APHRIAINC.

ANNUALINFORMATIONFORM

ForthefiscalyearendedMay31,2017

DATED:July12,2017

TABLEOFCONTENTS

ANNUALINFORMATIONFORM..........................................................................................................................................3

FORWARD-LOOKINGSTATEMENTS....................................................................................................................................3

CORPORATESTRUCTURE....................................................................................................................................................4

GENERALDEVELOPMENTOFTHEBUSINESS.....................................................................................................................5

QualifyingTransaction................................................................................................................................................5

Licenses.......................................................................................................................................................................5

ExpansionandPropertyAcquisitions..........................................................................................................................6

RegulatoryDevelopments...........................................................................................................................................7

RecentBusiness...........................................................................................................................................................8

DESCRIPTIONOFTHEBUSINESS.........................................................................................................................................9

CompanyOverview.....................................................................................................................................................9

LicenseandRegulations..............................................................................................................................................9

ReportingRequirementsundertheACMPR............................................................................................................11

PrincipalProducts.....................................................................................................................................................14

Distribution...............................................................................................................................................................14

Operations................................................................................................................................................................15

StorageandSecurity................................................................................................................................................15

SpecializedSkillandKnowledge...............................................................................................................................15

CompetitiveConditions............................................................................................................................................16

Employees................................................................................................................................................................16

RISKFACTORS...................................................................................................................................................................17

DIVIDENDS........................................................................................................................................................................28

CAPITALSTRUCTURE........................................................................................................................................................28

MARKETFORSECURITIES.................................................................................................................................................28

PRIORSALES......................................................................................................................................................................29

ESCROWEDSECURITIESANDSECURITIESSUBJECTTORESTRICTIONONTRANSFER.....................................................29

DIRECTORSANDOFFICERS...............................................................................................................................................30

LEGALPROCEEDINGSANDREGULATORYACTIONS.........................................................................................................34

INTERESTOFMANAGEMENTANDOTHERSINMATERIALTRANSACTIONS....................................................................34

TRANFERAGENTANDREGISTAR......................................................................................................................................34

MATERIALCONTRACTS.....................................................................................................................................................35

AUDITCOMMITTEEINFORMATION.................................................................................................................................35

INTERESTSOFEXPERTS.....................................................................................................................................................36

ADDITIONALINFORMATION.............................................................................................................................................36

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ANNUALINFORMATIONFORM

In this annual information form (“Annual Information Form”), unless otherwise noted or the context indicatesotherwise, the “Company”, “Aphria”, “we”, “us” and “our” refer to Aphria Inc. and its principal wholly-ownedsubsidiary,PureNaturesWellness Inc.d/b/aAphriaandtheterm“marijuana”hasthemeaninggiventotheterm“marihuana”intheAccesstoCannabisforMedicalPurposesRegulations(“ACMPR”).AllfinancialinformationinthisAnnual InformationForm isprepared inCanadiandollarsandusing InternationalFinancialReportingStandardsasissuedbythe InternationalAccountingStandardsBoard.The informationcontainedherein isdatedasofMay31,2017unlessotherwisestated.

FORWARD-LOOKINGSTATEMENTS

ThisAnnualInformationFormcontainscertaininformationthatmayconstitute“forward-lookinginformation”and“forward-looking statements” (collectively, “forward-looking statements”) which are based upon the Company’scurrentinternalexpectations,estimates,projections,assumptionsandbeliefs.Suchstatementscanbeidentifiedbytheuseofforward-lookingterminologysuchas"expect,"“likely”,"may,""will,""should,""intend,"or"anticipate",“potential”,“proposed”,“estimate”andothersimilarwords,includingnegativeandgrammaticalvariationsthereof,or statements that certain events or conditions “may” or “will” happen, or by discussions of strategy. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance, orother statements that are not statements of fact. The forward-looking statements included in this AnnualInformationFormaremadeonlyasofthedateofthisAnnualInformationForm.Forward-lookingstatementsinthisAnnualInformationForminclude,butarenotlimitedto,statementswithrespectto:

• theperformanceoftheCompany’sbusinessandoperations;

• theintentiontogrowthebusinessandoperationsoftheCompany;

• theCompany’s intentions tocompletePart IIIExpansion (asdefinedherein) and theCompany’sintention to proceed with Part IV Expansion (as defined herein), the respective costs andanticipatedtimingassociatedtherewith,andreceiptofapprovalfromHealthCanadainrelationtosuchexpansions;

• theanticipatedtimingtocompleteconstructioninconnectionwithPartIIIExpansionandPartIVExpansion;

• underlyingmarketconditionscontinuingtodemonstrateareasonablebasistoexecuteonPartIIIExpansionandPartIVExpansion;

• theexpectedgrowthintheamountofmedicalmarijuanasoldbytheCompany;

• theexpectedgrowthintheCompany’sgrowingcapacity;

• expectationswithrespecttofutureproductioncosts;

• expectationswithrespecttotherenewaland/orextensionoftheCompany’slicenses;

• thenumberofgramsofmedicalmarijuanausedbyeachpatient;

• themethodsusedbytheCompanytodelivermedicalmarijuana;

• thecompetitiveconditionsoftheindustry;

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• anycommentaryrelatedtothelegalizationofmarijuanaandthetimingrelatedthereto;

• theapplicablelaws,regulationsandanyamendmentsthereof;

• thecompetitiveandbusinessstrategiesoftheCompany;

• theCompany’sinvestmentsintheUnitedStates,thecharacterizationandconsequencesofthoseinvestmentsunderfederallaw,andtheframeworkfortheenforcementofmedicalmarijuanaandmarijuana-relatedoffensesintheUnitedStates;

• thegrantandimpactofanylicenseorsupplementallicensetoconductactivitieswithcannabisoranyamendmentsthereof;and

• theanticipatedfuturegrossmarginsoftheCompany’soperations.

Certainoftheforward-lookingstatementsandforward-lookinginformationandotherinformationcontainedhereinconcerning the medical marijuana industry and the general expectations of Aphria concerning the medicalmarijuana industry are based on estimates prepared by Aphria using data from publicly available governmentalsourcesaswellasfrommarketresearchandindustryanalysisandonassumptionsbasedondataandknowledgeofthis industry which Aphria believe to be reasonable. However, although generally indicative of relative marketpositions,market shares and performance characteristics, such data is inherently imprecise.While Aphria is notaware of anymisstatement regarding any industry or government data presented herein, themedicalmarijuanaindustryinvolvesrisksanduncertaintiesthataresubjecttochangebasedonvariousfactors.

AlthoughtheCompanybelievesthattheexpectationsreflectedinsuchforward-lookingstatementsarereasonable,it can give no assurance that such expectationswill prove to havebeen correct. TheCompany’s forward-lookingstatementsareexpresslyqualifiedintheirentiretybythiscautionarystatement. Inparticular,butwithoutlimitingtheforegoing,disclosureinthisAnnualInformationFormunder“DescriptionoftheBusiness”aswellasstatementsregardingtheCompany’sobjectives,plansandgoals,includingfutureoperatingresults,economicperformanceandpatientacquisitioneffortsmaymakereferencetoorinvolveforward-lookingstatements.Anumberoffactorscouldcause actual events, performance or results to differ materially from what is projected in the forward-lookingstatements. The purpose of forward-looking statements is to provide the reader with a description ofmanagement’sexpectations,andsuchforward-lookingstatementsmaynotbeappropriateforanyotherpurpose.Youshouldnotplaceunduerelianceonforward-lookingstatementscontainedinthisAnnualInformationForm.Weundertake no obligation to update or revise any forward-looking statements, whether as a result of newinformation,futureeventsorotherwise,exceptasrequiredbyapplicablelaw.

CORPORATESTRUCTURE

Aphria Inc. was incorporated under the Business Corporations Act (Alberta) on June 22, 2011 as Black SparrowCapitalCorp.(“BlackSparrow”,acapitalpoolcompanylistedontheTSXVentureExchange(the“TSXV”)).2427745OntarioInc.(“Subco”),awholly-ownedsubsidiaryofBlackSparrow,wasincorporatedonJuly24,2014inordertoeffect a business combination with Pure Natures Wellness Inc. d/b/a Aphria (“Pure Natures”) whereby BlackSparrowwouldacquirealloftheissuedandoutstandingsharesofPureNaturespursuanttoacourt-approvedplanofarrangement.PureNaturesamalgamatedwithSubcounder theOntarioBusinessCorporationsAct (“OBCA”) toformawhollyownedsubsidiaryofBlackSparrow,and togetherwithBlackSparrow,wascontinued inOntarioonDecember1,2014as “Aphria Inc.”under theOBCA.OnMarch22,2017,Aphriagraduated fromtheTSXV to theToronto Stock Exchange (“TSX”). The Company’s common shares (the “Common Shares”) are listed under thesymbol“APH”ontheTSXandunderthesymbol“APHQF”ontheOTCQB.

The following chart (as of this date) illustrates the Company’s corporate structure, together with the place ofincorporation/governinglawofeachprincipalsubsidiaryandthepercentageofvotingsecuritiesbeneficiallyownedbytheCompany.

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TheCompanyislicensedtoproduceandsellmedicalmarijuanaasaLicensedProducerundertheprovisionsoftheACMPR.TheCompanyreceiveditsinitiallicensetoproduceandsellmedicalmarijuanaonNovember26,2014.ForafurtherdescriptionoftheCompany’slicenses,seeGeneralDevelopmentoftheBusiness–LicensesandDescriptionoftheBusiness–LicenseandRegulations.

Aphria’s operations are based in Leamington, Ontario. Our head office is located at 245 Talbot StW, Suite 103,Leamington,ONN8H1N8andourregisteredoffice is locatedatc/o5300CommerceCourtWest,199BayStreet,Toronto,ON,M5L1B9.Ourtelephonenumberis(844)427-4742andourcorporatewebsiteiswww.aphria.com.

GENERALDEVELOPMENTOFTHEBUSINESS

QualifyingTransaction

On July 31, 2014, Black Sparrow and Pure Natures entered into a business combination agreement pursuant towhichBlackSparrowagreed,amongotherthings,tochangeitsnameto“AphriaInc.”,tocontinueundertheOBCAand to effect a consolidation of the outstanding Black Sparrow common shares on a 10 to 1 basis. Under theagreement, Black Sparrow acquired all of the outstanding shares of Pure Natures by way of a three-corneredamalgamationpursuant towhichBlackSparrowwascontinued inOntarioonDecember1,2014under theOBCAandonDecember2,2014,BlackSparrowcompleteditsQualifyingTransaction,asdefinedunderthepoliciesoftheTSXV,withPureNatures.

Licenses

Aphria’s application to becomea LicensedProducer under theMarihuana forMedical PurposesRegulations (the“MMPR”)wassubmittedtoHealthCanadaonAugust6,2013.OnMarch22,2014alicensetoacquire,produceanddestroymedicalmarijuana was obtained, and on August 8, 2014, Aphria received its license to harvestmedicalmarijuana.OnNovember26,2014,Aphriareceived its licensefromHealthCanadatocultivateandsellmarijuanaundertheMMPR.Priortoreceivingitsfinal licensetodistributemedicalmarijuana,Aphriawasoperatingunderapartial license at its facility in Leamington. In February 2015, theCompany successfully amended its licensewithHealthCanadatoallowforwholesaleshippingwithinCanadaofmedicalmarijuanaplantcuttings. InMarch2015,the Company amended its license to allow for wholesale shipping of medical marijuana in dried bud form. InDecember2015,HealthCanadaamendedtheCompany’slicensetoproduceandsellmedicalmarijuana,increasingtheCompany’sproductionandsellinglimitsduringthelicenseterm.InFebruary2016,HealthCanadaamendedtheCompany’slicensetoproducemedicalmarijuanabyapprovingtheCompany’sPartIExpansion(definedbelow)forgrowingmedicalmarijuana. InMay2017,HealthCanadaamended theCompany’s license in connectionwith theapprovalofthePartIIExpansion(asdefinedbelow).

OnAugust26,2015,theCompanyreceivedfromHealthCanadaalicensetoproduce(andonlyproduce)cannabisoil extracts under the section 56 exemption the (the “Section 56 Exemption”) of the Controlled Drugs andSubstancesAct (the“CDSA”).OnAugust17,2016,AphriaannouncethatHealthCanadaamendedtheCompany’slicensetoallowittosellcannabisoilextracts.

Aphria’s licensecurrentlydoesnotcontainacaponproductionor salesbut isbasedon theCompany storingnomore than 6,875 kilograms and/or the kilogram equivalent of cannabis oil in its vaults at any given time (the

AphriaInc.

Ontario

PureNaturesWellnessInc.(d/b/aAphria)

Ontario

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“License”).TheLicensehasacurrenttermthatendsonSeptember25,2019.ItisanticipatedthatHealthCanadawillextend or renew the License at the end of its current term. See Risk Factors – Reliance on License.MedicalmarijuanacultivatedbyAphria isprocessedforsaleorwholesaledistributiontootherLicensedProducers.AphriamaysellmedicalmarijuanatopatientswhohaveobtainedavalidprescriptionfromadoctororauthorizedhealthcareprofessionalortootherLicensedProducers.

ExpansionandPropertyAcquisitions

In March 2015, Aphria’s board of directors (the “Board”) approved a two-part expansion. The first part of theCompany’sgreenhouseexpansion(“PartIExpansion”) involvedtheretrofitofthreeexistinggreenhousesadjacentto thecurrent facilities foranadditional20,700square feet, fora totalannualgrowingcapacityofapproximately2,500 kilograms, and also involvedAphria building a research&development laboratory and investing in relatedadvanced equipment at its Leamington, Ontario facility. Part I Expansion was completed in October 2015.Subsequently,onFebruary7,2016,HealthCanadaamended theCompany’s License toapprove theuseofPart IExpansionforthepurposesofgrowingmedicalmarijuana.

The second part (the “Part II Expansion”)was approved by the Board on June 2, 2016 and the Company beganconstruction of the $10 million fully-funded capital project on July 1, 2016. On May 15, 2017 Health Canadaapproved the greenhouse portion of the Part II Expansion, which added an incremental 57,000 square feet ofgreenhousecapacityanda “levelnine”vault. Part II Expansion increased theCompany’sproductioncapacity formedicalmarijuana to approximately 8,000 kilograms on an annualized basis. The Part II Expansion also includes8,000square feetofcorporateofficespaceandelectricalandsewerupgradesnecessary for theoperationof theCompany’scurrentandfuturegreenhousespace.PartIIExpansion,withrespecttothecorporateofficespace,hasrecentlybegunwiththehiringofanarchitecttodesignthespace.TheCompanycurrentlyanticipatescommencingtheofficespaceportionofPartIIExpansioninSeptember2017.PartIIExpansion,withrespecttotheelectricalandsewerupgrades, is currently onhold as a result ofHydroOne indicating that the earliest they can complete theupgrades isMarch 2018. The Company continues to explore alternative sources of power including a larger co-generationprojectaspartofthePartIVExpansion(asdefinedbelow).

OnJune30,2016,Aphriaacquiredthegreenhousefacilities itpreviously leasedfromCacciavillaniandF.M.FarmsLtd. operating as CF Greenhouses (“CF Greenhouses”) and terminated the existing lease agreement for totalconsideration of $6.1 million. CF Greenhouses is a greenhouse growing company controlled in part by ColeCacciavillani,DirectorandChiefOperatingOfficerofAphria.Asaresultoftheacquisition,Aphrianowownsatotalof 360,000 square feet of production space located on 36 acres of land (the “Greenhouse Property”). The $6.1millionpurchasepricewassatisfiedbya$3.25millioncashpaymentandCFGreenhousesassumingavendortakebackmortgage,intheamountof$2.85million,witha5-yearamortizationperiodandbearinginterestat6.75%.

OnJuly22,2016,Aphriaclosedafinancingcomprisedofthreeseparatefacilities(amortgage,atermloanandanoperatinglineofcredit)totaling$6,000,000withWFCUCreditUnion(the“WFCUFacility”).Themortgagefacilityisfor$3,750,000,bearinginterestat3.95%,witha20-yearamortizationanda5-yearterm(the“MortgageFacility”).Thetermloanisfor$1,250,000bearinginterestat3.99%,witha10-yearamortizationanda5-yearterm(the“TermLoan”).Theoperating lineofcredit is for$1,000,000,bearing interestatWFCU’sprime lendingrateplus75basispoints and revolves annually (the “Line of Credit”). Aphria used $3.25 million of theWFCU Facility to fund theacquisition of theGreenhouse Property (as defined above) and has allocated the remaining $1.75million of thedrawnportionoftheWFCUFacilitytowardscapitalprojectsin2017unrelatedtoPartIIExpansion,PartIIIExpansionorPartIVExpansion.TheLineofCreditremainsundrawnandavailabletotheCompanyforfutureuse.

