Licensed marijuana producer Aphria Inc. (TSX:APH) said it is moving to "purify" its balance sheet by reducing its exposure to medical cannabis in the U.S., where pot remains illegal under federal law, as it undergoes a delisting review by the group which operates the Toronto Stock Exchange.

Aphria's chief executive Vic Neufeld said Monday that it continues to be in discussions with TMX Group, Canada's biggest exchange operator, which recently warned that companies that operate in states where cannabis is legal are not in compliance with TSX listing requirements.

Mr. Neufeld said Aphria plans to submit a brief, including documentation and legal opinions, to the TMX group on its stance before the holiday season as the review wraps by the end of the year. However, he said the Leamington, Ont.-based producer is also moving to reduce its U.S. exposure.

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"We are trying to endeavour as best as possible, as expeditiously as possible, to divest from Aphria any direct involvement in any medical cannabis that we have in the U.S.," Mr. Neufeld said in an interview.

In October, the TMX Group issued a notice cracking down on cross-border marijuana companies with business activities in the United States. While some states have legalized marijuana to varying degrees and conditions, under U.S. federal law it remains illegal to cultivate, distribute or possess it.

In turn, Canadian marijuana companies had largely focused on markets outside of the United States or listed on the smaller Canadian Securities Exchange, which is less risk-averse.

However, Aphria in April announced the launch of its U.S. expansion strategy through a strategic investment in an entity that was renamed Liberty Health Sciences Inc. Aphria's first foray into the U.S. market was in 2016 with an investment in a medical marijuana producer in Arizona called Copperstate Farms, LLC.

Mr. Neufeld said Monday Aphria is looking to shift its direct stake in Copperstate Farms into Liberty Health Sciences, thereby making it an indirect investment and "purify some of the balance sheet."

Aphria began exploring this option three months ago, and made its request and presentation to Copperstate's board last month, Mr. Neufeld said.

However, the company's request remains subject to a six-month hold agreement that the Arizona-based producer has with its shareholders regarding requests involving any capital transaction, added Mr. Neufeld. Aphria has also moved to reduce of its shares in Delaware-based cannabis technology platform MassRoots in recent months.

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"We're going to try to purify as much as possible," Mr. Neufeld said. "As long as the Aphria shareholders are not damaged in any which way."

Another option, if that doesn't satisfy the TMX Group's requirements, is to hive off Aphria's U.S. interests into a separate entity and list it on the CSE, but Mr. Neufeld said that would be the "last step" as it wants to remain on the TSX.