The health and safety of our employees remains a top priority for us. Amid the ongoing dynamic operating environment, we completed the strategic accretive acquisition of SweetWater, one of the largest independent craft brewers in the United States based on volume, and most recently entered into a definitive agreement to combine with Tilray in order to create the largest global cannabis business based on revenue. We're on track to close Tilray at the end of April or early May 2021, following the receipt of regulatory approvals and shareholder approval for both companies. I am genuinely excited about getting this done. At Aphria, we're building on our existing strong foundation in Canada and internationally by increasing the scale of our global operations through these two strategic transactions. Focusing on SweetWater, Freddy Bensch, Founder and CEO of SweetWater and his team have truly hit the ground running, working side by side with our team on drinks. Our acquisition of SweetWater provides a robust, profitable platform for future growth and development as we leverage their innovation, manufacturing, and marketing distribution infrastructure in the Southeast, with expansion opportunities across all of the U.S. for craft beer and, upon federal legalization, cannabis products and drinks, which is well over a $200 billion market. We have added key partnerships with leading U.S. distributors, retailers, and on-premise customers which strengthens our ability to develop new distribution in the U.S. for Aphria products and branded beer products. In addition to acquiring a strong brand and an accretive business, this acquisition positions Aphria with a scalable infrastructure within the U.S. and enables us to access the U.S. market quickly in the event and when federal legalization occurs. We're excited to build brand awareness for our adult-use cannabis brands in the U.S. ahead of potential federal cannabis legalization. Our integrated creative teams have already done a tremendous job developing new cannabis lifestyle craft beers and other beverages for products using the Aphria cannabis brands. We can't wait for them to hit the market in fiscal year 2021. This also includes SweetWater’s most recent product innovation in the rapidly growing hard seltzer category, and a great new product called Haze which is being fueled by millennials, an important demographic in our business. As many of you know, for 30 years, I led a CPG company in the U.S. I know what it takes to build winning brands. Brand equity is key. Consumers resonate with brands. Our team at Aphria understands the importance of brand equity and selling good-quality, safe products. In the U.S., we believe the recent election will likely provide a stronger near-term potential for change in federal cannabis regulations, and at Aphria we are ready and well positioned for it. We expect change to happen faster and decisions to be made sooner under the new Democratic leadership. More and more states are legalizing both medical and recreational cannabis. One in every three U.S. citizens has access to legal cannabis today. 68% of Americans are in favor of legalization based on a recent Gallup poll, and the anticipated passage of the SAFE Banking Act should provide access to additional institutional investors and market strategic partners. As we continue to advance our long-term vision and growth objectives, the addition of SweetWater is a cornerstone within our U.S. strategy and a strong complement to our existing Aphria business, and we believe it will be compelling financially for us. To further advance our vision and strategic growth objectives, we believe the addition of SweetWater and its pending business and the combination with Tilray will widen the gap between us and our peers, positioning us well ahead of the competition. We believe SweetWater and Tilray will provide compelling strategic and financial benefits and significant value for Aphria and Tilray shareholders, particularly as we increase our financial strength and flexibility for sustainable profitable growth on a global basis. On a combined basis, we will be the largest global cannabis and consumer packaged goods company in the industry based on revenue. Aphria and Tilray will be the leading adult-use cannabis Canadian licensed producer based on revenue for the last 12 months reported by each company by combining their respective brands and distribution networks and world-class facilities. We will have some of the strongest and most compelling leading brands with an ongoing focus on innovation, new products, new distribution. For example, for the period of August to October 2020, the combined