OnAugust 19, 2016, Aphria entered into an agreement to purchase 11 acres of additional greenhouse propertyadjacent to its existing campus fromDiNiro Farms Inc. for a $2,100,000 cash payment. The property consists of345,000 square feet of existing greenhouse spacewhich the Company demolished as part of Part IV Expansion.Concurrentlywiththeclosingofthistransaction,theabuttingpropertywasmergedintoAphria’sexistingmunicipaladdress,therebyavoidingtheneedtoapplyforanewHealthCanadasitelicense.

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On September 16, 2016, the Board approved the commencement of a fully-funded $24.5million capital project(“Part III Expansion”), which the Company anticipates will increase its capacity under the ACMPR from 100,000squarefeetto300,000squarefeetanditsgrowingcapabilitiesfrom8,000kilograms(followingPartIIExpansion)to22,000kilogramsannually.Theprojectincludes(1)200,000squarefeetofstate-of-the-artgreenhousesbuiltuptothe current standards of greenhouse operations in Leamington, (2) 21,000 square feet of infrastructure, (3) anadditional four “Level 9” vaults, (4) automation for both the greenhouses and processing areas, and (5) securityconsistentwithACMPRstandards.PartIIIExpansionremainsonscheduleandonbudget,withexpectedcompletionin late October 2017, with Health Canada approval to follow thereafter. The Company expects the first sale ofproductgrowninthePartIIIExpansiontooccurinlateMay2018.

OnDecember14,2016,Aphriaenteredintoapurchaseandsaleagreementtoacquire200acresoffullyservicedvacant land for $6.24 million. As the land acquired is not adjacent to the Company’s existing operations, theCompanywill require a new site license fromHealth Canada for the property. The purchase and sale closed onJanuary31,2017.

On January 16, 2017, the Board approved the commencement of a $137 million capital project (“Part IVExpansion”).ItwasoriginallyanticipatedthatPartIVExpansionwouldincludeapproximately350,000squarefeetofstate-of-the-art greenhouses, approximately 160,000 square feet of infrastructure, and the purchase anddevelopmentof additional land,with a total costbetween$70million to$90million;however, following furtherinternalreviewandconsultation,theCompanyhassinceincreasedthescopeoftheexpansiontomeetanticipateddemand.PartIVExpansionisnowfully-fundedandanticipatedtoinclude(1)700,000squarefeetofstate-of-the-artgreenhouses built up to the current standards of greenhouses operations in Leamington, for total greenhousegrowing spaceof1,000,000 square feet, (2) 230,000 square feetof infrastructure, includinga15MWpower co-generation facility designed to provide supplemental power to the Greenhouse Property to support existingoperations and potential future operations currently contemplated on the existing Greenhouse Property, (3) 10additional “Level 9” vaults, (4) additional automation of greenhouses and warehouse facilities, and (5) securityconsistentwithACMPRstandards.PartIVExpansionisexpectedtobecompletedwithin15monthsandisexpectedtoprovideanadditional53,000kilogramsofannualproductioncapacity,subjecttothereceiptofnecessaryHealthCanada approvals to increase Aphria’s capacity under its Licence. The Company expects the first sale of productgrowninthePartIIIExpansiontooccurinlateJanuary2019.

Althoughit isprematureatthistimeforAphriatoapplytoincreaseitsLicensecapacityinconnectionwithPartIIIExpansionorPartIVExpansion,AphriawillmakesuchapplicationstoHealthCanadaonanincrementalbasisinduecourseaseachpartnearscompletion.Inrespectofsuchapplications,AphriaanticipatesHealthCanadaapprovalstofollowwithinfourmonthsofthecompletionofsuchpartofexpansion.

The Company continues to refine and improve itsindustry leading greenhouse agricultural growing practices,combinedwithuniqueengineeringchangesembeddedinbothfullyfundedPartIIIandPartIVexpansions,presentlyunderway.ManagementbelievesthatoncefullcroprotationhasbeenattainedafterPartIVexpansioniscomplete,annualized capacity will exceed 100,000 kilograms. Supporting management's revised capacity projections arerecent yield improvements resulting from the introduction of new lighting strategies, growing techniques andleveragingother"uniquetogreenhouse"strengths.

As a result of the above, the Company amended its previously reported capacity expectations for its expansionprojects.TheCompanybelievesthatthecapacityafterfullcroprotationinPartIIExpansionwillincreasefrom8,000kilograms to 9,000 kilograms annualized, in Part III Expansion it will increase from 22,000 kilograms to 30,000kilograms annualized and in Part IV Expansion it will increase from 75,000 kilograms to 100,000 kilogramsannualized.

RegulatoryDevelopments

OnAugust24,2016,theACMPRreplacedtheMMPRasthegoverningregulationsinrespectoftheproduction,saleanddistributionofmedicalcannabisandrelatedoilextracts.Thereplacementregulationswereimplementedasa

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resultoftherulingbytheFederalCourtofCanadainthecaseofAllardvCanada(the“AllardDecision”)whichfoundthe MMPR unconstitutional in violation of the plaintiffs’ rights under section 7 of the Charter of Rights andFreedomsduetotherestrictionsplacedonapatient’sabilitytoreasonablyaccessmedicalcannabis.

TheACMPReffectively combines the regulationsand requirementsof theMMPR, theMarihuanaMedicalAccessRegulations (“MMAR”) and the Section 56 Exemptions relating to cannabis oil under the CDSA into one set ofregulations. In addition, amongother things, theACMPR setsout theprocesspatients are required to follow toobtainauthorizationfromHealthCanadatogrowcannabisandtoacquireseedsorplantsfromLicensedProducerstogrowtheirowncannabis.UndertheACMPR,patientshavethreeoptionsforobtainingcannabis:

(a) theycancontinuetoaccessquality-controlledcannabisbyregisteringwithLicensedProducers;

(b) they can register with Health Canada to produce a limited amount of cannabis for their ownmedicalpurposes;or

(c) theycandesignatesomeoneelsetoproduceitforthem.

Withrespectto(b)and(c),startingmaterials,suchasplantsorseeds,mustbeobtainedfromLicensedProducers.Itispossiblethat(b)and(c)couldsignificantlyreducetheaddressablemarketfortheCompany’sproductsandcouldmateriallyandadverselyaffectthebusiness,financialconditionandresultsofoperationsoftheCompany.Thatsaid,managementoftheCompanybelievesthatmanypatientsmaybedeterredfromoptingtoproceedwithoptions(b)or(c)sincesuchstepsrequireapplyingforandobtainingregistrationfromHealthCanadatogrowcannabis,aswellastheup-frontcostsofobtainingequipmentandmaterialstoproducesuchcannabis.FurtherdetailsontheACMPRarefoundbelowunderDescriptionoftheBusiness–LicenseandRegulation.

On December 13, 2016, the Task Force on Cannabis Legalization and Regulation (the “Task Force”), which wasestablishedbytheCanadianFederalGovernment toseek inputonthedesignofanewsystemto legalize,strictlyregulate and restrict access to marijuana, completed its review and published its report outlining itsrecommendations. On April 13, 2017, the Canadian Federal Government released Bill C-45, which proposes theenactmentoftheCannabisAct, toregulatetheproduction,distributionandsaleofcannabis forunqualifiedadultuse,with a target implementation date of no later than July 1, 2018. The impact of such regulatory changes onAphria’sbusinessisunknown,andtheproposedregulatorychangesmaynotbeimplementedatall.SeeRiskFactors-ChangesinLaws,RegulationsandGuidelines.

RecentBusiness

OnOctober27,2016,AphriaenteredintoanintellectualpropertytransferagreementwithCopperstateFarms,LLC(“Copperstate”), a licensed producer and seller of medical cannabis under the Arizona Medical Marijuana Act.Copperstatemaintainsa40-acre,high-tech,Dutch-stylegreenhousefacilityinSnowflake,Arizona.Underthetermsof the agreement, Aphria licensed certain of its intellectual property to Copperstate in exchange for a 5,000membershipunitsinCopperstate.Inaddition,AphriamadeadirectcashcontributionofUS$1,300,000totheparentcompanyofCopperstate inreturnfora2,600membershipunits intheparentcompany.Thetransactionreceivedfinal approval from the TSXV on December 21, 2016. Prior to receiving such final approval, Aphria acquired anadditional2,600membershipunits in theparentcompany, increasing itsownership in theparentcompany5,200membership units. On March 27, 2017, Aphria made an additional investment of US$3 million in the parentcompany,foranadditional6,000membershipunitsintheparentcompany.

OnApril4,2017,AphriaannouncedthelaunchofitsUSexpansionstrategythroughastrategicleadinvestmentinan entity to be renamed LibertyHealth Sciences Inc. (“Liberty”) thatwill operate in theUnited States under thebrand“AphriaUSA”.Whilethe initial investmentrelatestotheStateofFlorida,the intentionoftheUSexpansionstrategy is to target key states that have approvedmedical use ofmarijuana andmeet the Company’s stringentinvestmentcriteria.Aphriahassubsequently invested$25million intoDFMMJ InvestmentLtd. (“DFMMJ”),anewspecialpurposeprivatecompanywhichhasacquiredallorsubstantiallyalloftheassetsofChestnutHillTreeFarm

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LLC (“Chestnut”). It is expected that DFMMJ will amalgamate into a subsidiary of SecureCom Mobile Inc.(“SecureCom”),apubliccompanylistedontheCanadianSecuritiesExchange,aspartofthepreviouslyannouncedbusinesscombination(the“BusinessCombination”).Thefunds,whencombinedwithanadditional$35millionthatwasraisedfromthirdpartiesinabrokeredprivateplacementledbyClaruswillallowLiberty,oncompletionoftheBusinessCombination, to indirectlyholdandoperate theassetsofChestnut.Chestnut is a licensedholder in thestate as an authorized dispensing organization of low-THCmedical cannabis to patients in need in the State ofFlorida.

Aspartofthetransaction,uponcompletionoftheBusinessCombination,Aphriahasagreedto(a)licenceitsAphriamedicalbrandtoLiberty,inexchangeforaperpetual3%royaltyonallsalesofmarijuanaandrelatedproducts,and(b) licence its greenhouse growing “know how” system to Liberty in exchange for additional common shares inLiberty. As part of the investment in Liberty and theBusinessCombination,Aphriawill be entitled, amongothercustomary rights, to appoint two nominees as boardmembers to Liberty’s proposed five-person board. It is theintentionoftheCompanytoappointVicNeufeldandJohnCerviniasnomineestoLiberty’sboardofdirectors.ItisalsoexpectedthattheywillbejoinedbyAaronSerruyaofSerruyaPrivateEquity,effectiveuponthecompletionoftheBusinessCombination,subjecttoallboardnomineesbeingapprovedbytheCanadianStockExchangeandtheFloridaDepartmentofHealth.OncetheBusinessCombinationiscompleted,Aphriawillownapproximately37.6%of the issued and outstanding common shares of Liberty. Upon completion of the Business Combination,SecureCom, renamed Liberty, will remain a reporting issuer with its common shares listed on the CanadianSecuritiesExchange.

OnMay 9, 2017, Aphria entered into 5-year, $25million term loanwithWFCU Credit Union bearing interest at3.95%anda15-yearamortization(the“NewWFCUFacility”).TheNewWFCUFacilityissecuredbyafirstchargeontheCompany’s realestateholdings,a firstpositiononageneral securityagreement,certaincashsecurityandanassignmentoffireinsurancetothelender.

DESCRIPTIONOFTHEBUSINESS

CompanyOverview

The Company is licensed to produce and sellmedicalmarijuana, including dried cannabis and cannabis oil, as aLicensedProducerundertheprovisionsoftheACMPR.TheCompanyreceiveditsinitiallicensetoproduceandsellmedical marijuana on November 26, 2014. For a further description of the Company’s License, see GeneralDevelopmentsoftheBusiness–Licenses.

The License grants Aphria the authority to produce, sell, possess, ship, transport, deliver and destroy driedmarijuana andmarijuana plants (including live plants, clippings and seeds), as well as cannabis oil extracts. TheLicenseisissuedtoAphriaforuseatitsfacilityinLeamington,Ontarioat265TalbotStreetWestandappliesonlytosuch facility. Adverse changes or developments affecting the existing facility could have a material and adverseeffectonAphria’sabilitytocontinueproducingmedicalmarijuana, itsbusiness, financialconditionandprospects.SeeRiskFactors–RelianceonaSingleFacility.

LicenseandRegulations

PursuanttoitsLicense,Aphriamay:

(a) possess,produce,sell,provide,ship,deliver,transportanddestroymarijuanaorcannabisoil;

(b) possess andproduce cannabis in its natural form,other thanmarijuanaor cannabis oil, for thepurpose of producing cannabis oil, and sell, provide, ship, deliver, transport and destroy thatcannabisifitwasobtainedorproducedforthatpurpose;and

(c) possess and produce cannabis, other than marihuana or cannabis oil, for the purpose ofconductinginvitrotestingthat isnecessarytodeterminethecannabinoidcontentofmarihuana

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or cannabis oil, and sell, provide, ship, deliver, transport and destroy that cannabis if it wasobtainedorproducedforthatpurpose.

Aphriamaysellorprovide:

(a) marijuana, cannabisoil, cannabis in itsnatural form,other thanmarihuanaor cannabisoil, thatwas obtained or produced for the purpose of producing cannabis oil and cannabis, other thanmarihuanaorcannabisoil,thatwasobtainedorproducedforthepurposeofconductinginvitrotestingthatisnecessarytodeterminethecannabinoidcontentofmarihuanaorcannabisoil(eacha“substance”)to:

(i) anotherLicensedProducer;

(ii) alicenseddealer(asdefinedintheACMPR);

(iii) theMinisterofHealth(the“Minister”);or

(iv) a person to whom an exemption relating to the substance has been granted undersection56oftheCDSA;and

(b) driedmarijuanaorcannabisoilto

(i) aclientoranindividualwhoisresponsiblefortheclient;

(ii) ahospital employee, if thepossessionof thedriedmarijuanaor cannabisoil is for thepurposesofandinconnectionwiththeiremployment;or

(iii) apersontowhomanexemptionrelatingtothedriedmarijuanaorcannabisoilhasbeengrantedundersection56oftheCDSA.

Aphriamayalso(i)shipdriedmarijuanaorcannabisoiltoahealthcarepractitioner(asdefinedintheACMPR)inthecase referred to in subparagraph 130(1)(f)(iii) of the ACMPR; (ii) import marijuana or a substance if done inaccordancewithanimportpermitissuedundersection95oftheACMPR;and(iii)possessmarijuanaorasubstanceforthepurposeofexportandexportitifdoneinaccordancewithanexportpermitissuedundersection103oftheACMPR.

Before the end of the term of the License, Aphria must submit an application for renewal to Health CanadacontaininginformationprescribedbytheACMPR.TheACMPRrequiresthattheMinisterofHealth,afterexaminingtheapplicationandanysupplementaryinformationrequested,issuearenewedLicense,unless:

(a) theapplicant isnotanadultwhoordinarilyresidesinCanadaoracorporationthathasitsheadofficeinCanadaoroperatesabranchofficeinCanadaandwhoseofficersanddirectorsarealladults;

(b) the requirements regarding notification of local authorities pursuant to the ACMPR have not beenmet(such notifications would only be required in connection with a renewal if there are changes to theinformationsincetheoriginalapplication);

(c) an inspector,who has requested an inspection, has not been given the opportunity by the applicant toconductaninspection;

(d) theMinister has reasonable grounds to believe that false ormisleading information or false or falsifieddocumentsweresubmittedinorwiththeapplication;

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(e) informationreceivedfromapeaceofficer,acompetentauthorityortheUnitedNationsraisesreasonablegrounds to believe that the applicant has been involved in the diversion of a controlled substance orprecursortoanillicitmarketoruse;

(f) theapplicantdoesnothaveinplacethesecuritymeasuressetoutintheSecurityDirectiveandSubdivisionCoftheACMPRinrespectofanactivityforwhichthelicenceissought;

(g) theapplicantisincontraventionoforhascontravenedinthepast10years:

i. aprovisionoftheCDSAoritsregulationsortheFoodandDrugsAct,or

ii. atermorconditionofanotherlicenceorapermitissuedtoitunderanyofthoseregulations,

(h) therenewalofthelicencewouldlikelycreatearisktopublichealth,safetyorsecurity,includingtheriskofcannabisbeingdivertedtoanillicitmarketoruse;

(i) anyofthefollowingpersonsdoesnotholdasecurityclearance:

i. theseniorpersonincharge,

ii. theresponsiblepersonincharge,

iii. ifapplicable,thealternateresponsiblepersonincharge,

iv. iftheapplicantisanindividual,thatindividual,and

v. iftheapplicantisacorporation,anyofitsofficersordirectors;

(j) theproposedmethodofrecordkeepingdoesnotmeettherequirementsoftheACMPR;or

(k) ifapplicable,anysupplemental informationrequestedhasnotbeenprovidedor is insufficienttoprocesstheapplication.

