Aleafia stock is mostly unmoved on Monday morning after Aleafia Health (TSX:ALEF) (OTCQX:ALEAF) announced it had completed construction of its Paris facility’s phase II expansion.
Paris Expansion Represents "The Crown Jewel" of Aleafia Health
Aleafia Health revealed on Monday that construction had been completed on the 30,000 square foot expansion completely dedicated to the extraction, production, packaging, and distribution of the company's range of cannabis health and wellness products. The expansion builds upon the current licensed and operational Paris facility, which features cultivation rooms and handles all extraction and packaging of Aleafia's medicinal cannabis. Despite the announcement, Aleafia stock is down 15% in the last month.
The completion of this expansion should be very welcome news for Aleafia's investors, who are expecting the company to turn profitable in the third quarter. The Phase II expansion features an initial annual extraction capacity of 115,000 kilograms of dried flower, which represents a 2,775% increase from the company's current capacity of 4,000 kilograms. Investors in Aleafia shares will also be pleased to know that the facility has been built specifically to allow for further expansions by utilizing different machinery, which could be a boost after legalization 2.0 comes into effect.
“The Paris expansion represents the crown jewel of Aleafia Health’s cannabis ecosystem. This facility will allow us to rapidly expand the production of high-margin derivative products while adding new, differentiated formats that are grown, processed, packaged and exported by Aleafia Health,” said CEO Geoffrey Benic. “We look forward to bringing the next generation of cannabis products to market, while greatly expanding our international footprint in Germany, Australia and beyond.” Aleafia stock is currently valued at $0.65.
Aleafia Stock Could Be Boosted By Europe Expansion
As mentioned by its CEO, Aleafia Health has planned to expand internationally by equipping the Paris expansion to meet European Union Good Manufacturing Practices (EU-GMP) certification requirements, which will allow Aleafia to export finished goods to the EU. However, Aleafia does face stiff competition in the European market after Canopy Growth (TSX:WEED) (NYSE:CGC) bought German firm C3, Aurora Cannabis (TSX:ACB) (NYSE:ACB) acquired Portuguese company Gaia Pharm, and Tilray (NASDAQ:TLRY) opened a €20 million research facility, also in Portugal.
Given Aleafia's significant production capacity now that Paris phase II is operational, the company is well-positioned to take advantage of Europe's booming CBD market, which is expected to grow by over 400% in the next three years. The near-term future looks pretty rosy for Aleafia stock also, as the company expects to post a profit for the first time in its coming quarterly report, while the industry as a whole should receive a much-needed boost when legalization 2.0 comes into effect later this month.
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