company would have a market share approaching 20%, the largest share held by any single licensed producer in Canada and 700 basis points higher than the next closest competitor. While we're pleased to be in this position together, we're striving to achieve at least a 30% market share over time. In Europe, we will have five strong brands to help us establish our presence on the European platform, including two production facilities. Tilray has the leading medical cannabis operations in Europe that will benefit our existing medical sales and distribution. On a combined basis, Aphria and Tilray will be one of the strongest medical cannabis companies with our assortment of dry flower, medical cannabis, medical cannabis oil, and wellness products, becoming a true market leader and innovator. We will also have a robust supply chain given Tilray’s EU GMP facility in Portugal, and we expect to be the first to have in-country cultivation in Germany based on the recent completion of our new facility. At the same time, we look forward to expanding CC Pharma’s medical cannabis offerings with access to over 13,000 pharmacies throughout Germany. We believe these compelling operational strengths position us better than ever to lead the medical cannabis market and better position us when cannabis potentially becomes a legal product for recreational use in Europe, which we believe will happen sooner rather than later. From a global operations perspective, we remain committed to Latin America and today are the only Canadian LP with a physical presence in Latin America. We have a tremendous runway for growth, a proven global team with a track record of success. In the U.S., we can leverage a strong sales and distribution network. This includes leveraging SweetWater’s existing relationships along with the addition of Tilray’s CBD and wellness brand Manitoba Harvest, which is a pioneer in their industry. SweetWater and Manitoba Harvest together represent over C$120 million sales in the U.S. market. We look to build upon our existing distribution partnerships in the U.S. and internationally. Keep in mind, SweetWater and Manitoba Harvest provide us with thousands of distribution points for our products across natural mass club and grocery sales channels as well as via e-commerce. SweetWater is also available in restaurants and bars and other on-premise food service outlets. We believe this will give us a tremendous head start to access these retail and food outlets with our craft beer beverage, CBD and hemp product offerings. We can do this on a national scale in the U.S. for our cannabis branded products when federal legalization occurs. We are also looking to build upon strategic partnerships. The business combination builds on both Tilray and Aphria’s other strategic partnerships with consumer industry leaders, including the global pharmaceutical, alcohol, CBD, functional foods, and beverage categories. We're excited about the opportunity for approximately C$100 million in pre-tax cost synergies between both companies that should be realized within the first 24 months following the completion of the transaction. This will also be a positive platform for future business accretion as we integrate our two businesses together. With a strong financial profile, low-cost production, market-leading brands, distribution network, and unique partnerships, the combined company of Aphria and Tilray will be increasingly well positioned to deliver sustainable, attractive returns for both our shareholders. In summary, we are very pleased with our results for the first half of fiscal year 2021 in a difficult operating environment. At Aphria, we continue to build on our strong foundation in Canada and internationally to capitalize on growth opportunities, utilizing our best-in-class cultivation and manufacturing across a greater distribution footprint, enabling us to connect with an increasing number of consumers and patients with our industry-leading brands and products. We remain excited about the tremendous growth in Canada, the U.S., and the rest of the world, and the future milestones, including the completion of our business combination with Tilray. From the bottom of my heart, I would like to thank our entire team that has worked tirelessly to run the business, execute these deals, and stay safe, along with our Board of Directors for their continuous efforts and support during our transformational journey. I know I said a lot and there's a lot to do, but as a team we are really excited about what the end result will be. With that, I will now turn the call over to Carl who will take you through our financial results for fiscal Q2.