TherecanbenoguaranteethatHealthCanadawillextendorrenewtheLicenseasnecessaryor, if itextendedorrenewed, that the Licensewill beextendedor renewedon the sameor similar terms. ShouldHealthCanadanotextendorrenewtheLicense,orshoulditrenewtheLicenseondifferentterms,thebusiness,financialconditionandresultsoftheoperationofAphriawouldbemateriallyadverselyaffected.SeeRiskFactors–RelianceonLicense.

MedicalmarijuanacultivatedbyAphriaisprocessedforsaleorwholesaledistributiontootherLicensedProducers.Aphria may sell medical marijuana to patients who have obtained a valid medical document from a doctor orauthorizedhealthcareprofessionalortootherLicensedProducers.

ReportingRequirementsundertheACMPR

As described under the ACMPR (see Part 1, Division 5 of the ACMPR), Licensed Producers are required to keeprecords of, among other things, their activities with cannabis, including all transactions (sale, exportation, andimportation),allfreshordriedmarihuanaorcannabisoilsreturnedfromclients,andaninventoryofcannabis(e.g.seeds,freshharvestedmarihuana,driedmarihuana,packagedmarihuana,packagedmarijuanaseeds,cannabisoil,marijuanaplantsdestinedtobesoldorprovided).Allrecordshavetobekeptforaperiodofatleasttwoyears,inaformat that will be easily auditable, and will have to be made available to Health Canada upon request. Allcommunicationsregardingreportsforhealthcarelicensingauthorities,includingboththosesentandreceived,arealsosubjecttothistwoyearrequirement.

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ALicensedProducermustprovideHealthCanadawithacasereport foreachseriousadversereactiontofreshordried marihuana or cannabis oil within 15 days of the Licensed Producer becoming aware of the reaction. ALicensed Producer must annually prepare and maintain a summary report that contains a concise and criticalanalysis of all adverse reactions to have occurred during the previous 12 months (the serious adverse reactionreportsandthesummaryreportsmustberetainedbytheLicensedProducerforaperiodof25yearsafterthedayonwhichtheyweremade).

HealthCanadareleasedanInformationBulletintitled,“LicensedProducers'ReportingRequirements”toprovideanoverview of the information licensed producers must provide to Health Canada on a monthly basis. LicensedProducersmustprovidethefollowinginformationtotheOfficeofControlledSubstancesforthepreviousmonthonorbeforethe15thdayofeachmonth:

(a) With respect to fresh and driedmarijuana, cannabis oil, cannabis seeds andmarijuana plants, licensedproducers must report the amounts produced, as well as the amounts received from another licensedproducerasfollows:

i. totalamountproducedinthereportingperiod;

ii. amountreleasedforsaleinthereportingperiod;

iii. amountoffreshanddriedmarijuanaproducedinthereportingperiodandintendedforextractionactivities;and

iv. amountreceivedfromotherlicensedproducersduringthereportingperiod;

(b) With respect to fresh and driedmarijuana, cannabis oil, cannabis seeds andmarijuana plants, licensedproducersmustreportthetotalamountsoldortransferredtothefollowingduringthereportingperiod:

i. registeredclients;

ii. otherlicensedproducers;and

iii. licenseddealers;

(c) Numberofclientsregistered;

(d) Numberofclientsregisteredbyprovinceorterritoryofresidence;

(e) Numberofrefusedregistrationsandrefusalstofillorder;

(f) Withrespecttofreshanddriedmarijuanaandcannabisoil,licensedproducersmustreportasofthefinaldayofthereportingperiodtheamountsheldininventoryasfollows:

i. totalamountheldininventory;

ii. amountintendedforsalebutnotyetapprovedheldininventory;

iii. amountapprovedforsaleheldininventory;

iv. amountofsamplesininventory;and

v. amountoffreshanddriedmarijuanaintendedforextractionactivitiesheldininventory;

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(g) Withrespecttocannabisseedsandmarijuanaplants,licensedproducersmustreport:

i. thetotalnumberofplantsheldininventory;

ii. thenumberofplantsdestinedtobesoldasstartingmaterialheldininventory;

iii. thetotalweightofseedsheldininventory;and

iv. thenumberandweightofseedsdestinedtobesoldasstartingmaterialheldininventory;

(h) Licensedproducersmustalsoincludeintheirreportthetotalamountsreadytobedestroyed,butstillheldininventoryonthefinaldayofthereportingperiod;

(i) Totalamountofcannabisimportedduringthereportingperiod;

(j) Totalamountofcannabisexportedduringthereportingperiod;

(k) Totalamountofcannabislostorstolenduringthereportingperiod;

(l) With respect to fresh and driedmarijuana, cannabis oil, cannabis seeds andmarijuana plants, licensedproducersmustreportthetotalamount:

i. thatwasdestroyedduringthereportingperiod;and

ii. ofwaste(e.g.,plants,leaves,twigs)destroyedduringthereportingperiod;

(m) With respect to fresh and driedmarijuana, cannabis oil, cannabis seeds andmarijuana plants, licensedproducersmustreportthetotalamountreturnedfromclientsduringthereportingperiod;

(n) Licensedproducersmustreportthetotalnumberofshipmentssenttothefollowingduringthereportingperiod:

i. registeredclients;

ii. registeredclientsforinterimsupply;

iii. otherlicensedproducers;and

iv. licenseddealers;

(o) Licensedproducersmustreportthetotalnumberofshipmentssenttothefollowingineachprovinceandterritory:

i. registeredclients;

ii. registeredclientsforinterimsupply;otherlicensedproducers;and

iii. licenseddealers;

(p) Averagedailyamountofmarihuanaformedicalpurposesauthorized;

(q) Mediandailyamountofmarihuanaformedicalpurposesauthorized;

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(r) Averageshipmentsizesenttoregisteredclientsduringthereportingperiod;

(s) Medianshipmentsizesenttoregisteredclientsduringthereportingperiod;

(t) Listoftenhighestuniquedailyauthorizedamountsandthefrequencywithwhichtheyoccur;

(u) Listofdailyauthorizedamountsinspecifiedincrements:

i. 0to1grams;

ii. 1.1to2grams;

iii. 2.1to3grams;

iv. 3.1to4grams;

v. 4.1to5grams;

vi. 5to10grams;

vii. 10to15grams;and

viii. >15grams;

(v) Totalnumberofshipmentstoregisteredclientspereach10gramintervalbetween0and150grams;

(w) List of all health care practitioners who have completed medical documents for cannabis for medicalpurposesforregisteredclientsandtheirlocation;

(x) Listofallnursepractitionerswhohavecompletedmedicaldocuments forcannabis formedicalpurposesforregisteredclientsandtheirlocation;

(y) Cannabiswithwhichtheyareconductingresearchanddevelopmentactivities;and

(z) Activitieswithrespecttocannabisproducts,otherthanmarijuanaorcannabisoil(e.g.cannabisresin).

PrincipalProducts

Medicalmarijuanacanbeingestedinavarietyofways,includingsmoking,vaporizing,consumptionintheformofoil, or edibles. Unlike the pharmaceutical options, individual elements within medical marijuana have not beenisolated, concentrated and synthetically manipulated to deliver a specific therapeutic effect. Instead medicalmarijuanaaddressesailmentsholisticallythroughthesynergisticactionofnaturallyoccurringphytochemicals.

SativaandIndicaarethetwomaintypesofcannabisplants,andhybridscanbecreatedwhenthegeneticsofeachof the twoplants are crossed.Within thesedifferent typesof cannabisplants therearemanydifferent varieties.Withineachvarietyofmedicalcannabistherearemanydifferentcannabinoids,withthemostcommonbeingTHCandCBD,whichisresponsibleformanyofthenon-psychoactiveeffectsfrommedicalmarijuana.Aphriahasaccesstoover40strainvarietiesandwillcontinuetoestablishavarietyofstrainstobestsuitpatientneeds.

Distribution

MedicalmarijuanapatientsorderfromtheCompanyprimarilythroughAphria’sonlinestoreorthroughthephone.Medical marijuana is and will continue to be delivered by secured courier or other methods permitted by the

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ACMPR.Aphria’spricesvarybasedongrowthtime,strainyieldandmarketprices.Aphriamay fromtimeto timeoffervolumediscountorpromotionalpricing.

TheCompanyisalsoauthorizedforwholesaleshippingofmedicalmarijuanaplantcuttingsanddriedbudtootherLicensedProducers.Aphriahasalreadycompletedseveralsalesthroughitswholesalestrategyandbasedoncurrentcosts, management expects the wholesale shipment strategy to continue. This sales channel requires minimalselling,generalandadministrativecostsoverandabovethecosttoproduceplantcuttingsanddriedbud.

Operations

Aphria has assembled a management team with almost 90 years of combined experience in agriculture andagribusinessandover40yearsofcombinedexperience in thepharmaceutical industry.Coupledwithoperationalexperience,Aphriaexpectstobealow-costproducerofmedicalmarijuana,owingtovariouscost-savingattributesofitsoperations,suchas:(i)lowerelectricalcostsasaresultofitsgreenhousefacilitiesandtheabilitytoleveragethe advantages of passive coolingmethods; and, (ii) lower fertilization costs attributable to the fact that Aphriamixesitsownfertilizer.Aphriaiscurrentlygrowinginits100,000sq.feetofgreenhousespaceacross10lightandcomputercontrolledglassgreenhouseslocatedinLeamington,Ontario.SeeGeneralDevelopmentoftheBusiness–ExpansionandGreenhouseAcquisition.

SubstantiallyalloftheCompany’srevenueisderivedfromthesaleofmedicalcannabisandmarijuanaplantmaterialproduced,cultivatedand/orprocessedbyAphriaat itsgreenhousefacilities inLeamington,Ontario.Aphriagrowscannabis at its greenhouse for the purposes of sale and distribution of finished products in accordancewith theMMPR.Aphria’scurrentplantsareatvariousstagesofgrowth.

StorageandSecurity

TheMMPRrequireproductionsitestobelocatedindoors,andnotinaprivatedwelling.SubdivisionCoftheACMPRset out physical security requirements that are necessary to secure sites where Licensed Producers conductactivitieswithmedicalmarijuanaotherthanstorage.AsperHealthCanada’sregulations,Aphria’sfacilitiescontaintwo vaults, deemed tobe “security level eight” and “security level nine” respectively, anda “security level nine”safe,asdeterminedbytheconstructionofthevaultsandAphria’sproximitytoamajorcity(Windsor).ThisallowsAphriatostoreupto6,875kilogramsofdriedmarijuanaand/orthekilogramequivalentofcannabisoilonsiteatanygiventime.

Thevaultsareequippedwithsecuritycameras,motionsensors,fingerprint,codelockeddoorsandseismicsensorsthat set alarmsoffwhen vibrations aredetected. These securitymeasuresensureAphria is compliantwith all ofHealth Canada’s necessary security requirements. The vaults can only be accessed by a “Responsible Person inCharge”(asdefinedundertheACMPR)andatleastoneResponsiblePersoninChargemustbepresentinthevaultatalltimesifthedoorsareopened.

HealthCanadaconductsadhoc,unscheduledsiteinspectionsofLicensedProducers.Aphriahasexperiencedtheseinspectionsnumeroustimes,previouslyonamonthlybasisbutnowonabi-monthlybasis.AphriahasrespondedtoandcompliedwithallrequestsfromHealthCanadawithinthetimeframesindicatedinsuchrequests.Asofthedatehereof, there are no outstanding inspection issueswithHealth Canada beyondday-to-day adjustments thatmayoccur in order to ensure ongoing compliance. Aphria has not been required to recall distributed product orotherwisebeenformallyreprimanded.

SpecializedSkillandKnowledge

Knowledge with respect to cultivating and growing medical marijuana is important to the medical marijuanaindustry. The nature of growing marijuana is not substantially different from the nature of growing othergreenhouse products. The Company’s Chief Scientific Officer, Gary Leong has a personal background in qualityassurance,qualitycontrol,qualitysystemaudits,internationalanddomesticregulatoryaffairsandproductresearchand development. Variables such as temperature, humidity, lighting, air flow, watering and feeding cycles are

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meticulouslydefinedandcontrolledtoproduceconsistentproductandtoavoidcontamination.Theproductiscut,sortedanddriedunderdefinedconditionsthatareestablishtoprotecttheactivityandpurityoftheproduct.Onceprocessing is complete, each and every processing batch is subjected to full testing against stringent qualityspecificationssetforactivityandpurity.John Cervini, Aphria’s Vice-President – Infrastructure and Technology, has significant experience in greenhousegrowingtechnologyandhasalsooverseengreenhouseexpansion inCaliforniaandMexico.Mr.Cervini’s focusonimprovedefficiencies,healthierqualityandresearchstudieshavehelpedhimcreatefoodsafetyprogramsandskillstransferabletothemedicalmarijuanaindustry.

CompetitiveConditions

OnOctober19,2015,theLiberalPartyofCanada(“Party”)obtainedamajoritygovernmentinCanada.ThePartyhascommittedtothe legalizationof recreationalcannabis inCanada.SeeRiskFactors -Changes inLaws,RegulationsandGuidelines formore informationonBillC-45,whichproposestheenactmentof theCannabisAct, toregulatetheproduction,distributionandsaleofcannabisforunqualifiedadultuse,withatargetimplementationdateofnolaterthanJuly1,2018.However,itisunknownifthisregulatorychangewillbeimplementedatall.Theintroductionof a recreationalmodel for cannabis production anddistributionmay impact themedicalmarijuanamarket. Theimpact of this potential development may be negative for the Company and could result in increased levels ofcompetition in itsexistingmedicalmarketand/or theentryofnewcompetitors in theoverall cannabismarket inwhichtheCompanyoperates.

There is potential that theCompanywill face intense competition fromother companies, someofwhich canbeexpected to have longer operating histories and more financial resources and manufacturing and marketingexperience than theCompany. Increased competitionby larger andbetter financed competitors couldmateriallyandadverselyaffectthebusiness,financialconditionandresultsofoperationsoftheCompany.

Thegovernmenthasonlyissuedtodatealimitednumberoflicenses,undertheACMPR,toproduceandsellmedicalmarijuana.Thereare,however,severalhundredapplicantsforlicenses.Thenumberoflicensesgrantedcouldhavean impact on the operations of the Company. Because of the early stage of the industry inwhich the Companyoperates, the Company expects to face additional competition from new entrants. According to Health Canadathereare currently51 LicensedProducers. If thenumberofusersofmedicalmarijuana inCanada increases, thedemandforproductswillincreaseandtheCompanyexpectsthatcompetitionwillbecomemoreintense,ascurrentand future competitors begin to offer an increasing number of diversified products. To remain competitive, theCompanywill require a continued level of investment in research and development,marketing, sales and clientsupport.TheCompanymaynothavesufficientresourcestomaintainresearchanddevelopment,marketing,salesandclientsupporteffortsonacompetitivebasiswhichcouldmateriallyandadverselyaffectthebusiness,financialconditionandresultsofoperationsoftheCompany.

Theprincipal aspectsof competitionbetweenAphriaand its competitorswill be thepriceandqualityofmedicalmarijuanaandclientserviceprovidedtopatients.WhileAphriawillpriceitsmedicalmarijuanaaccordingtomarketdemands,itanticipatesalowercostofproductioncomparedtoitscompetitors.ThisisexpectedtoprovideAphriawithpricingflexibilitywhilemaintaininghealthymarginsrelativetoitscompetitors.Additionally,Aphriawillstrivetohave better and faster service by havingmore on hand trained staff than other Licensed Producers. Aphria alsoplans tomaintain aminimum level of inventory to ensure that we can continue to provide our customers withunmatchedqualityonaconsistentbasiswhilealsoacquiringnewcustomerswithoutsupplyinterruptions.

Employees

AsofMay31,2017Aphriaemployedapproximately150full-timeemployees.

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RISKFACTORS

Thereareanumberofriskfactorsthatcouldcausefutureresultstodiffermateriallyfromthosedescribedherein.The risks and uncertainties described herein are not the only ones the Company faces. Additional risks anduncertainties, includingthosethattheCompanydoesnotknowaboutnoworthat itcurrentlydeems immaterial,may also adversely affect the Company’s business. If any of the following risks actually occur, the Company’sbusinessmaybeharmedanditsfinancialconditionandresultsofoperationsmaysuffersignificantly.

