Two notable names in the cannabis industry might be combining their businesses. According to a report published after market hours Tuesday by Bloomberg that cited "sources familiar with the matter," Tilray (NASDAQ:TLRY) and Aphria (NASDAQ:APHA) are in "advanced talks" to merge. An announcement on such a deal could come as soon as this week, those sources said.

The report says the merged company will likely use the Tilray name, but be led by current Aphria CEO Irwin Simon. Additionally, Aphria will likely hold a majority of seats on the new entity's board of directors, as present shareholders should own a stake of 60%. 

Two hands holding marijuana leaves.

Image source: Getty Images.

Another intriguing potential result of a merger between the two companies is that as a combined unit, it might move its headquarters to the U.S. Both Tilray and Aphria are currently based in Canada, but may be eager to capitalize on a rapidly improving legal environment in their neighbor to the south. Vice President-elect Kamala Harris has said her administration will decriminalize cannabis.

If the merger speculation is accurate and a deal is agreed, the newly created entity would also be better poised than rivals to take advantage of business opportunities overseas. Both companies have relatively strong international operations that could be leveraged if and when the legalization trend spreads abroad.

Aphria has apparently been eager to merge with a peer. BNN Bloomberg previously reported that the company had been in similar talks with fellow Canadian marijuana producer and distributor Aurora Cannabis. It seems that these discussions, however, fell apart over issues related to the potentially merged company's board.

Investors found the prospect of a Tilray-Aphria merger exciting. Both stocks beat the rise of the S&P 500 on Tuesday, with Tilray closing 6.8% higher and Aphria rising by almost 3.1%.

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