Thank you, Irwin. Good morning, everyone. Today, I will reference our adjusted financial results unless noted otherwise. Please refer to our press release issued today for a reconciliation of our reported financial results under IFRS for the non-GAAP financial measures identified during our call. Q2 marked our highest adjusted EBITDA quarter ever with adjusted EBITDA of 12.6 million and adjusted EBITDA from our cannabis business of 12.9 million. This represents our seventh consecutive quarter of increasing positive adjusted EBITDA. We maintained our brand strength in the quarter across both our adult-use and medical markets. For the seventh consecutive quarter, we reported record gross revenue for adult-use cannabis. Our industry-leading cultivation team continues to do a great job keeping our cash cost below $1, coming in at $0.79 this quarter. The strength of our balance sheet and capital structure enables us to not only complete the strategic accretive acquisition of SweetWater Brewing Company but also end the quarter with pro forma cash of CAN$320 million. As Irwin discussed, SweetWater further diversifies our product offering, broadens our consumer reach, and enhances loyalty with consumers. In conjunction with our acquisition of SweetWater, we closed a $120 million U.S. financing with BMO, providing US$20 million in a revolving credit facility and US$100 million of term debt within a few days after the end of our second quarter. At closing, we drew fully on the term debt facility. The credit facility is secured by the assets of SweetWater and a corporate guarantee from Aphria. The term loan bears interest at the EURIBOR rate plus market pricing based on SweetWater’s leverage. Our efforts to improve our free cash flow position were successful in the quarter, as we improved our position by more than $70 million and moved closer to our target of generating positive free cash flow. With these results, Aphria continues to maintain its leadership position within the cannabis industry. We are pursuing significant opportunities for future growth and further diversifying our business in Canada and internationally. Our ability to generate consistent financial results is a direct result of our global teams’ emphasis on initiatives that prioritize Aphria’s profitability not only for today, but well into the future. As Irwin mentioned, we shipped our first EU GMP certified product to Germany and Malta during the quarter, and we completed our first shipment of medical cannabis to Canndoc for distribution in Israel. In the second quarter, we are pleased to see a return to normalized sales levels at CC Pharma after experiencing an impact from COVID-19 in their business during the prior quarter. Our teams remain resilient and agile to best manage our cannabis operations and supply chain as the marketplace evolves. At the end of the quarter, our supply chain experienced little impact as a result of COVID-19. Even though we experienced minimal supply chain impact from COVID-19, portions of our business reliant on in-person visits—whether they be to doctor offices, hospitals, pharmacies, cannabis clinics, bars, restaurants, or cannabis retail stores—continue to experience challenges depending upon local restrictions and regulations related to the global pandemic, which may have an adverse impact on our revenue in the future. Our supply chain team continues to work closely with our partners daily to prevent and minimize any sort of disruption associated with COVID-19. Additionally, we were closely watching and proactively preparing for Brexit, as CC Pharma worked closely with alternative suppliers to minimize any Brexit impacts, and purchased additional inventory in advance of Brexit. Moving to our financial results for Q2 in more detail, net revenue increased 33% from the prior year or 10% from the prior quarter to 160.5 million. Net cannabis revenue increased 7% from the prior quarter to $67.9 million or an increase of 99% from the prior year quarter, all while medical cannabis revenue was essentially flat in the quarter despite a 5.7% decrease in the average gross retail selling price to medical patients. This decline in average gross retail selling price is a result of specific programs offered to assist patients in need who have been negatively impacted by COVID-19 and other promotional programs. The increase in revenue from adult-use cannabis products was primarily due to a 3.4% increase in the average gross selling price to the adult-use market to $4.29 based on sales mix. As Irwin mentioned, we are particularly pleased with our $5.3 million of international cannabis revenue as we started selling cannabis in Europe and met our first year volumes to Canndoc. Given that we sold our first year volume to Canndoc in the quarter, we anticipate fluctuation in our international cannabis revenue over the remainder of the year. SweetWater contributed nearly $1 million in revenue at a very attractive 61% adjusted gross margins based on us owning the business for only five days in the quarter. During the quarter, we missed an opportunity, particularly in Alberta, when we experienced a significant increase in demand for pre-rolls over an extremely short period of time that we were unable to supply. To address the increased demand at the beginning of the quarter, we worked to triple our daily supply capabilities by the end of the quarter, positioning us to better meet demand going forward. Adjusted cannabis gross profit decreased to $31.2 million in Q2 compared to $31.5 million in Q1. Adjusted cannabis gross margin was 45.9% in Q2 compared to 49.7% in Q1. The decrease in adjusted cannabis gross profit and gross margin was primarily due to actions taken to reduce production levels at our Aphria One facility to better match supply and demand, including inventory that was liquidated below cost. We liquidated some older inventory below cost, resulting in a gross loss of approximately $1.5 million on the sale, and we incurred unabsorbed overhead of approximately $1 million as a result of our reduced operating capacity. Our cash cost to produce per gram remained below $1 for the fifth consecutive quarter, down 9% to $0.79. Our all-in cost per gram decreased 8% to $1.30 in Q2. Adjusted distribution gross profit for the second quarter was $12 million compared to $11.8 million in the prior quarter. The increase in adjusted distribution gross profit was a result of an increase in distribution revenue at CC Pharma in Germany. During the quarter, our adjusted gross margin on distribution decreased from 14.4% to 13.1%. The decrease in gross margin was a function of product sales mix at CC Pharma. Operating expenses in the