RelianceonLicense

Aphria’sabilitytogrow,storeandsellmedicalmarijuanaandcannabisoilinCanadaisdependentonmaintainingitsLicensewithHealthCanada.Failure tocomplywith therequirementsof theLicenseorany failure tomaintain itsLicensewouldhaveamaterialadverseimpactonthebusiness,financialconditionandoperatingresultsofAphria.TherecanbenoguaranteesthatHealthCanadawillextendorrenewtheLicenseasnecessaryor,ifitextendedorrenewed,thatittheLicensewillbeextendedorrenewedonthesameorsimilarterms.ShouldHealthCanadanotextendorrenewtheLicenseorshoulditrenewtheLicenseondifferentterms,thebusiness,financialconditionandresultsoftheoperationofAphriawouldbemateriallyadverselyaffected.

ExpansionofFacilities

ThereisnoguaranteethatHealthCanadawillapprovethecontemplatedexpansionsinatimelyfashion,noristhereany guarantee that the expansion will be completed in its currently proposed form, if at all. The failure of theCompanytosuccessfullyexecuteitsexpansionstrategy(includingreceivingtheexpectedHealthCanadaapprovalsinatimelyfashion)couldadverselyaffectthebusiness,financialconditionandresultsofoperationsoftheCompanyandmayresultinAphrianotmeetinganticipatedorfuturedemandwhenitarises.

ChangesinLaws,RegulationsandGuidelines

OnJune30,2016, theCanadianFederalGovernmentestablishedtheTaskForce toseek inputonthedesignofanew system to legalize, strictly regulate and restrict access tomarijuana.OnDecember13, 2016, theTask Forcecompleteditsreviewandpublishedareportoutliningitsrecommendations.OnApril13,2017,theCanadianFederalGovernment released Bill C-45, which proposes the enactment of the Cannabis Act, to regulate the production,distributionandsaleofcannabisforunqualifiedadultuse,withatargetimplementationdateofnolaterthanJuly1,2018.However, it isunknownifthisregulatorychangewillbeimplementedatall.SeveralrecommendationsfromtheTaskForcereflected intheCannabisAct including,butnot limitedto,permittinghomecultivation,potentiallyeasingbarrierstoentryintoaCanadianrecreationalmarijuanamarketandrestrictionsonadvertisingandbranding,couldmaterially and adversely affect thebusiness, financial condition and results of operations of theCompany.Their advicewill be considered by theGovernment of Canada as a new framework for recreationalmarijuana isdeveloped and it is possible that such developments could significantly adversely affect the business, financialconditionandresultsofoperationsoftheCompany.

RiskFactorsRelatedtotheUnitedStates

OnMarch27,2017,AphriamadeanadditionalinvestmentofUS$3millionintheparentcompanyofCopperstate,whichis isaUS-basedlicensedproducerandsellerofmedicalcannabisundertheArizonaMedicalMarijuanaAct.On April 4, 2017, the Company announced the launch of its US expansion strategy through a strategic leadinvestment in Liberty. SeeGeneral Development of the Business – Recent Business for further details concerningLibertyandCopperstate.

In light of these recent announcements, the Board has undertaken to consider, evaluate, assess and provideadditionaldisclosureonanyriskstheremaybetoinvestorsasaresultofcurrentandfutureinvestmentsinentitiesinvolvedwithmedicalcannabisintheUnitedStates,includingLibertyandCopperstate.OutlinedbelowisasummaryofcertainrisksthattheBoardhasidentifiedasbeingappropriatetohighlighttoinvestorsatthistime.Theserisks

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will continue to be considered, evaluated, reassessed,monitored and analyzed on an on-going basis andwill besupplemented,amendedandcommunicatedtoinvestorsasnecessaryoradvisableintheCompany’sfuturepublicdisclosure.

While cannabis is legal inmanyUS state jurisdictions, it continues to be a controlled substance under theUnitedStatesfederalControlledSubstancesAct.

UnlikeinCanadawhichhasfederallegislationuniformlygoverningthecultivation,distribution,saleandpossessionofmedicalcannabisundertheAccesstoCannabisforMedicalPurposesRegulations,investorsarecautionedthatintheUnitedStates,cannabisislargelyregulatedatthestatelevel.TotheCompany’sknowledge,therearetodateatotalof28states,plus theDistrictofColumbia, thathave legalizedcannabis insomeform, includingArizonaandFlorida as noted above in connection with the investments in Copperstate and Liberty. Notwithstanding thepermissiveregulatoryenvironmentofmedicalcannabisatthestatelevel,cannabiscontinuestobecategorizedasacontrolledsubstanceundertheControlledSubstancesAct (the“CSA”) intheUnitedStatesandassuch,maybeinviolationoffederallawintheUnitedStates.

TheUnitedStatesCongresshaspassedappropriationsbillseachofthelastthreeyearsthathavenotappropriatedfundsforprosecutionofcannabisoffensesof individualswhoare incompliancewithstatemedicalcannabis laws.American courts have construed these appropriations bills to prevent the federal government from prosecutingindividuals when those individuals comply with state law. However, because this conduct continues to violatefederallaw,AmericancourtshaveobservedthatshouldCongressatanytimechoosetoappropriatefundstofullyprosecute the CSA, any individual or business—even those that have fully complied with state law—could beprosecutedforviolationsoffederallaw.AndifCongressrestoresfunding,thegovernmentwillhavetheauthoritytoprosecute individuals for violations of the law before it lacked funding under the CSA’s five-year statute oflimitations.

Violationsof any federal laws and regulations could result in significant fines, penalties, administrative sanctions,convictions or settlements arising from civil proceedings conducted by either the federal government or privatecitizens,orcriminalcharges,including,butnotlimitedto,disgorgementofprofits,cessationofbusinessactivitiesordivestiture.ThiscouldhaveamaterialadverseeffectontheCompany,includingitsreputationandabilitytoconductbusiness, its holding (directly or indirectly) of medical cannabis licenses in the United States, the listing of itssecuritiesonvariousstockexchanges,itsfinancialposition,operatingresults,profitabilityorliquidityorthemarketpriceofitspubliclytradedshares.Inaddition,itisdifficultfortheCompanytoestimatethetimeorresourcesthatwould be needed for the investigation of any suchmatters or its final resolution because, in part, the time andresources that may be needed are dependent on the nature and extent of any information requested by theapplicableauthoritiesinvolved,andsuchtimeorresourcescouldbesubstantial.

The approach to the enforcement of cannabis lawsmay be subject to change ormay not proceed as previouslyoutlined.

As a result of the conflicting views between state legislatures and the federal government regarding cannabis,investments incannabisbusinesses intheUnitedStatesaresubjectto inconsistent legislationandregulation.Theresponse to this inconsistency was addressed in August 2013 when then Deputy Attorney General, James Cole,authored a memorandum (the “Cole Memorandum”) addressed to all United States district attorneysacknowledgingthatnotwithstandingthedesignationofcannabisasacontrolledsubstanceatthefederallevelintheUnitedStates,severalUSstateshaveenactedlawsrelatingtocannabisformedicalpurposes.

The Cole Memorandum outlined certain priorities for the Department of Justice relating to the prosecution ofcannabisoffenses.Inparticular,theColeMemorandumnotedthatinjurisdictionsthathaveenactedlawslegalizingcannabisinsomeformandthathavealsoimplementedstrongandeffectiveregulatoryandenforcementsystemstocontrol the cultivation, distribution, sale and possession of cannabis, conduct in compliancewith those laws andregulationsislesslikelytobeapriorityatthefederallevel.Notably,however,theDepartmentofJusticehasnever

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provided specific guidelines for what regulatory and enforcement systems it deems sufficient under the ColeMemorandumstandard.

Inlightoflimitedinvestigativeandprosecutorialresources,theColeMemorandumconcludedthattheDepartmentof Justice should be focused on addressing only the most significant threats related to cannabis. States wheremedical cannabis had been legalized were not characterized as a high priority. In March of this year, newlyappointedAttorneyGeneralJeffSessionsagainnotedlimitedfederalresourcesandacknowledgedthatmuchoftheCole Memorandum had merit, although he disagreed that it had been implemented effectively and has notcommittedtoutilizingtheColeMemorandumframeworkgoingforward.

TheBoardhasinformeditsdecisiontoauthorizeandapprovetheinvestmentsinCopperstateandLibertybasedontheguidelinesoutlinedintheColeMemorandumandbelievesthattheriskoffederalprosecutionandenforcementiscurrentlyunlikely.However,unlessanduntiltheColeMemorandumismemorializedinfederallegislation,therecan be no assurance that the federal government will not seek to prosecute cases involving medical cannabisbusinessesthatareotherwisecompliantwithstatelaw.

SuchpotentialproceedingscouldinvolvesignificantrestrictionsbeingimposedupontheCompanyorthirdparties,while diverting the attention of key executives. Such proceedings could have a material adverse effect on theCompany’sbusiness,revenues,operatingresultsandfinancialconditionaswellastheCompany’sreputation,evenifsuchproceedingswereconcludedsuccessfullyinfavouroftheCompany.

The Company’s investments in the United States are subject to applicable anti-money laundering laws andregulations.

The Company is subject to a variety of laws and regulations domestically and in the United States that involvemoneylaundering,financialrecordkeepingandproceedsofcrime,includingtheCurrencyandForeignTransactionsReporting Act of 1970 (commonly known as the Bank Secrecy Act), as amended by Title III of the Uniting andStrengtheningAmericabyProvidingAppropriate ToolsRequired to Intercept andObstruct TerrorismActof 2001(USAPATRIOTAct), theProceedsofCrime (MoneyLaundering)andTerroristFinancingAct (Canada), asamendedandtherulesandregulationsthereunder,theCriminalCode(Canada)andanyrelatedorsimilarrules,regulationsorguidelines,issued,administeredorenforcedbygovernmentalauthoritiesintheUnitedStatesandCanada.

In February 2014, the Financial Crimes Enforcement Network (“FCEN”) of the Treasury Department issued amemorandumprovidinginstructionstobanksseekingtoprovideservicestocannabis-relatedbusinesses.TheFCENMemo states that in some circumstances, it is permissible for banks to provide services to cannabis-relatedbusinesseswithoutriskingprosecutionforviolationof federalmoney laundering laws. It referstosupplementaryguidance that Deputy AttorneyGeneral Cole issued to federal prosecutors relating to the prosecution ofmoneylaundering offenses predicated on cannabis-related violations of the CSA. It is unclear at this time whether thecurrentadministrationwillfollowtheguidelinesoftheFCENMemo.

In the event that any of the Company’s investments, or any proceeds thereof, any dividends or distributionstherefrom, or any profits or revenues accruing from such investments in theUnited Stateswere found to be inviolationofmoneylaunderinglegislationorotherwise,suchtransactionsmaybeviewedasproceedsofcrimeunderone or more of the statutes noted above or any other applicable legislation. This could restrict or otherwisejeopardize the ability of the Company to declare or pay dividends, effect other distributions or subsequentlyrepatriatesuchfundsbacktoCanada.Furthermore,whiletheCompanyhasnocurrentintentiontodeclareorpaydividendson itsCommonShares in the foreseeable future, in theevent thatadeterminationwasmade that theinvestmentsinCopperstateorLiberty(oranyfutureinvestmentsintheUnitedStates)couldreasonablybeshowntoconstitute proceeds of crime, theCompanymaydecideor be required to suspenddeclaring or paying dividendswithoutadvancenoticeandforanindefiniteperiodoftime.

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TheCompany’sinvestmentsintheUnitedStatesmaybesubjecttoheightenedscrutiny.

For the reasons set forth above, the Company’s existing investments in the United States, and any futureinvestments,maybecomethesubjectofheightenedscrutinybyregulators,stockexchangesandotherauthoritiesinCanada.Asaresult,theCompanymaybesubjecttosignificantdirectandindirect interactionwithpublicofficials.TherecanbenoassurancethatthisheightenedscrutinywillnotinturnleadtotheimpositionofcertainrestrictionsontheCompany’sabilitytoinvestintheUnitedStatesoranyotherjurisdiction.TheTSXhasadvisedtheCompanythat it reserves the right to enforce its rules and policies against the Company in the manner the TSX deemsappropriate.Further,theTSXreservedtherighttosetwhateverrequirementsitdeemsappropriateasconditionstoitsacceptanceofnoticeofanyproposedfutureissuanceofCommonSharesoftheCompany.

Governmentpolicy changesorpublicopinionmayalso result in a significant influenceover the regulationof thecannabisindustryinCanada,theUnitedStatesorelsewhere.Anegativeshiftinthepublic’sperceptionofmedicalcannabisintheUnitedStatesoranyotherapplicablejurisdictioncouldaffectfuturelegislationorregulation.Amongother things, such a shift could cause state jurisdictions to abandon initiatives or proposals to legalize medicalcannabis,therebylimitingthenumberofnewstatejurisdictionsintowhichtheCompanycouldexpand.Anyinabilityto fully implement the Company’s expansion strategy may have a material adverse effect on the Company’sbusiness,financialconditionandresultsofoperations.

LegislativeorRegulatoryReformandCompliance

ThecommercialmedicalmarijuanaindustryisanewindustryandtheCompanyanticipatesthatsuchregulationswillbe subject to change as the FederalGovernmentmonitors Licensed Producers in action. Aphria’s operations aresubject to a variety of laws, regulations, guidelines and policies relating to the manufacture, import, export,management,packaging/labelling,advertising, sale, transportation, storageanddisposalofmedicalmarijuanabutalso including laws and regulations relating to drugs, controlled substances, health and safety, the conduct ofoperationsandtheprotectionoftheenvironment.Whiletotheknowledgeofmanagement,Aphriaiscurrentlyincompliancewithallsuchlaws,anychangestosuchlaws,regulations,guidelinesandpoliciesduetomattersbeyondthecontrolofAphriamaycauseadverseeffectstoitsoperations.

EnvironmentalRegulationsandRisks

Aphria’soperationsaresubjecttoenvironmentalregulationinthevariousjurisdictionsinwhichitoperates.Theseregulationsmandate,amongotherthings,themaintenanceofairandwaterqualitystandardsandlandreclamation.Theyalsosetforthlimitationsonthegeneration,transportation,storageanddisposalofsolidandhazardouswaste.Environmental legislationisevolvinginamannerwhichwillrequirestricterstandardsandenforcement, increasedfines and penalties for non-compliance, more stringent environmental assessments of proposed projects and aheightened degree of responsibility for companies and their officers, directors and employees. There is noassurancethatfuturechangesinenvironmentalregulation,ifany,willnotadverselyaffectAphria’soperations.

Government approvals andpermits are currently, andmay in the futurebe required in connectionwithAphria’soperations. To the extent such approvals are required and not obtained, the Company may be curtailed orprohibited from its proposed production of medical marijuana or from proceeding with the development of itsoperationsascurrentlyproposed.

Failuretocomplywithapplicablelaws,regulationsandpermittingrequirementsmayresultinenforcementactionsthereunder,includingordersissuedbyregulatoryorjudicialauthoritiescausingoperationstoceaseorbecurtailed,and may include corrective measures requiring capital expenditures, installation of additional equipment, orremedial actions. The Companymay be required to compensate those suffering loss or damage by reason of itsoperationsandmayhavecivilorcriminalfinesorpenaltiesimposedforviolationsofapplicablelawsorregulations.

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Amendments to current laws, regulations and permits governing the production of medical marijuana, or morestringent implementation thereof, could have amaterial adverse impact on the company and cause increases inexpenses,capitalexpendituresorproductioncostsorreductioninlevelsofproductionorrequireabandonmentordelaysindevelopment.

VolatileMarketPriceoftheCommonShares

ThemarketpriceoftheCommonSharesmaybevolatileandsubjecttowidefluctuationsinresponsetonumerousfactors, many of which are beyond the Company’s control. This volatility may affect the ability of holders ofCommonSharestoselltheirsecuritiesatanadvantageousprice.MarketpricefluctuationsintheCommonSharesmaybeduetotheCompany’soperatingresultsfailingtomeetexpectationsofsecuritiesanalystsorinvestorsinanyperiod, downward revision in securities analysts’ estimates, adverse changes in general market conditions oreconomic trends, acquisitions, dispositionsorothermaterial public announcementsbyAphriaor its competitors,alongwithavarietyofadditionalfactors.ThesebroadmarketfluctuationsmayadverselyaffectthemarketpriceoftheCommonShares. Financialmarketshistorically at timesexperienced significantprice and volume fluctuationsthat have particularly affected the market prices of equity securities of companies and that have often beenunrelatedtotheoperatingperformance,underlyingassetvaluesorprospectsofsuchcompanies.Accordingly,themarketpriceoftheCommonSharesmaydeclineeveniftheCompany’soperatingresults,underlyingassetvaluesorprospectshavenot changed.Additionally, these factors, aswell asother related factors,may causedecreases inassetvaluesthataredeemedtobeotherthantemporary,whichmayresultinimpairmentlosses.Therecanbenoassurancethatcontinuing fluctuations inpriceandvolumewillnotoccur. If such increased levelsofvolatilityandmarket turmoil continue, the Company’s operations could be adversely impacted and the trading price of theCommonSharesmaybemateriallyadverselyaffected.

