Liberty Health Sciences (CSE: LHS; OTCQX: LHSIF) has promised to continue aggressively expanding its retail estate after opening a tenth dispensary today.
Located in Dania Beach, Liberty claims the new store will service 1.9 million people in the Fort Lauderdale and Hollywood region. It follows hot on the heels of a ninth dispensary, which was opened in North Miami yesterday, its second in the city.
The firm plans to open four more dispensaries across the state in 2019, with Hollywood, Orange Park Cape Coral, and Orlando all earmarked for stores. Chief executive George Scorsis said it feels an obligation to make high-quality medicinal marijuana available to as many people as possible in Florida.
It has a 20,000 sq. ft. cultivation facility in Gainesville, an hour southwest of Jacksonville, and 40,000 sq. ft. of cultivation space in nearby Alachua. It plans to add another 160,000 sq. ft. this year to meet growing demand for its cannabis, while it has also pledged to increase its workforce by 50% to 300 people.
Liberty Cleared of Wrongdoing After Short Seller Attack
The firm was swept up in the Hindenburg Research short seller attack on Aphria last year and it came out swinging. It always maintained that Hindenburg was trying to cynically manipulate its share price through a series of unconfirmed allegations, hoping to ease fears among investors by going on the offensive. It has now been cleared of any wrongdoing by a third-party investigation.
Aphria (NYSE:APHA) was previously a major shareholder in Liberty. The two firms were forced to divest as a result after facing a de-listing from the TSX. Liberty also found itself in the firing line as Hindenburg attacked Aphria, as the short-seller accused it of skulduggery regarding the purchase of 242 Cannabis, which cost Liberty $13.5 million after 242’s $6.5 million purchase of another property.
Grassi & Co conducted the third party report and found that Hindenburg’s report was misleading to investors, containing inaccurate or out of date statements, and it should not be relied upon. Accusations of former Aphria chief executive Vic Neufeld purchasing discounted Liberty shares just before the 242 investment were also said to be erroneous by the third party report.
Liberty Loses New Board Members
Liberty’s share price fell off a cliff as the Hindenburg report surfaced, decreasing 41.8% from C$1.41 at the end of November to $0.82 by Dec. 5. It has since endured a tumultuous couple of months, but it is trading between $1.05 and $1.07 today after enjoying modest gains on the back of the news of the expanding retail estate and the short-seller verdict.
Yet the firm continues to see disruption in the boardroom. On January 21, it announced that Ian McKinnon and John Hick had joined its board of directors. Neufeld and John Cervini resigned from the board on Jan. 18, and McKinnon and Hick replaced them, with McKinnon taking on the role of chairman.
However, just a couple of weeks later both men have resigned from the board. Liberty cited personal reasons “related to the increased uncertainty regarding cross-border travel into the United States”. It sounds like a blow for the company after it reported their arrivals with such excitement. Scorsis has previously said their arrivals would strengthen the firm’s corporate governance, hailing their skills and expertise as crucial to supporting the next stage of Liberty’s growth.
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