quarter increased to $82.7 million from $54.5 million in the prior quarter. The increase from the prior quarter was primarily due to $22.6 million of transaction costs associated with our M&A activities in the quarter and increased share-based compensation, largely driven by the increase in Aphria’s share price. On an adjusted basis, excluding the impacts of non-cash losses on financial instruments driven by the increase in our share price, and transaction costs, we reported net income for Q2 of $3.2 million or $0.01 per share. As we consistently state, our focus remains on generating positive EBITDA. We are pleased that Q2 represents a record adjusted EBITDA for us and our seventh consecutive quarter of increasing positive adjusted EBITDA. Consolidated adjusted EBITDA for the quarter increased $2.6 million to $12.6 million. This includes adjusted EBITDA from cannabis operations of $12.9 million, adjusted EBITDA from distribution operations of $2.6 million, and adjusted EBITDA from our beverage alcohol business of $0.3 million. These positive results were partially offset by an adjusted EBITDA loss from businesses under development of $3.2 million. Most notably, adjusted EBITDA from cannabis operations increased 24% in the quarter achieved by driving revenue increases and our consistent focus on managing our cost structure. From a liquidity perspective, at the end of the quarter, the company had pro forma cash of $320 million to continue to fund planned international growth. We are extremely pleased to report that on a free cash flow basis, our concentrated efforts resulted in an improvement in free cash flow of over $70 million in the quarter, recording a free cash flow loss of $16.3 million compared to a loss of $86.6 million in the prior quarter. This was accomplished while completing the CapEx spending on our German cultivation facility. Similar to Q2, we will continue to work to lower our quarterly working capital requirements, succeeding in the current quarter by reporting positive operating cash flow or cash provided by operations of over $3 million. We continue to work to be free cash flow positive in Q3, all subject to the intensity of COVID-19 restrictions in the markets where we operate. We believe this free cash flow when combined with our existing cash position and strong balance sheet will support our growth initiatives in both Canada and internationally. In summary, we believe Aphria continues to set itself apart from others in the cannabis industry based on various financial metrics, including our record of consecutive quarters of positive adjusted EBITDA, our growing cannabis revenues, our diversified revenue stream with the addition of SweetWater, our ability to leverage our Canadian cannabis brands in the U.S. through SweetWater’s brand portfolio, our focus on our highest return priorities and profitability as well as our industry leading cultivation and production efforts. We believe our strong cash position will continue to help us navigate through this COVID-19 global pandemic as we succeed in reaching more consumers and patients with our high-quality, leading brands and products. As Irwin highlighted in detail, Aphria is better positioned than ever in Canada, the U.S., Europe, and Latin America for continued growth and development. We are ready for potential future cannabis legalization in the U.S. and Europe with a proven global team to execute on our strategic growth initiatives. Since closing the acquisition of SweetWater, we are working collaboratively to execute on key revenue synergies and strategic initiatives, particularly for fiscal year 2022. With SweetWater, we are creating a complementary branded cannabis lifestyle product platform. Prior to our acquisition of SweetWater, they grew revenues, generated solid net income and adjusted EBITDA, as well as good cash flow in spite of headwinds from COVID-19. We look forward to leveraging a combined scalable operating model to drive strong long-term financial performance and are confident this acquisition will support our long-term growth in revenue, enhance our profitability, enhance our margin structure, and generate free cash flow while enhancing value for our shareholders. Since Irwin reviewed the key reasons why we continue to believe Tilray is a compelling and attractive business combination for Aphria shareholders, I wanted to spend a few moments addressing some financial items and a couple housekeeping items. First, in addition to maintaining their NASDAQ listing, we understand that Tilray is working on registration under the TSX so that the combined entity will be dual listed post-closing. It is a goal of the combined entity to maintain a place on the S&P/TSX Composite Index. The combined company will report results under U.S. GAAP accounting rules, which means our finance team at Aphria will be working diligently to convert our existing Canadian reporting to U.S. GAAP. We also anticipate the combined entity will maintain Aphria’s current fiscal year-end in May. Importantly, we are working on a joint circular, which subject to SEC review, we anticipate filing and mailing to shareholders in mid-March. Please reference our Aphria and Tilray business combination FAQ for any further questions related to this transaction available on our website. As part of our transaction team, which included finance and operational representation, we spent a considerable amount of time identifying and quantifying potential synergies from the transaction. As we announced the transaction, we disclosed over $100 million in pre-tax synergies that had been identified and will be realizable within 24 months of the transaction. Upon realization, we expect these synergies will benefit the combined company going forward and deliver incremental value to its shareholders; applying a 10x to 15x multiple to this incremental EBITDA would result in an estimated increased value of $1 billion to $1.5 billion for shareholders of the combined company. From a sales perspective, at the time of announcement, the combined company would be the largest cannabis company in the world. The additional scale and financial strength this provides will be important for our entry into the U.S., makes us more appealing to potential CPG partners, and allows us to better leverage Aphria’s existing production footprint in Canada. Looking ahead to the second half of fiscal 2021 for Aphria, we expect to become an even stronger, more diversified, and profitable company. We will continuously work with local and global communities where we operate. We have tremendous confidence in our ability to create long-term sustainable shareholder value for many years to come.