RisksRelatedtoDilutions

TheCompanymayissueadditionalCommonSharesinthefuture,whichmaydiluteashareholder’sholdingsintheCompany.TheCompany’sarticlespermittheissuanceofanunlimitednumberofCommonShares,andshareholderswill have no pre-emptive rights in connection with such further issuance. The directors of the Company havediscretiontodeterminethepriceandthetermsofissueoffurtherissuances.Moreover,additionalCommonShareswill be issued by the Company on the exercise of options under the Company’s stock option plan and upon theexerciseofoutstandingwarrants.

RisksInherentinanAgriculturalBusiness

Aphria’sbusinessinvolvesthegrowingofmedicalmarijuana,anagriculturalproduct.Suchbusinesswillbesubjectto the risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks.AlthoughAphriaexpectsthatanysuchgrowingwillbecompletedindoorsunderclimatecontrolledconditions,therecanbenoassurancethatnaturalelementswillnothaveamaterialadverseeffectonanysuchfutureproduction.

RelianceonaSingleLocation

To date, Aphria’s activities and resources have been primarily focused on the premises in Leamington, Ontario.Aphriaexpectstocontinuethefocusonthis facilityfortheforeseeablefuture.Adversechangesordevelopmentsaffectingtheexisting facilityand locationcouldhaveamaterialandadverseeffectonAphria’sability tocontinueproducingmedicalmarijuana,itsbusiness,financialconditionandprospects.

ThirdPartyTransportation

Inorder forcustomersofAphria toreceivetheirproduct,Aphriamustrelyonthirdpartytransportationservices.This can cause logistical problems with and delays in patients obtaining their orders and cannot be directlycontrolled by Aphria. Any delay by third party transportation services may adversely affect Aphria’s financialperformance.

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Moreover,securityoftheproductduringtransportationtoandfromtheCompany’sfacilities iscriticalduetothenature of the product. A breach of security during transport could have material adverse effects on Aphria’sbusiness, financials andprospects. Any such breach could impactAphria’s ability to continueoperating under itslicensesortheprospectofrenewingitslicenses.

RelianceonKeyPersonnel

The success of the Company is dependent upon the ability, expertise, judgment, discretion and good faith of itssenior management (collectively, “Key Personnel”). Aphria’s future success depends on its continuing ability toattract, develop, motivate and retain highly qualified and skilled employees. Qualified individuals are in highdemand,andtheCompanymayincursignificantcoststoattractandretainthem.ThelossoftheservicesofaKeyPerson,oraninabilitytoattractothersuitablyqualifiedpersonswhenneeded,couldhaveamaterialadverseeffecton the Aphria’s ability to execute on its business plan and strategy, and the Company may be unable to findadequatereplacementsonatimelybasis,oratall.Further,asaLicensedProducer,eachKeyPersonissubjecttoasecurityclearancebyHealthCanada.UndertheACMPRasecurityclearancecannotbevalidformorethanfiveyearsand must be renewed before the expiry of a current security clearance. There is no assurance that any of theCompany’sexistingpersonnelwhopresentlyormayinthefuturerequireasecurityclearancewillbeabletoobtainor renew such clearances or that new personnel who require a security clearancewill be able to obtain one. AfailurebyaKeyPersontomaintainorrenewhisorhersecurityclearance,wouldresultinamaterialadverseeffecton the Company’s business, financial condition and results of operations. In addition, if a Key Person leaves theCompany,andtheCompanyisunabletofindasuitablereplacementthathasasecurityclearancerequiredbytheACMPR in a timely manner, or at all, there could occur a material adverse effect on the Company’s business,financial condition and results of operations.While employment agreements are customarily used as a primarymethodofretainingtheservicesofKeyPersonnel,theseagreementscannotassurethecontinuedservicesofsuchemployees.

LimitedOperatingHistory

Aphria,whileincorporatedin1994,begancarryingonbusinessin2012anddidnotgeneraterevenuefromthesaleof products until late 2014. The Company is therefore subject to many of the risks common to early-stageenterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial, andother resources and lack of revenues. There is no assurance that the Companywill be successful in achieving areturnonshareholders’ investmentandthe likelihoodofsuccessmustbeconsideredin lightoftheearlystageofoperations.

ProductLiability

Asadistributorofproductsdesignedtobeingestedbyhumans,Aphriafacesaninherentriskofexposuretoproductliabilityclaims,regulatoryactionandlitigationifitsproductsareallegedtohavecausedsignificantlossorinjury.Inaddition, thesaleofAphria’sproducts involves theriskof injury toconsumersdueto tamperingbyunauthorizedthirdpartiesorproductcontamination.Previouslyunknownadversereactionsresultingfromhumanconsumptionof Aphria’s products alone or in combination with othermedications or substances could occur. Aphriamay besubjecttovariousproduct liabilityclaims, including,amongothers, thatAphria’sproductscaused injuryor illness,include inadequate instructions for use or include inadequate warnings concerning possible side effects orinteractions with other substances. A product liability claim or regulatory action against Aphria could result inincreasedcosts,couldadverselyaffectAphria’sreputationwithitsclientsandconsumersgenerally,andcouldhaveamaterialadverseeffectonourresultsofoperationsandfinancialconditionofAphria.Therecanbenoassurancesthat Aphria will be able to obtain ormaintain product liability insurance on acceptable terms or with adequatecoverage against potential liabilities. Such insurance is expensive and may not be available in the future onacceptableterms,oratall.TheinabilitytoobtainsufficientinsurancecoverageonreasonabletermsortootherwiseprotectagainstpotentialproductliabilityclaimscouldpreventorinhibitthecommercializationofAphria’spotentialproducts.

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ProductRecalls

Manufacturers anddistributors of products are sometimes subject to the recall or return of their products for avarietyofreasons,includingproductdefects,suchascontamination,unintendedharmfulsideeffectsorinteractionswith other substances, packaging safety and inadequate or inaccurate labelling disclosure. If any of Aphria’sproductsarerecalledduetoanallegedproductdefectorforanyotherreason,Aphriacouldberequiredtoincurtheunexpectedexpenseof therecallandany legalproceedingsthatmightarise inconnectionwiththerecall.Aphriamayloseasignificantamountofsalesandmaynotbeabletoreplacethosesalesatanacceptablemarginoratall.In addition, a product recall may require significant management attention. Although Aphria has detailedproceduresinplacefortestingitsproducts,therecanbenoassurancethatanyquality,potencyorcontaminationproblemswillbedetectedintimetoavoidunforeseenproductrecalls,regulatoryactionorlawsuits.Additionally,ifoneofAphria’s significantbrandsweresubject to recall, the imageof thatbrandandAphriacouldbeharmed.Arecall for any of the foregoing reasons could lead to decreased demand for Aphria’s products and could have amaterial adverse effect on the results of operations and financial condition of Aphria and the Resulting Issuer.Additionally, product recalls may lead to increased scrutiny of Aphria’s operations by Health Canada or otherregulatoryagencies,requiringfurthermanagementattentionandpotentiallegalfeesandotherexpenses.

ResultsofFutureClinicalResearch

ResearchinCanada,theU.S.andinternationallyregardingthemedicalbenefits,viability,safety,efficacy,dosingandsocialacceptanceofcannabisor isolatedcannabinoids(suchasCBDandTHC)remains inearlystages.Therehavebeen relatively few clinical trials on the benefits of cannabis or isolated cannabinoids (such as CBD and THC).AlthoughAphria believes that the articles, reports and studies support its beliefs regarding themedical benefits,viability,safety,efficacy,dosingandsocialacceptanceofcannabis,futureresearchandclinicaltrialsmayprovesuchstatements tobe incorrect,or could raise concerns regarding, andperceptions relating to, cannabis.Given theserisks,uncertaintiesandassumptions,prospectivepurchasersofOfferedSharesshouldnotplaceunduerelianceonsucharticlesandreports.Futureresearchstudiesandclinicaltrialsmaydrawopposingconclusionstothosestatedin this prospectus or reachnegative conclusions regarding themedical benefits, viability, safety, efficacy, dosing,socialacceptanceorotherfactsandperceptionsrelatedtomedicalcannabis,whichcouldhaveamaterialadverseeffecton thedemand for theCompany’sproductswith thepotential to lead toamaterial adverseeffecton theCompany’sbusiness,financialconditionandresultsofoperations.

InsuranceCoverage

TheCompanyhasinsurancetoprotectitsassets,operations,directorsandemployees.WhiletheCompanybelievesits insurance coverage addresses all material risks to which it is exposed and is adequate and customary in itscurrentstateofoperations,suchinsuranceissubjecttocoveragelimitsandexclusionsandmaynotbeavailablefortherisksandhazardstowhichAphriaisexposed.Inaddition,noassurancecanbegiventhatsuchinsurancewillbeadequatetocovertheCompany’sliabilitiesorwillbegenerallyavailableinthefutureor,ifavailable,thatpremiumswill be commercially justifiable. If the Company were to incur substantial liability and such damages were notcoveredbyinsuranceorwereinexcessofpolicylimits,oriftheCompanyweretoincursuchliabilityatatimewhenit is not able to obtain liability insurance, there could be amaterial adverse effect on the Company’s business,financialconditionandresultsofoperation.

NegativeConsumerPerception

TheCompanybelievesthemedicalcannabisindustryishighlydependentuponconsumerperceptionregardingthemedicalbenefits,safety,efficacyandqualityof thecannabisdistributedformedicalpurposestosuchconsumers.Consumer perception of Aphria’s products can be significantly influenced by scientific research or findings,regulatoryinvestigations,litigation,politicalstatementsbothinCanadaandinothercountries,mediaattentionandotherpublicity(whetherornotaccurateorwithmerit)regardingtheconsumptionofcannabisproductsformedicalpurposes,includingunexpectedsafetyorefficacyconcernsarisingwithrespecttotheproductsoftheCompanyor

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its competitors. There can be no assurance that future scientific research, findings, regulatory proceedings,litigation,mediaattentionorotherresearchfindingsorpublicitywillbefavorabletothemedicalcannabismarketoranyparticularproduct,orconsistentwithearlierpublicity.Futureresearchreports,findings,regulatoryproceedings,litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlierresearch reports, findings or publicity could have a material adverse effect on the demand for the Company’sproducts and the business, results of operations and financial condition of the Company. The Company’sdependence upon consumer perceptions means that adverse scientific research reports, findings, regulatoryproceedings, litigation,mediaattentionorotherpublicity (whetherornotaccurateorwithmerit), couldhaveanadverseeffectonanydemandforAphria’sproductswhichcouldhaveamaterialadverseeffectontheCompany’sbusiness, financialconditionandresultsofoperations.Further,adversepublicityreportsorothermediaattentionregardingthesafety,efficacyandqualityofcannabis formedicalpurposes ingeneral,or theCompany’sproductsspecifically,orassociatingtheconsumptionofcannabiswithillnessorothernegativeeffectsorevents,couldhavesuch a material adverse effect. Such adverse publicity reports or other media attention could arise even if theadverseeffectsassociatedwithsuchproductsresultedfromconsumers’ failuretoconsumesuchproducts legally,appropriatelyorasdirected.

SecuringAdequateFinancingtoFundOperationsandMeetExpectedConsumerDemand

ThereisnoguaranteethattheCompanywillbeabletoachieveitsbusinessobjectives.ThecontinueddevelopmentofAphriamay requireadditional financing.The failure to raise suchcapital could result in thedelayor indefinitepostponement of current business objectives or the Company ceasing to carry on business. There can be noassurancethatadditionalcapitalorothertypesoffinancingwillbeavailableifneededorthat,ifavailable,thetermsof such financing will be favorable to the Company. In addition, from time to time, Aphria may enter intotransactions toacquireassetsor the sharesofother corporations. These transactionsmaybe financedwhollyorpartiallywith debt,whichmay increase the Company’s debt levels above industry standards. Any debt financingsecuredinthefuturecouldinvolverestrictivecovenantsrelatingtocapitalraisingactivitiesandotherfinancialandoperationalmatters,whichmaymakeitmoredifficultfortheCompanytoobtainadditionalcapitalandtopursuebusiness opportunities, including potential acquisitions. Debt financings may also contain provisions which, ifbreached,mayentitlelendersortheiragentstoacceleraterepaymentofloansand/orrealizeuponsecurityovertheassetsoftheCompany,andthereisnoassurancethattheCompanywouldbeabletorepaysuchloansinsuchaneventorpreventtheenforcementofsecuritygrantedpursuanttosuchdebtfinancing.

IdentifyandExecuteFutureAcquisitionsorDispositions,ortoSuccessfullyManagetheImpactofSuchTransactionsonitsOperations

Although there is no present intention to undertake any of the following transactions, material acquisitions,dispositions and other strategic transactions involve a number of risks, including: (i) potential disruption of theCompany’songoingbusiness;(ii)distractionofmanagement;(iii)Aphriamaybecomemorefinanciallyleveraged;(iv)theanticipatedbenefitsandcostsavingsofthosetransactionsmaynotberealizedfullyoratallormaytakelongerto realize than expected; (v) increasing the scope and complexity of the Company’s operations, and (vi) loss orreductionofcontrolovercertainoftheCompany’sassets.

ThepresenceofoneormorematerialliabilitiesofanacquiredcompanythatareunknowntotheCompanyatthetime of acquisition could have a material adverse effect on the results of operations, business prospects andfinancialconditionof theCompany.Astrategic transactionmayresult inasignificantchange in thenatureof theCompany’s business, operations and strategy. In addition, the Companymay encounter unforeseen obstacles orcostsinimplementingastrategictransactionorintegratinganyacquiredbusinessintotheCompany’soperations.

RegulatoryorAgencyproceedings,InvestigationsandAudits

TheCompany’sbusinessrequirescompliancewithmanylawsandregulations.FailuretocomplywiththeselawsandregulationscouldsubjecttheCompanytoregulatoryoragencyproceedingsorinvestigationsandcouldalsoleadto

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damage awards, fines and penalties. Aphria may become involved in a number of government or agencyproceedings,investigationsandaudits.Theoutcomeofanyregulatoryoragencyproceedings,investigations,audits,andothercontingenciescouldharmtheCompany’sreputation,requiretheCompanytotake,orrefrainfromtaking,actionsthatcouldharmitsoperationsorrequireAphriatopaysubstantialamountsofmoney,harmingitsfinancialcondition.Therecanbenoassurancethatanypendingor futureregulatoryoragencyproceedings, investigationsand auditswill not result in substantial costs or a diversion ofmanagement’s attention and resources or have amaterialadverseimpactontheCompany’sbusiness,financialconditionandresultsofoperation.

Litigation

The Companymay become party to litigation from time to time in the ordinary course of businesswhich couldadverselyaffectitsbusiness.ShouldanylitigationinwhichtheCompanybecomesinvolvedbedeterminedagainsttheCompany,suchadecisioncouldadverselyaffecttheCompany’sabilitytocontinueoperatingandthevalueoftheCommonSharesandcouldusesignificantresources.Even ifAphria is involved in litigationandwins, litigationcanredirectsignificantCompanyresources,includingthetimeandattentionofmanagementandavailableworkingcapital.LitigationmayalsocreateanegativeperceptionoftheCompany’sbrand.

IntellectualProperty

Theownershipandprotectionoftrademarks,patents,tradesecretsandintellectualpropertyrightsaresignificantaspectsof theCompany’s futuresuccess.Unauthorizedpartiesmayattempt to replicateorotherwiseobtainanduse the Company’s products and technology. Policing the unauthorized use of the Company’s current or futuretrademarks,patents,tradesecretsorintellectualpropertyrightscouldbedifficult,expensive,time-consumingandunpredictable,asmaybeenforcingtheserightsagainstunauthorizedusebyothers.Identifyingunauthorizeduseofintellectual property rights is difficult as Aphriamay be unable to effectivelymonitor and evaluate the productsbeingdistributedby its competitors, includingparties suchasunlicenseddispensaries,and theprocessesused toproduce such products. In addition, in any infringement proceeding, some or all of the Company’s trademarks,patents or other intellectual property rights or other proprietary know-how, or arrangements or agreementsseekingtoprotectthesameforthebenefitoftheCompany,maybefoundinvalid,unenforceable,anti-competitiveornotinfringed.AnadverseresultinanylitigationordefenseproceedingscouldputoneormoreoftheCompany’strademarks, patents or other intellectual property rights at risk of being invalidated or interpreted narrowly andcould put existing intellectual property applications at risk of not being issued. Any or all of these events couldmateriallyandadverselyaffectthebusiness,financialconditionandresultsofoperationsoftheCompany.

Inaddition,otherpartiesmayclaimthattheCompany’sproductsinfringeontheirproprietaryandperhapspatentprotectedrights.Suchclaims,whetherornotmeritorious,mayresultintheexpenditureofsignificantfinancialandmanagerialresources,legalfees,resultininjunctions,temporaryrestrainingordersand/orrequirethepaymentofdamages.Aswell,AphriamayneedtoobtainlicensesfromthirdpartieswhoallegethattheCompanyhasinfringedontheirlawfulrights.However,suchlicensesmaynotbeavailableontermsacceptabletotheCompanyoratall.Inaddition, theCompanymaynotbeabletoobtainorutilizeontermsthatare favorableto it,oratall, licensesorotherrightswithrespecttointellectualpropertythatitdoesnotown.

ConstraintsonMarketingProducts

Thedevelopmentof theCompany’sbusinessandoperating resultsmaybehinderedbyapplicable restrictionsonsales and marketing activities imposed by Health Canada. The regulatory environment in Canada limits theCompany’s ability to compete for market share in a manner similar to other industries. If Aphria is unable toeffectively market its products and compete for market share, or if the costs of compliance with governmentlegislationandregulationcannotbeabsorbedthroughincreasedsellingpricesforitsproducts,theCompany’ssalesandoperatingresultscouldbeadverselyaffected.

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FraudulentorIllegalactivitybyitsemployees,contractorsandconsultants

TheCompany is exposed to the risk that its employees, independent contractors and consultantsmayengage infraudulentorotherillegalactivity.Misconductbythesepartiescouldincludeintentional,recklessand/ornegligentconduct or disclosure of unauthorized activities to the Company that violates: (i) government regulations; (ii)manufacturingstandards; (iii) federalandprovincialhealthcare fraudandabuse lawsandregulations;or (iv) lawsthatrequirethetrue,completeandaccuratereportingoffinancialinformationordata.ItisnotalwayspossiblefortheCompanytoidentifyanddetermisconductbyitsemployeesandotherthirdparties,andtheprecautionstakenbytheCompanytodetectandpreventthisactivitymaynotbeeffectiveincontrollingunknownorunmanagedrisksor losses or in protecting the Company from governmental investigations or other actions or lawsuits stemmingfromafailuretobe incompliancewithsuch lawsorregulations. Ifanysuchactionsare institutedagainstAphria,anditisnotsuccessfulindefendingitselforassertingitsrights,thoseactionscouldhaveasignificantimpactonourbusiness, including the imposition of civil, criminal and administrative penalties, damages, monetary fines,contractualdamages,reputationalharm,diminishedprofitsandfutureearnings,andcurtailmentoftheCompany’soperations,anyofwhichcouldhaveamaterialadverseeffectontheCompany’sbusiness, financialconditionandresultsofoperations.

Informationtechnologysystemsandcyber-attacks

Aphria has entered into agreements with third parties for hardware, software, telecommunications and otherinformationtechnology(“IT”)servicesinconnectionwithitsoperations.TheCompany’soperationsdepend,inpart,on how well it and its suppliers protect networks, equipment, IT systems and software against damage from anumberofthreats,including,butnotlimitedto,cablecuts,damagetophysicalplants,naturaldisasters,intentionaldamage and destruction, fire, power loss, hacking, computer viruses, vandalism and theft. The Company’soperationsalsodependonthetimelymaintenance,upgradeandreplacementofnetworks,equipment,ITsystemsandsoftware,aswellaspre-emptiveexpensestomitigatetherisksoffailures.Anyoftheseandothereventscouldresultininformationsystemfailures,delaysand/orincreaseincapitalexpenses.Thefailureofinformationsystemsoracomponentof informationsystemscould,dependingonthenatureofanysuch failure,adversely impact theCompany’sreputationandresultsofoperations.

Aphria has not experienced any material losses to date relating to cyber-attacks or other information securitybreaches,buttherecanbenoassurancethattheCompanywillnotincursuchlossesinthefuture.TheCompany’sriskandexposuretothesematterscannotbefullymitigatedbecauseof,amongotherthings,theevolvingnatureofthesethreats.Asaresult,cybersecurityandthecontinueddevelopmentandenhancementofcontrols,processesand practices designed to protect systems, computers, software, data and networks from attack, damage orunauthorized access is a priority. As cyber threats continue to evolve, the Companymay be required to expendadditional resources to continue tomodify or enhance protectivemeasures or to investigate and remediate anysecurityvulnerabilities.

Breaches of security at its facilities, or in respect of electronic documents and data storage andmay face risksrelatedtobreachesofapplicableprivacylaws

Given thenatureof theCompany’s product and its lack of legal availability outsideof channels approvedby theGovernment of Canada, as well as the concentration of inventory in its facilities, despite meeting or exceedingHealthCanada’ssecurityrequirements,thereremainsariskofshrinkageaswellastheft.Asecuritybreachatoneofthe Company’s facilities could expose Aphria to additional liability and to potentially costly litigation, increaseexpensesrelatingtotheresolutionandfuturepreventionofthesebreachesandmaydeterpotentialpatientsfromchoosingtheCompany’sproducts.

Inaddition,Aphriacollectsandstorespersonalinformationaboutitspatientsandisresponsibleforprotectingthatinformationfromprivacybreaches.Aprivacybreachmayoccurthroughproceduralorprocessfailure,informationtechnologymalfunction,ordeliberateunauthorizedintrusions.Theftofdataforcompetitivepurposes,particularly

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patient lists and preferences, is an ongoing risk whether perpetrated via employee collusion or negligence orthrough deliberate cyber-attack. Any such theft or privacy breach would have a material adverse effect on theCompany’sbusiness,financialconditionandresultsofoperations.

Inaddition,thereareanumberoffederalandprovinciallawsprotectingtheconfidentialityofcertainpatienthealthinformation, including patient records, and restricting the use and disclosure of that protected information. Inparticular, the privacy rules under the Personal Information Protection and Electronics Documents Act (Canada)(“PIPEDA”),protectmedical recordsandotherpersonalhealth informationby limiting theiruseanddisclosureofhealth informationtotheminimumlevelreasonablynecessarytoaccomplishthe intendedpurpose. IfAphriawasfoundtobeinviolationoftheprivacyorsecurityrulesunderPIPEDAorotherlawsprotectingtheconfidentialityofpatienthealth information, itcouldbesubjecttosanctionsandcivilorcriminalpenalties,whichcould increaseitsliabilities,harmitsreputationandhaveamaterialadverseeffectonthebusiness,resultsofoperationsandfinancialconditionoftheCompany.

HistoryofLosses

TheCompanyincurredlossesinpriorperiods.Aphriamaynotbeabletoachieveormaintainprofitabilityandmaycontinue to incur significant losses in the future. In addition, Aphria expects to continue to increase operatingexpensesasitimplementsinitiativestocontinuetogrowitsbusiness.IfAphria’srevenuesdonotincreasetooffsettheseexpectedincreasesincostsandoperatingexpenses,Aphriawillnotbeprofitable.

ChangestoReimbursementAllowancesforVeterans

OnNovember22,2016,theMinisterofVeteransAffairsannouncedthatVeteransAffairsCanada(“VAC”)willissuenewrulesrelatedtothereimbursementofmedicalcannabisforveterans.Itisexpectedthatthenewruleswilllimitthe amount of reimbursement to veterans in two ways. First, the amount of medical marijuana that can bereimbursedisexpectedtobelimitedto3.0gramsperday(perveteran),suchchangetobeeffectiveasofMay21,2017. Second, effective November 22, 2016, the price per gram reimbursement has been limited to $8.50 pergram. TheCompanyunderstands that thenew rulesmayallow individual veterans to receive reimbursement formorethan3.0gramsaday,onacasebycasebasis,subjecttospecificconditions,whichasofthedatehereofhaveyet to be fully delineated. Accordingly, the Company has not yet been able to fully model the impact that theproposedVACchangesmayhaveontheCompany’srevenuestream.ItisalsounclearhowmanyveteranpatientsofAphria, if any, may meet the case by case exemption referenced herein. Investors are cautioned that the VACchanges may have a material effect on Aphria’s business in the event that the Company is unable to secureoffsetting revenuestreams, itsveteranpatientsdonotqualify foranexemptionor if furtheramendments to theVACchangesareannounced.

Competition

There is potential that theCompanywill face intense competition fromother companies, someofwhich canbeexpected to have longer operating histories and more financial resources and manufacturing and marketingexperience than theCompany. Increased competitionby larger andbetter financed competitors couldmateriallyandadverselyaffectthebusiness,financialconditionandresultsofoperationsoftheCompany.

Thegovernmenthasonlyissuedtodatealimitednumberoflicenses,undertheACMPR,toproduceandsellmedicalmarijuana.Thereare,however,severalhundredapplicantsforlicenses.Thenumberoflicensesgrantedcouldhavean impact on the operations of the Company. Because of the early stage of the industry inwhich the Companyoperates, the Company expects to face additional competition from new entrants. According to Health Canadathere were 50 Licensed Producers as ofMay 31, 2017. If the number of users of medical marijuana in Canadaincreases, the demand for products will increase and the Company expects that competition will becomemoreintense,ascurrentandfuturecompetitorsbegintoofferan increasingnumberofdiversifiedproducts.Toremaincompetitive, the Companywill require a continued level of investment in research and development,marketing,

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salesandclientsupport.TheCompanymaynothavesufficient resources tomaintain researchanddevelopment,marketing,salesandclientsupporteffortsonacompetitivebasiswhichcouldmateriallyandadverselyaffect thebusiness,financialconditionandresultsofoperationsoftheCompany.

DIVIDENDS

AsofthedateofthisAnnualInformationForm,AphriahasnocurrentintentiontodeclaredividendsonitsCommonSharesintheforeseeablefuture.AnydecisiontopaydividendsonitsCommonSharesinthefuturewillbeatthediscretion of Aphria’s board of directors and will depend on, among other things, the Company’s results ofoperations, current and anticipated cash requirements and surplus, financial condition, any future contractualrestrictionsandfinancingagreementcovenants,solvencytestsimposedbycorporatelawandotherfactorsthattheboardofdirectorsmaydeemrelevant.

CAPITALSTRUCTURE

The company is authorized to issue an unlimited number of Common Shares. As ofMay 31, 2017, therewere138,628,704CommonSharesissuedandoutstanding.TheholdersoftheCommonSharesareentitledtoonevotepershareatallmeetingsoftheshareholdersoftheCompany.TheholdersofCommonSharesarealsoentitledtodividends, ifandwhendeclaredbythedirectorsoftheCompanyandthedistributionoftheresidualassetsoftheCompanyintheeventofaliquidation,dissolutionorwindingupoftheCompany.

The Company adopted a stock option plan under which it is authorized to grant options to officers, directors,employees,andconsultantsenablingthemtoacquireCommonSharesoftheCompany.ThemaximumnumberofCommonSharesreservedforissuanceofstockoptionsthatmaybegrantedundertheplanis10%oftheissuedandoutstandingCommonSharesoftheCompany.Theoptionsgrantedcanbeexercisedforamaximumof10yearsandvestasdeterminedbytheBoardofDirectors.Theexercisepriceofeachoptionmaynotbe less thanthemarketpriceoftheCommonSharesonthedateofgrant.AsofMay31,2017,thereare5,926,001optionsoutstandingtopurchaseCommonShares.

Inaddition,theCompanyhaswarrantsoutstandingtopurchaseuptoanaggregateof3,885,908CommonShares.

MARKETFORSECURITIES

CommonShares

CommonSharesarelistedandtradedontheTSXunderthetradingsymbol“APH”andunderthesymbol“APHQF”on the OTCQB. Prior to March 22, 2017, the Common Shares were traded on the TSXV, and not the TSX. Thefollowingtablesetsforththereported intradayhighandlowpricesandmonthlytradingvolumesoftheCommonSharesforthe12-monthperiodpriorJune1,2016andMay31,2017:

Period HighTradingPrice LowTradingPrice Volume(#)

May2017 $6.81 $5.18 28,969,226April2017 $8.77 $5.85 86,861,758March2017 $6.99 $6.01 49,493,151February2017 $6.72 $5.10 20,186,915January2017 $5.73 $5.02 15,450,042December2016 $5.75 $4.06 28,868,414November2016 $7.79 $3.65 89,367,449October2016 $4.04 $3.26 41,537,147September2016 $3.51 $2.56 22,600,079August2016

2

$2.85 $2.21 21,222,123

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Period HighTradingPrice LowTradingPrice Volume(#)

July2016 $2.59 $1.57 18,590,000June2016 $1.60 $1.37 6,120,000

PRIORSALES

The following table summarizes details of the following securities that are not listed or quoted on amarketplaceissuedbyAphriaduringthetwelvemonthperiodbetweenJune1,2016andMay31,2017:

Dateofissuance Security Issuance/Exercisepricepersecurity

Numberofsecurities

April12,2017 Stockoptions $7.92 140,000January12,2017 StockOptions $5.72 45,000December12,2016 StockOptions $5.25 500,000November21,2016 Warrants $1.75 159,234November1,2016 Stockoptions $3.90 1,000,000October28,2016 Stockoptions $3.70 50,000October6,2016 Stockoptions $3.47 20,000September26,2016 Warrants $3.14 200,000September9,2016 Stockoptions $3.00 75,000July13,2016 Stockoptions $1.64 110,000June10,2016 Stockoptions $1.48 30,000June2,2016 Stockoptions $1.40 283,000

ESCROWEDSECURITIESANDSECURITIESSUBJECTTORESTRICTIONONTRANSFER

ThefollowingtablesummarizesdetailsoftheCompany’ssecuritiesofeachclassheld,totheCompany’sknowledge,inescroworthataresubjecttoacontractualrestrictionontransferasofthedateofthisAnnualInformationForm:

DesignationofClass

Numberofsecuritiesheldinescroworthataresubjecttoacontractualrestrictionontransferescrow

Percentageofclass

CommonShares 675,000 0.5%(1)

Notes:

(1)Basedon138,628,704CommonSharesoutstanding.

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DIRECTORSANDOFFICERS

Name,OccupationandSecurityHolding

Belowarethenames,provinceorstateandcountryofresidence,principaloccupationandperiodsofserviceofthedirectorsandexecutiveofficersoftheCompany.

NameandMunicipalityResidence

PrincipalOccupationsForLastFiveYears

DirectorofAphriaSince

PositionwithAphria

NumberofCommonSharesBeneficiallyOwned,

ControlledorDirected,DirectlyorIndirectly(4)

VicNeufeldLakeshore,ON

ChiefExecutiveOfficerofAphriaChiefExecutiveOfficerofJamiesonLaboratoriesLtd.

December1,2014(1)

President,ChiefExecutiveOfficerandDirector

811,514(0.59%)

ColeCacciavillaniLeamington,ON

Vice-President–GrowingOperationsofAphriaChiefOperatingOfficerofAphriaSecretary-TreasurerofCFGreenhouses

December1,2014(1)

Vice-President–GrowingOperationsandDirector

8,494,444(2)(6.13%)

JohnCerviniLeamington,ON

Vice-President–InfrastructureandTechnologyofAphriaChiefAgronomistOfficerofAphriaPresidentofCerviniFarmsCalifornia

December1,2014(1)

Vice-President–InfrastructureandTechnologyandDirector

9,500,001(3)(6.85%)

CarlMertonBelleRiver,ON

ChiefFinancialOfficerofAphria

ChiefFinancialOfficerofRekoInternationalGroup

N/A ChiefFinancialOfficer

57,000(0.04%)

DennisStaudt(5)(6)Kingsville,ON

RetiredPartneratPricewaterhouseCoopersLLP

December1,2014(1)

Director 60,000(0.04%)

PhilipWaddington(6)Chelsea,QC

Consultant December1,2014(1)

Director 32,007(0.02%)

RobertKozlov(5)(6)Toronto,ON

PartneratNortonRoseFulbrightCanadaLLP

October27,2015

Director 43,500(0.03%)

ArleneDickinson(5)(6)Calgary,AB

OwnerandCEOofVentureCommunications

October27,2016

Director 11,400(0.01%)

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Notes:(1)Mr.CacciavillaniwasadirectorofthepredecessorcorporationtoAphria,PureNaturesWellnessInc.(“PNW”)fromitsincorporationonJune3,1994.Mr.NeufeldbecameadirectorandofficerofPNWonJune3,2014.Mr.CervinibecameadirectorofPNWonJuly17,2013.Mr.StaudtbecameadirectorofPNWonJuly1,2014.Mr.WaddingtonbecameadirectorofPNWonAugust14,2014(2)Mr.Cacciavillaniowns6,716,667CommonSharesdirectlyandexercisescontroloveranadditional1,777,777CommonSharesheldbytheCacciavillaniFamilyTrust(3)Mr.Cerviniowns9,500,001CommonSharesindirectlythroughFulfillHoldingsInc.,acompanywhichheisthePresidentandsoleshareholderof.(4)Basedon138,628,704CommonSharesoutstandingasofMay31,2017.(5)MemberoftheAuditCommittee.(6)MemberoftheCompensation&NominatingCommittee.