This concludes our prepared remarks. Irwin and I are now available for analyst questions. Back to you, Denise.

Good morning.

Good morning.

Good morning, Owen.

Just one question for me. So Canada looks like it continues to perform excellently. I just wanted to focus on the international business. International sales taking off in the quarter and this segment will obviously become much more of a focus with the addition of Tilray. Just hoping you could perhaps talk through the international competitive and pricing dynamics a bit more, particularly with regard to Germany, as it appears like competition is really ramping up at the moment. Thank you.

So, Owen, I'll take that. Pricing in Germany today has remained balanced. We're not seeing competitive pricing out there. From Aphria's standpoint with our facility there with tender, we can be very competitive because of our ability to ship products at a low cost from our Leamington facility. The other thing is we are very well positioned because of CC Pharma. With Portugal coming on, which will allow us to ship anywhere in Europe, we can be as competitive as anybody else and then some. I'm quite excited about the European market from a medical standpoint, potentially a recreational legalization, and other CBD products, but so far we have not seen the competitive pricing there that we've experienced in Canada.

Okay. Thank you. That's very helpful.

Thank you.

Hi. Good morning.

Good morning.

I was hoping to touch on your inventory levels, given the sales below cost that weighed on your gross margin, which picked up only modestly sequentially in the quarter but remains elevated relative to historical levels. Any color around that would be helpful. Thank you.

So, basically listen, as we go into the back half, the two biggest quarters of Aphria, our inventory levels went up to hit those sales. The demand for pre-rolls, which we're selling 7 million to 8 million a quarter, is built up for new product distribution, new stores opening, and some of our products. There is a big effort within the company right now as we look at our inventories and how we can get them down. More stores are opening up, and the market is growing, and we need to balance our inventories. Some liquor control boards going through SKU rationalization is going to force us to do that. Looking at integrating Tilray and some of their growth into our facilities will help our inventory position. We are focused on this because managing inventory drives cash to the bottom line.

The only thing I would add is if you look at the inventory levels over the last three quarters, you can see that sequentially we've been bringing those balances down and are working in the current quarter to flip that equation.

Perfect. Thank you so much.