ThetermofeachdirectorofAphriawillexpireonthedateofthenextannualmeetingofshareholdersofAphria.

ThefollowingisasummarybiographyofeachofthedirectorsandexecutiveofficersofAphria:

VicNeufeldPresident,ChiefExecutiveOfficerandDirectorVic Neufeld is the President and Chief Executive Officer of Aphria. Mr. Neufeld is the former CEO of JamiesonLaboratories(“Jamieson”)Canada’slargestmanufactureranddistributorofnaturalvitamins,minerals,concentratedfood supplements, herbs and botanical medicines. Mr. Neufeld brings 15 years of experience as a charteredaccountantandpartnerwithErnst&Youngand21yearsasCEOofJamieson.DuringhistenurewithJamieson,thecompany went from $20 million in annual sales to over $250 million and expanded the company’s distributionnetwork to over 40 countries, building Jamieson to a globally recognized brand name.Mr. Neufeld, a native ofLeamington, Ontario, earned a Bachelor’s degree in Economics from Western University, Honours degree inbusinessfromtheUniversityofWindsorandanMBAfromtheUniversityofWindsor.Mr.NeufeldisalsoaCPA.

ColeCacciavillaniCo-Founder,VicePresident-GrowingOperationsandDirectorColeCacciavillani,Aphria’sco-founder,isanindustrialengineerwith35yearsofexperienceintheagriculturalandgreenhouseindustry.Colehasaccumulatedexpertiseofhowtobestutilizenature’s lightandproprietarygrowingtechniques and technologies to create competitive, safe and cost effective products. Mr. Cacciavillani sits on anumber of charitable and associative boards including serving as: past Chairman of the Board for LeamingtonMemorialDistrictHospitalaswellasservingontheHospital’sFoundationBoard.ColewasafoundingchairofTheOntarioGreenhouseAlliance;servesontheboardofTheAgriculturalInstituteofOntario,PoliceServicesBoard,F.V.Energy Co-op, and the Leamington Economic Development Committee. Currently he serves as Co-Chair ofFundraisingfortheErieShoresCampusHospice.Mr.Cacciavillani’sdedicationtohiscommunityhasreceivedmuchrecognition, including: the Queen Elizabeth II Diamond Jubilee Medal, which is awarded to honour significantcontributions and achievements by Canadians. Ontario’s greenhouse industry recognized Mr. Cacciavillani’sleadershipandvisionas the foundingChairof the industryorganizationwith its first serviceaward.Recently,Mr.Cacciavillani was awarded the St. Clair alumni distinction award based on the success he pursued within thecommunity.

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JohnCerviniCo-Founder,VicePresident-InfrastructureandTechnologyandDirectorJohnCervini,Aphria’sco-founder,comesfromfourthgenerationgrowersinsouthwesternOntariowithhydroponicagriculturalexperience.Togetherwithhisfatherandbrother,Mr.CervinihelpedestablishedLakesideProduce,aofNorth America sales and marketing companies selling fresh produce from Canada to multinational retailersthroughoutNorthAmerica.Mr.Cervinihassignificantexperience ingreenhousegrowing technologyandhasalsooverseengreenhouseexpansions toCaliforniaandMexico.Mr.Cervini’s focuson improvedefficiencies,healthierquality and the latest research studies helped him create an industry leading food safety program. Mr. Cerviniunderstandstheneedandimportanceofproductsafety,producttraceabilityandstandardizedindustryprocedures.Mr.CerviniisthefoundingchairoftheOntarioGreenhouseMarketingAssociationremainsinvolvedintheindustryaspartoftheOntarioGreenhouseVegetableGrowersAssociation.

CarlMertonChiefFinancialOfficerCarlMerton,ChiefFinancialOfficer,hasover20yearsoffinancialandbusinessexperience,havingspentalmost12yearscombinedwithErnst&YoungLLPandKPMGLLPpriortoservingasVice-President,SpecialProjectsatAtlasTubeCanadaULC,ChiefFinancialOfficerofRekoInternationalGroupInc.(TSXV:REK)andChiefFinancialOfficerofAphria Inc. Mr. Merton is a Chartered Professional Accountant, Chartered Accountant and is a Fellow of theCanadian Institute of Chartered Business Valuators (the “CICBV”). As the Chief Financial Officer of Aphria, Mr.Mertonisresponsibleforleadingstrategicdiscussions,acquisitionsanddivestitures,budgeting,financing,financialreportingandinternalcontrols.Mr.MertonholdsanHonoursBachelorofCommerceinSportsAdministrationfromLaurentian University. In addition Mr. Merton, is currently a member of the Board of Directors of Motor CityCommunity Credit Union, is the Chair of their Audit Committee, serves as an external member of the AuditCommitteeoftheGreaterWindsor&EssexCountyDistrictSchoolBoardandhasservedasapastChairofboththeCICBVandtheInternationalAssociationofProfessionalBusinessValuators.

DennisStaudtDirectorDennis Staudt, Director, has over 35 years’ experience providing business advice to private companies inSouthwestern Ontario, having spent most of his career with PricewaterhouseCoopers LLP (“PwC”), including 22years as a partner in the Audit and Assurance Group. Prior to being admitted to partnership,Mr. Staudt spentalmost two yearswith PwCGermany in their Düsseldorf office. Following his retirement from PwC in 2012,Mr.Staudt continues to provide business advisory services to a number of private companies, primarily in themanufacturingandgreenhousesectors.HeisalsoVice-PresidentofStaudtFarmsLimited,afamilyownedfarmingoperationinLeamington,Ontario.Mr.StaudtgraduatedfromtheUniversityofWindsorin1977withaBachelorofCommerce Degree. He obtained his Chartered Accountant (Ontario) designation in 1979 and his Certified PublicAccountant (Illinois)designation in1999.Mr. Staudt is alsoAdvisoryBoardMemberat theUniversityofWindsorCentre for Executive and Professional Education. Mr. Staudt is Past Chair of the Leamington District MemorialHospital Foundation, the Art Gallery ofWindsor and the Art Gallery ofWindsor Foundation. He also previouslyservedontheBoardofGovernorsoftheUniversityofWindsorandtaughtasaSessionalLecturerinAccounting.

Dr.PhilipWaddingtonDirectorDr. Philip Waddington, Director, a trained naturopathic physician, has experience in regulating natural healthproducts. From January 2000 to August 2008 Dr. Waddington served as the inaugural Director General of theNaturalHealthProductsDirectorate (NHPD)ofHealthCanada.Underhis leadership,anewregulatory frameworkwas defined, developed and implemented in Canada. Dr. Waddington received his training from the CanadianCollegeofNaturopathicMedicine.HeholdsanMBAfromtheRichard IveySchoolofBusinessattheUniversityof

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WesternOntarioandaB.Sc.Hon. inBiologyfromQueen’sUniversity.Hecurrentlyworksasaconsultant;helpingcompaniesdealwithanyregulatory,NHPDorgovernmentstrategyissues.

RobertKozlovDirectorRobertKozlov,Director, is a seniorpartnerat the law firmNortonRoseFulbrightCanadaLLPwherehepractisescorporate - commercial law, with a particular focus on privatemergers and acquisitions, strategic alliances, andmajor commercial contracts, including those involving the supply, distribution and franchising of products andservices, and the protection and licensing of intellectual property rights. He has experience advising clients on awide array of commercial arrangements, including the drafting and negotiation of licensing, distribution, supply,franchise and development, joint-venture, sponsorship, co-promotion, advertising and marketing (includingpromotional contests), and services agreements for Canadian-based clients respecting their local operations,including inregardtotheirdealingswiththeMinistryofHealth (Ontario),aswellas their internationalexpansionanddistributionofproducts inmultiple foreign jurisdictions.Healsoadvises foreigncompanies in regard to theirbusinessoperationsinCanada,frominitialset-uptocompliancewithlocalregistrationandregulatoryrequirements.As a registered trade-mark agent, Mr. Kozlov has acted for Canadian and foreign companies in protecting andenforcing their intellectual property rights, including providing validity opinions and pursuing action againstinfringers.Mr.KozlovobtainedanhonoursB.A.fromMcGillUniversityin1977andwascalledtotheBarofOntarioin 1984, after having obtained LL.B and B.C.L. law degrees fromMcGill in 1982. Aswell,Mr. Kozlov has been amember of the Board and executive, as corporate secretary, of ProAction Cops& Kids, a charitable organizationdedicatedtohelpingkidsatrisk,since1997.

ArleneDickinsonDirector

ArleneDickinson,Director, is theownerandCEOofVentureCommunications,acompanyshegrewfromasmall,localfirmtooneofthelargestindependentagenciesinCanada,isalsotheCEOofDistrictVenturesandYouinc.com,companiesallaimedathelpingmarket,fundandgrowentrepreneursandentrepreneurialcompanies.Sheisatwotimebest-sellingauthor, accomplished speaker, and isbest known forher roleas aDragon for8 seasonson theaward-winning CBC series Dragons Den. Ms. Dickinson’s leadership has been recognized many times, includingCanada’sMostPowerfulWomenTop100,thePinnacleAwardforEntrepreneurialExcellence,aswellasPROFITandChatelaine’sTop100WomenBusinessOwners.SheisalsoaMarketingHallofLegendsinductee

CeaseTradeOrders,Bankruptcies,PenaltiesorSanctions

TotheknowledgeofAphria,nodirectororexecutiveofficerofAphria,orshareholderholdingasufficientnumberofsecuritiesofAphriatoaffectmateriallythecontroloftheCompany:

(a) is, as at the date hereof, or has been, within the ten (10) years before the date hereof, a director orexecutiveofficerofanycorporationthat,whilethatpersonwasactinginsuchcapacity:

(i) wassubjecttoaceasetradeorsimilarorderoranorderthatdeniedtherelevantcompanyaccesstoanyexemptionundersecurities legislation,thatwas ineffectforaperiodofmorethanthirty(30) consecutive days, thatwas issuedwhile the director or executive officerwas acting in thecapacityasdirector,chiefexecutiveofficerorchieffinancialofficer;or

(ii) wassubjecttoaceasetradeorsimilarorderoranorderthatdeniedtherelevantcompanyaccesstoanyexemptionundersecurities legislation,thatwas ineffectforaperiodofmorethanthirty(30) consecutive days, that was issued after the director or executive officer ceased to be adirector, chief executive officer or chief financial officer andwhich resulted froman event thatoccurredwhilethatpersonwasactinginthecapacityasdirector,chiefexecutiveofficerorchieffinancialofficer;or

34

(iii) withinayearof thatpersonceasing toact in thatcapacity,becamebankrupt,madeaproposalunder any legislation relating to bankruptcy or insolvency or was subject to or instituted anyproceedings,arrangementorcompromisewithcreditors,orhadareceiver,receivermanagerortrusteeappointedtoholditsassets.

(b) has, within the ten (10) years before the date hereof, become bankrupt, made a proposal under anylegislation relating to thebankruptcyor insolvency, or become subject toor instituted anyproceedings,arrangementorcompromisewithcreditors,orhada receiver, receivermanageror trusteeappointed toholdtheassetsofthedirector,officerorshareholder.

TotheknowledgeofAphria,nodirectororexecutiveofficerofAphria,orashareholderholdingsufficientnumberofsecuritiesofAphriatoaffectmateriallythecontrolofAphria,hasbeensubjectto:

(a) anypenaltiesorsanctionsimposedbyacourtrelatingtosecuritieslegislationorbyasecuritiesregulatoryauthorityorhasenteredintoasettlementagreementwithasecuritiesregulatoryauthority;or

(b) any other penalties or sanctions imposedby a court or regulatory body thatwould likely be consideredimportanttoareasonableinvestorinmakinganinvestmentdecision.

ConflictsofInterest

Wemayfromtimetotimebecomeinvolvedintransactionswhichconflictwiththeinterestsofourdirectorsandtheofficers.TheinterestsofthesepersonscouldconflictwiththoseoftheCompany.Conflictsofinterest,ifany,willbesubject to the procedures and remedies provided under applicable laws. In particular, in the event that such aconflictofinterestarisesatameetingofourdirectors,adirectorwhohassuchaconflictwillabstainfromvotingfororagainsttheapprovalofsuchparticipationorsuchterms.Inaccordancewithapplicablelaws,thedirectorsoftheCompanyarerequiredtoacthonestly,ingoodfaithandinthebestinterestsoftheCompany.

LEGALPROCEEDINGSANDREGULATORYACTIONS

Aphriaisnotcurrentlyapartytoanylegalproceedings,norisAphriacurrentlycontemplatinganylegalproceedings,whicharematerialtoitsbusiness.Aphriaiscurrentlynotawareofanyexistingorcontemplatedlegalproceedingstowhich it isorwasapartyto,ortowhichanyof itsproperties isorwasthesubjectof.Aphria isnotawareofanysettlementagreements,penaltiesorsanctionsthatCompanyhasenteredintobeforeacourtrelatingtosecuritieslegislationorwithasecuritiesregulatoryauthorityorthatwouldbematerialtoareasonableinvestorinmakinganinvestmentdecision.

INTERESTOFMANAGEMENTANDOTHERSINMATERIALTRANSACTIONS

Prior to June 30, 2016, Aphria leased its greenhouse facilities from CF Greenhouses. CF Greenhouses is agreenhousegrowingcompanycontrolledinpartbyColeCacciavillani,DirectorandChiefOperatingOfficerofAphria.OnJune30,2016,Aphriaacquired360,000squarefeetofproductionspace, locatedon36acresof landfromCFGreenhousesfortotalconsiderationof$6.1million.The$6.1millionpurchasepricewassatisfiedbya$3.25millioncashpaymentandCFGreenhousesassumingavendortakebackmortgage,intheamountof$2.85million,witha5-yearamortizationperiodandbearinginterestat6.75%.

TRANFERAGENTANDREGISTAR

The transfer agent and registrar of Aphria is Computershare Trust Company of Canada at its offices in Toronto,Ontario.

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MATERIALCONTRACTS

Exceptforcontractsenteredintointheordinarycourseofbusiness,theonlycontractsenteredintobytheCompanyduringthetwelvemonthperiodendingMay31,2017whicharematerialorenteredintobeforethetwelvemonthperiodendingMay31,2017butarestillineffectare:

(c) theLicense;

(d) the warrant indenture dated July 31, 2014 between Aphria, Black Sparrow and Valiant TrustCompany (the“Warrant Indenture”) for the issueofanaggregateof12,302,268commonsharepurchase share warrants entitling the holders thereof to purchase an aggregate of 12,302,268CommonShares at a priceof $1.50perCommonShare for a periodof five years following thesatisfactionoftheEscrowreleaseConditions(asdefinedintheWarrantIndenture);and

(e) the warrant indenture dated December 11, 2016 between Aphria and Computershare TrustCompany of Canada for the issue of an aggregate of 4,688,576 common share purchase sharewarrantsentitlingtheholdersthereoftopurchaseanaggregateof4,688,576CommonSharesatapriceof$1.75perCommonSharepriortoDecember11,2018.

AUDITCOMMITTEEINFORMATION

AsofMay31,2017theAuditCommittee(the“Committee”)consistsofDennisStaudt,ArleneDickinsonandRobertKozlov,allofwhomare“independent”and“financiallyliterate”withinthemeaningofNationalInstrument52-110—Audit Committees. Each of the Audit Committeemembers has an understanding of the accounting principlesusedtoprepareAphria’s financialstatements,experiencepreparing,auditing,analyzingorevaluatingcomparablefinancial statements andexperienceas to thegeneral applicationof relevant accountingprinciples, aswell as anunderstandingoftheinternalcontrolsandproceduresnecessaryforfinancialreporting

TheAuditCommitteehastheprimaryfunctionoffulfillingitsresponsibilitiesinrelationtoreviewingtheintegrityofAphria’s financial statements, financial disclosures and internal controls over financial reporting; monitoring thesystemof internal control;monitoring Aphria’s compliancewith legal and regulatory requirements, selecting theexternal auditor for shareholder approval; reviewing the qualifications, independence and performance of theexternalauditor;andreviewingthequalifications,independenceandperformanceofAphria’sinternalauditors.TheAuditCommitteehasspecificresponsibilitiesrelatingtoAphria’sfinancialreports;theexternalauditor;theinternalaudit function; internalcontrols; regulatoryreportsandreturns; legalorcompliancematters thathaveamaterialimpact on Aphria; and Aphria’s whistleblowing procedures. In fulfilling its responsibilities, the Audit Committeemeetsregularlywiththeinternalandexternalauditorandkeymanagementmembers.InformationconcerningtherelevanteducationandexperienceoftheAuditCommitteememberscanbefoundin“DirectorsandOfficers”above.ThefulltextoftheAuditCommittee’scharterisdisclosedinSchedule“A”.

Pre-ApprovalPoliciesandProcedures

The Committeewill pre-approve all non-audit services to be provided to Aphria or any subsidiary entities by itsexternal auditors or by the external auditors of such subsidiary entities. The Committeemay delegate to one ormoreofitsmemberstheauthoritytopre-approvenon-auditservicesbutpreapprovalbysuchmemberormemberssodelegatedshallbepresentedtothefullCommitteeatitsfirstscheduledmeetingfollowingsuchpre-approval.

ExternalAuditorServiceFees

The followingtablesets forth,bycategory, the fees forall servicesrenderedbytheCompany’sexternalauditors,MNPLLP,forthefinancialyearendedMay31,2016andPricewaterhouseCoopersLLPforthefinancialyearendedMay31,2017,areassetoutbelow(includingestimates).

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May2016 May2017

AuditFees(1) $60,000 $99,000

AuditRelatedFees(2) $20,000 $61,200

TaxFees(3) - -

AllOtherFees - $107,500

Notes:(1)IncludesfeesnecessarytoperformtheannualauditandquarterlyreviewsoftheCompany’s financialstatements. Audit Fees include fees for review of tax provisions and for accounting consultations onmattersreflectedinthefinancialstatements.AuditFeesalsoincludeauditorotherattestservicesrequiredby legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutoryaudits.(2)Includes services thatare traditionallyperformedby theauditor. Theseaudit-related services includeemployee benefit audits, due diligence assistance, accounting consultations on proposed transactions,internalcontrolreviewsandauditorattestservicesnotrequiredbylegislationorregulation.(3)Includes fees for all tax servicesother than those included in “Audit Fees” and “Audit-Related Fees”.This category includes fees for tax compliance, taxplanning and tax advice. Taxplanning and tax adviceincludes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, andrequestsforrulingsortechnicaladvicefromtaxauthorities.

INTERESTSOFEXPERTS

PricewaterhouseCoopers LLP was appointed as the auditor of the Company on October 27, 2016.PricewaterhouseCoopers LLP is independent within the meaning of the Rules of Professional Conduct of theCharteredProfessionalAccountantsofOntario.MNPLLPwastheindependentauditoroftheCompanyfortheyearendedMay31,2016.MNPLLPisindependentwithinthemeaningoftheRulesofProfessionalConductoftheCharteredProfessionalAccountantsofOntario.

ADDITIONALINFORMATION

AdditionalinformationrelatingtotheCompanymaybefoundonSEDARatwww.sedar.com.

A - 1

ScheduleA–AuditCommitteeCharter

Thischarter(the“Charter”)setsforththepurpose,composition,responsibilitiesandauthorityoftheAuditCommittee(the“Committee”)oftheBoardofDirectors(the“Board”)ofAphriaInc.(“Aphria”).

1.0 Purpose

ThepurposeoftheCommitteeistoassisttheBoardinfulfillingitsoversightresponsibilitieswithrespectto:

• financialreportinganddisclosurerequirements;

• ensuringthataneffectiveriskmanagementandfinancialcontrolframeworkhasbeenimplementedandtestedbymanagementofAphria;and

• externalandinternalauditprocesses.

2.0 CompositionandMembership

(a) The Board will appoint the members (“Members”) of the Committee. The Members will beappointedtoholdofficeuntilthenextannualgeneralmeetingofshareholdersofAphriaoruntiltheir successors are appointed. TheBoardmay removeaMemberat any timeandmay fill anyvacancy occurring on the Committee. A Member may resign at any time and a Member willautomaticallyceasetobeaMemberuponceasingtobeadirector.

(b) The Committee will consist of at least three directors. EachMember will meet the criteria forfinancialliteracyestablishedbyapplicablelawsandtherulesofanystockexchangesuponwhichAphria’s securities are listed, including National Instrument 52-110 — Audit Committees. AllMemberswillmeetthecriteriaforindependenceestablishedbytheaforementionedlawsandrules. In addition, each directorwill be free of any relationshipwhich could, in the viewof theBoard,reasonablyinterferewiththeexerciseofaMember’sindependentjudgment.

(c) The Board will appoint one of the Members to act as the chairman of the Committee(the “Chairman”).ThesecretaryofAphria(the“Secretary”)willbethesecretaryofallmeetingsandwillmaintainminutesofallmeetingsanddeliberationsoftheCommittee. IftheSecretary isnotinattendanceatanymeeting,theCommitteewillappointanotherpersonwhomay,butneednot,beaMembertoactasthesecretaryofthatmeeting.

3.0 Meetings

(a) MeetingsoftheCommitteewillbeheldatsuchtimesandplacesastheChairmanmaydetermine,but inanyeventnot lessthanfour(4)timesperyear.Twenty-four(24)hoursadvancenoticeofeachmeetingwillbegiventoeachMemberorally,bytelephone,byfacsimileoremail,unlessall Members are present and waive notice, or if those absent waive notice before or after ameeting.Membersmayattendallmeetingseitherinpersonorbytelephone.

(b) AttherequestoftheexternalauditorsofAphria,theChiefExecutiveOfficerortheChiefFinancialOfficerofAphriaor anyMember, theChairmanwill conveneameetingof theCommittee. Any such requestwill set out in reasonable detail the business proposed tobeconductedatthemeetingsorequested.

A - 2

(c) TheChairman,ifpresent,willactasthechairmanofmeetingsoftheCommittee.IftheChairmanisnotpresentatameetingoftheCommitteetheMembersinattendancemayselectoneofthememberstoactaschairmanofthemeeting.

(d) AmajorityofMemberswillconstituteaquorumforameetingoftheCommittee.EachMemberwill have one vote and decisions of the Committeewill bemade by an affirmative vote of themajority.TheChairmanwillnothaveadecidingorcastingvoteinthecaseofanequalityofvotes.PowersoftheCommitteemayalsobeexercisedbywrittenresolutionssignedbyallMembers.

(e) TheCommitteemay invite fromtime to timesuchpersonsas it sees fit toattend itsmeetingsand to take part in the discussion and consideration of the affairs of the Committee. TheCommitteemaymeet incamerawithoutmembersofmanagement inattendanceforaportionofeachmeetingoftheCommittee,astheCommitteedeemsappropriate.

(f) InadvanceofeveryregularmeetingoftheCommittee,theChairman,withtheassistanceoftheSecretary,willprepareanddistributetotheMembersandothersasdeemedappropriatebytheChairman, an agenda of matters to be addressed at the meeting together with appropriatebriefing materials. The Committee may require officers and employees of Aphria toproducesuchinformationandreportsastheCommitteemaydeemappropriateinorderforittofulfillitsduties.

4.0 DutiesandResponsibilities

ThedutiesandresponsibilitiesoftheCommitteeastheyrelatetothefollowingmatters,areasfollows:

4.1 FinancialReportingandDisclosure

(a) reviewandrecommendtotheBoardforapproval,theauditedannualfinancialstatements,includingtheauditors’reportthereon,thequarterlyfinancialstatements,managementdiscussionandanalysis,financialreports,andanyguidancewithrespecttoearningspersharetobegiven,priortothepublicdisclosureofsuchinformation,withsuchdocumentstoindicatewhethersuchinformationhasbeenreviewedbytheBoardortheCommittee;

(b) reviewandrecommendtotheBoardforapproval,whereappropriate,financialinformationcontainedinanyprospectuses,annualinformationforms,annualreporttoshareholders,managementproxycircular,materialchangedisclosuresofafinancialnatureandsimilardisclosuredocumentspriortothepublicdisclosureofsuchinformation;

(c) reviewwithmanagementofAphria,andwithexternalauditors,significantaccountingprinciplesanddisclosureissuesandalternativetreatmentsunderInternationalFinancialReportingStandards(“IFRS”),withaviewtogainingreasonableassurancethatfinancialstatementsareaccurate,completeandpresentfairlyAphria’sfinancialpositionandtheresultsofitsoperationsinaccordancewithIFRS,asapplicable;

(d) seektoensurethatadequateproceduresareinplaceforthereviewofAphria’spublicdisclosureoffinancialinformationextractedorderivedfromAphria’sfinancialstatements,periodicallyassesstheadequacyofthoseproceduresandrecommendanyproposedchangestotheBoardforconsideration;

(e) reviewtheminutesfromeachmeetingoftheResponsibleParties,establishedpursuanttoAphria’scorporatedisclosurepolicy,sincethelastmeetingoftheCommittee;

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4.2 InternalControlsandAudit

(a) reviewtheadequacyandeffectivenessofAphria’ssystemofinternalcontrolandmanagementinformationsystemsthroughdiscussionswithmanagementandtheexternalauditortoensurethatAphriamaintains:(i)thenecessarybooks,recordsandaccountsinsufficientdetailtoaccuratelyandfairlyreflectAphria’stransactions;(ii)effectiveinternalcontrolsystems;and(iii)adequateprocessesforassessingtheriskofmaterialmisstatementofthefinancialstatementandfordetectingcontrolweaknessesorfraud.FromtimetotimetheCommitteeshallassesswhetheritisnecessaryordesirabletoestablishaformalinternalauditdepartmenthavingregardtothesizeandstageofdevelopmentofAphriaatanyparticulartime;

(b) satisfyitselfthatmanagementhasestablishedadequateproceduresforthereviewofAphria’sdisclosureoffinancialinformationextractedorderiveddirectlyfromAphria’sfinancialstatements;

(c) satisfyitself,throughdiscussionswithmanagement,thattheadequacyofinternalcontrols,systemsandprocedureshasbeenperiodicallyassessedinordertoensurecompliancewithregulatoryrequirementsandrecommendations;

(d) reviewanddiscussAphria’smajorfinancialriskexposuresandthestepstakentomonitorandcontrolsuchexposures,includingtheuseofanyfinancialderivativesandhedgingactivities;

(e) review,andintheCommittee’sdiscretionmakerecommendationstotheBoardregarding,theadequacyofAphria’sriskmanagementpoliciesandprocedureswithregardtoidentificationofAphria’sprincipalrisksandimplementationofappropriatesystemstomanagesuchrisksincludinganassessmentoftheadequacyofinsurancecoveragemaintainedbyAphria;

(f) recommendtheappointment,orifnecessary,thedismissaloftheheadofAphria’sinternalauditprocess;

4.3 ExternalAudit

(a) recommendtotheBoardafirmofexternalauditorstobenominatedforappointmentastheexternalauditorofAphria;

(b) ensuretheexternalauditorsreportdirectlytotheCommitteeonaregularbasis;

(c) reviewtheindependenceoftheexternalauditors,includingawrittenreportfromtheexternalauditorsrespectingtheirindependenceandconsiderationofapplicableauditorindependencestandards;

(d) reviewandrecommendtotheBoardthefee,scopeandtimingoftheauditandotherrelatedservicesrenderedbytheexternalauditors;

(e) reviewtheauditplanoftheexternalauditorspriortothecommencementoftheaudit;

(f) establishandmaintainadirectlineofcommunicationwithAphria’sexternalandinternalauditors;

(g) meetincamerawithonlytheauditors,withonlymanagement,andwithonlythemembersoftheCommitteeateveryCommitteemeetingwhere,andtotheextentthat,suchpartiesarepresent,astheCommitteedeemsappropriate;

(h) overseetheperformanceoftheexternalauditorswhoareaccountabletotheCommitteeandtheBoardasrepresentativesoftheshareholders,includingtheleadpartneroftheindependentauditors’team;

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(i) overseetheworkoftheexternalauditorsappointedbytheshareholdersofAphriawithrespecttopreparingandissuinganauditreportorperformingotheraudit,revieworattestservicesforAphria,includingtheresolutionofissuesbetweenmanagementofAphriaandtheexternalauditorsregardingfinancialdisclosure;

(j) reviewtheresultsoftheexternalauditandthereportthereonincluding,withoutlimitation,adiscussionwiththeexternalauditorsastothequalityofaccountingprinciplesused,anyalternativetreatmentsoffinancialinformationthathavebeendiscussedwithmanagementofAphria,theramificationsoftheiruseaswellasanyothermaterialchanges.Reviewareportdescribingallmaterialwrittencommunicationbetweenmanagementandtheauditorssuchasmanagementlettersandscheduleofunadjusteddifferences;

(k) discusswiththeexternalauditorstheirperceptionofAphria’sfinancialandaccountingpersonnel,recordsandsystems,thecooperationwhichtheexternalauditorsreceivedduringtheircourseoftheirreviewandavailabilityofrecords,dataandotherrequestedinformationandanyrecommendationswithrespectthereto;

(l) discusswiththeexternalauditorstheirperceptionofAphria’sidentificationandmanagementofrisks,includingtheadequacyoreffectivenessofpoliciesandproceduresimplementedtomitigatesuchrisks;

(m) reviewthereasonsforanyproposedchangeintheexternalauditorswhichisnotinitiatedbytheCommitteeorBoardandanyothersignificantissuesrelatedtothechange,includingtheresponseoftheincumbentauditors,andenquireastothequalificationsoftheproposedauditorsbeforemakingitsrecommendationstotheBoard;

(n) reviewannuallyareportfromtheexternalauditorsinrespectoftheirinternalquality-controlprocedures,anymaterialissuesraisedbythemostrecentinternalquality-controlreview,orpeerreviewoftheexternalauditors,orbyanyinquiryorinvestigationbygovernmentalorprofessionalauthorities,withintheprecedingfiveyears,respectingoneormoreindependentauditscarriedoutbytheexternalauditors,andanystepstakentodealwithanysuchissues;

4.4 AssociatedResponsibilities

(a) reviewandapproveAphria’shiringpoliciesregardingemployeesandpartners,andformeremployeesandpartners,ofthepresentandformerexternalauditorsofAphria.

4.5 Non-AuditServices

(a) pre-approveallnon-auditservicestobeprovidedtoAphriaoranysubsidiaryentitiesbyitsexternalauditorsorbytheexternalauditorsofsuchsubsidiaryentities.TheCommitteemaydelegatetooneormoreofitsmemberstheauthoritytopre-approvenon-auditservicesbutpre-approvalbysuchmemberormemberssodelegatedshallbepresentedtothefullCommitteeatitsfirstscheduledmeetingfollowingsuchpre-approval.

5.0 OversightFunction

WhiletheCommitteehastheresponsibilitiesandpowerssetforthinthisCharter,itisnotthedutyoftheCommitteetoplanorconductauditsortodeterminethatAphria’sfinancialstatementsarecompleteandaccurateor comply with IFRS and other applicable requirements. These are the responsibilities of Management and theexternalauditors.TheCommittee,theChairmanandanyMembersidentifiedashavingaccountingorrelatedfinancial expertise are members of the Board, appointed to the Committee to provide broad oversight of thefinancial,riskandcontrolrelatedactivitiesofAphria,andarespecificallynotaccountableorresponsibleforthedaytodayoperationorperformanceofsuchactivities.AlthoughthedesignationofaMemberashavingaccountingorrelatedfinancialexpertisefordisclosurepurposesisbasedonthatindividual’seducationandexperience,whichthat

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individualwillbringtobearincarryingouthisorherdutiesontheCommittee,suchdesignationdoesnotimposeonsuchpersonanyduties,obligationsorliabilitythataregreaterthantheduties,obligationsandliabilityimposedonsuchpersonasamemberof theCommitteeandBoard in theabsenceof suchdesignation.Rather, the roleof aMemberwho is identified as having accounting or related financial expertise, like the role of allMembers, is tooverseetheprocess,not tocertifyorguaranteethe internalorexternalauditofAphria’s financial informationorpublicdisclosure.

6.0 Reporting

TheChairmanwillreporttotheBoardateachBoardmeetingontheCommittee’sactivitiessincethelastBoardmeeting.TheCommitteewillannuallyreviewandapprovetheCommittee’sreportforinclusionintheAnnualInformationForm.TheminutesofeachmeetingoftheCommitteewillbeavailabletothemembersoftheBoard,attheirrequest.

7.0 AccesstoInformationandAuthority

TheCommitteewillbegrantedunrestrictedaccesstoallinformationregardingAphriathatisnecessaryordesirabletofulfillitsdutiesandalldirectors,officersandemployeeswillbedirectedtocooperateasrequestedbyMembers.TheCommitteehas theauthority toretain,atAphria’sexpense, independent legal, financialandotheradvisors,consultantsandexperts,toassisttheCommittee infulfilling itsdutiesandresponsibilities, includingsoleauthority to retain and to approve any such firm’s fees and other retention termswithout prior approval of theBoard.TheCommitteealsohastheauthoritytocommunicatedirectlywithinternalandexternalauditors.

8.0 ReviewofCharter

TheCommitteewillannuallyreviewandassesstheadequacyofthisCharterandrecommendanyproposedchangestotheBoardforconsideration.