Hi. Thanks. Good morning. I know you're not giving any formal targets, but I want to ask how you're thinking about revenues for the second half. The distribution business snapped back up nicely, but you cautioned with COVID. Is this the right level or is it that two quarters ago? How are you thinking about the SweetWater business relative to that 2019 $66.6 million revenue number? Also, how should we think about the wholesale agreement? Is there an opportunity to do more with Tilray? Lastly, this is kind of the first quarter where we've seen some market share ceded. Over the back half, do you see yourselves getting back into a position of gaining market share with your current portfolio or will you need the full capabilities from the Tilray acquisition to do that? Thanks.

I'll take a few, and then I'll let Carl weigh in. There's a lot of questions there, and hopefully I can remember them all. The big thing is in regards to Ontario currently closed down; it's curbside delivery. In regard to SweetWater, a lot of on-premises are closed down. On the other hand, as consumers stay home, they'll consume more beer bought at retail or consume more cannabis because they’re at home and will pick it up curbsiding. We will deal with that. However, we have unique products, and by continuing to build our brand we will take share. You heard me talk about balancing out our inventories. The liquor control boards are getting smarter by looking at inventories and sales. Regarding the next path, these are our biggest two quarters out there, and we've planned for it, seeing tremendous demand, more and more stores opening up, and product requests from provinces. It's two years of growth, and we’re improving our visibility and data on product needs. With the next path around COVID, we're facing our biggest two quarters. We're not giving guidance, but tremendous demand is on our horizon. We also have products that we will ship to Europe certified, addressing the demand with a plan.

To add to the share ceded, it was a function of pre-roll capacity internally. Now that our capacity is back up and we look at December and some preliminary January information, we believe all that share has returned.

That's great. Thank you, guys. I’ll pass it on.

Hi. Good morning, and thanks for the questions. I want to jump back to international opportunities because it will be more of a focus once the merger closes. Specifically on Germany, you talked about the pricing landscape, but want to discuss the overall market growth there. We've seen data from insurance showing a slowdown in the market over the past two quarters. I want to understand any initiatives you might have in educating doctors to get more patients there to help lift the overall market. You're going to have CC Pharma and pharmacy distribution there. How about increasing overall demand from consumers, and how you envision the German market evolving as your own cultivation comes online in the country and the new Portugal facility? Thanks.

Good questions. Currently, we can't get in to see doctors, but we have a whole online program to educate them. We are collaborating with universities to connect with medical schools and research opportunities. This is where Tilray and Aphria combine to bolster our medical platform. With Tilray having a strong presence in Europe already, particularly being number one in oils, we have a competitive advantage in distribution to 13,000 pharmacies through CC Pharma. Therefore, despite COVID’s current constraints, we have an actionable strategy to scale up once the situation normalizes.

Thank you. Good morning. Irwin, I guess my question is more about the U.S. David Klein in an interview with BNN Bloomberg recently, said he expects to be selling in the U.S. in seven to eight months. Given the outlook about how regulations may change, how much of a disadvantage is it for you not to have those contingent stakes like Canopy Growth has in Acreage? And also, a two-part question related to being more attractive to CBG companies or strategic partners. How much of a disadvantage compared to Cronos or Canopy Growth is it for you not having the backing of an Altria or Constellation Brands?

Pablo, I don't think I am at a disadvantage at all. David Klein has a strategy that he's going to execute on. Today, we are selling products in the U.S. under SweetWater and under Manitoba Harvest. We will be selling other CBD products. I do not think we are disadvantaged because with Aphria, our brands, balance sheet, R&D, and regulatory compliance give us a strong footing to thrive. We will partner with various consumer packaged goods companies that are heading into this industry, allowing us to choose the right partner. So, I don’t view the lack of equity with a player like Constellation as a disadvantage. What matters is timing our partnerships with the landscape as it evolves.

Right. Can I squeeze one more if I may? At the local level in Canada, how much is it advantageous being larger? I ask in the context that smaller companies appear to be doing well in sales and market share. How does size help at least in the Canadian context?

Listen, size does not always matter. It’s about quality and what’s inside the company. Tilray brings great assets, strong brands, and management to us. They’re asset-light, which benefits our facility's growth. The combination achieves over 20% market share now. If we reach 30% market share, there's a considerable gap to close. As pricing drops, competing with us as a low-cost producer will be increasingly difficult. When you have size and free cash, you can invest in your brands— an advantage that smaller LPs do not have.

Thanks. Good morning. Can you explain your optimism on more legalization in Europe, especially your view that recreational legalization in some countries, such as Germany, will come sooner than later? What are you specifically seeing that drives your expectation?

Good morning, Tamy. Your expectations correlate with the intel we gather from these countries. Whether it's the Green Party and certain elections, my intel suggests timing could happen this year. Furthermore, like the U.S. and Canada, every country needs tax dollars. Germany has seen the benefits of medical legalization, indicating a positive move towards recreational use. Lobbyists and political relationships reinforce this belief, along with public sentiment pushing for change. Thus, I expect legalization will happen in Europe sooner than later.

Thanks. Good morning. I wanted to follow on the U.S. side of things as well. Just looking for your thoughts on whether your strategy changes at all since the results of last week's runoff elections. Does it give you a sense of greater urgency to gain a presence in the U.S. beyond your current setup? Or does it make you pause to see clarity from a regulatory perspective?

Great question, John. I doubt that the Biden administration will legalize cannabis within the first 100 days. Multiple paths exist regarding the SAFE Banking Act, decriminalization, and other measures. We can purchase a company today easily, but I'm drawn to assets like SweetWater or Manitoba Harvest that seamlessly transition into legalized cannabis THC products when permitted. I observe the success of Canadian beer in the U.S.; we could similarly build infrastructure to supply U.S. markets once regulations are clearer. Not wanting to rush foregone conclusions or big risks for our shareholders is vital. So, we will circle the wagons and prepare for action when the landscape looks appropriate.

Hi. Good morning, and thank you for taking my question. I wanted to follow up on the outstanding merger agreement with Aphria and Tilray. Given the recent share price appreciation for both stocks over the past months, particularly Tilray significantly outperforming its peer group, does that impact the expected closing date?

Not at all. We have a fixed share price in a fixed agreement. Both stocks have moved in favor of shareholders appreciating the merger prospects of Tilray and Aphria. However, this has no effect on our deal. The deal is moving toward closing at the end of April or early May. Our teams are diligently working on bringing all pieces together, identifying synergies and opportunities. I find that I am even more enthusiastic about this deal now that I’m getting into the details. It's genuinely going to be an exciting time for Aphria and Tilray’s shareholders.

Understood. Thank you very much, Irwin.

Thank you.

I would now like to turn the call back over to Irwin Simon for closing remarks.

Thank you very much, Denise, and thank you all for joining today's call. 2020 has been a good year for Aphria, marked by many changes and growth, what a difference a couple of years makes. In 2021, we have much to accomplish; being number one does not guarantee you remain at the top, that's something you continuously earn through hard work and evolution. I strongly believe that if Aphria and Tilray work together, next year at this time we will be fundamentally different companies, so will the industry as a whole. I must express my immense gratitude to all the employees at Aphria, who have put in extraordinary efforts to realize both mergers, while maintaining business operations. It's been challenging given COVID, but a lot has happened at Aphria, and I truly appreciate the team’s hard work. I also want to thank Brendan Kennedy and his team at Tilray; it has been a true pleasure collaborating with them. Brendan will join our Board, alongside many of his team members, and we are enthusiastic about this partnership. The subsequent five months will be tough with COVID, and we must be diligent and safe. Each day we assess our operations and facilities to keep our business growing. With stores closed and restaurants shut, we’re focusing on leading in retail. I want to thank everyone for your support. Thank you for believing in Aphria, and now in Aphria, Tilray, and SweetWater as we come together. Happy New Year; be safe out there. I look forward to talking to you in the next four months. Bye-bye.

This concludes today’s conference call. You may now disconnect.