Cannabis Businesses Eye Latin America in Effort to Reduce Costs
14 Feb, 2019, 14:00 GMT
FinancialBuzz.com News Commentary
NEW YORK, Feb. 14, 2019 The cannabis industry is an attractive investment opportunity for entrepreneurs, however, entering into the market poses a challenge for many. In combination with federal regulations and high expenses, obtaining licenses and efficiently operating a cannabis business is difficult. For instance, the top industry players have recently reported their quarterly financial results and many reported overall net losses. In order to mitigate their losses, many began to establish operations in Latin America, specifically in countries such as Argentina, Brazil, Chile, Colombia, and Peru. The LATAM region is a desirable target for many cannabis companies because of its robust cultivation potential and low-costs. Cultivators are able to grow and distribute high-quality cannabis for a significantly cheaper cost as opposed to operating in other regions like Canada. The inexpensive costs allow businesses to sell products back for a reduced price when compared to other global marketplaces. According to data compiled by BDS Analytics in partnership with Arcview Research, the South American legal cannabis spending is expected to grow from USD 125 Million in 2018 to USD 776 Million by 2026. Blueberries Medical Corp. (OTC: BBRRF) (CSE: BBM), PharmaCielo Ltd. (OTC: PHCEF) (TSX-V:PCLO), CannTrust Holdings Inc. (OTC: CNTTF) (TSX:TRST), MariMed Inc. (OTC: MRMD), General Cannabis Corp. (OTC: CANN)
Uruguay and Colombia, in particular, are where cannabis businesses are eyeing. Uruguay has completely legalized cannabis, while Colombia maintains lenient laws regarding the plant. According to data compiled by Cannabis Intelligence Briefing, the two countries are projected to witness legal cannabis spending at approximately USD 66.7 Million by 2027. "What we're seeing is a mix of local entrepreneurs, with diverse amounts of capital, finding a supplement in foreign capital," Diego Olivera, the General Secretary of Uruguay's national drug board, adding that he's seen substantial foreign capital interest, particularly from Canada and Latin American, via Benzinga. "[Investors] understand there are certain favorable conditions in Uruguay, including the general conditions the country offers for foreign investments, the educational level, the legal certainty, the macroeconomic stability and other dimensions that combine with the country's robust and complete cannabis-related regulations."
Blueberries Medical Corp. (OTC: BBRRF) (CSE: BBM) just earlier this morning the company announced breaking cannabis news that, "a leading Colombia-based licenced producer of medicinal cannabis and cannabis-derived products, has entered into a letter of intent (the "Letter Agreement") dated February 13, 2019 for a joint venture (the "Joint Venture") with Harmony and Life S.A.S., operating as El Manantial medical centers ("El Manantial"). The Joint Venture will further the development and commercialization of Blueberries' medicinal cannabis products through El Manantial's rapidly growing patient base and collaboration with El Manantial's team of physicians, pharmacists and technicians with deep expertise in a variety of medical areas. It will also provide a direct distribution channel to an established and rapidly growing patient by selling exclusively Blueberries' cannabis-derived products. The Company has also set out to build two BPE (Good Elaboration Practices) certified pharmacies in support of the initiative which will provide additional sales channels for Blueberries' products. Blueberries and El Manantial will also develop a treatment-focused medical education program designed to assist physicians in prescribing cannabis-based treatment plans to patients.
"Our joint venture with El Manantial provides an outstanding opportunity for Blueberries to develop medical products and acquire patients in the Colombian market", stated Christian Toro, Chief Executive Officer of the Company. "El Manantial is a respected leader in Colombia, and their focus on equitable access to medicine and patient care aligns with our goal of providing treatment to a broad spectrum of patients. The Joint Venture emphasizes communication with prescribing doctors and education of both doctors and patients which is expected to ensure that Blueberries is developing treatments that the medical community needs, and that a streamlined process is developed for the company to reach its patients."
El Manantial is among the fastest growing networks of medical centers in Colombia, currently representing over 7,000 patients and expected to grow to over 50,000 patients over the next 36-month period as four new centers are projected to come online. This is an important development in Blueberries' strategy to acquire patients and develop treatments with cannabis products, positioning Blueberries as a leader in the Colombian medicinal cannabis product market.
"This transaction will allow us the opportunity to work with the Blueberries team to develop new cannabis products and treatments, which can in turn be rolled out to our medical center network, offering patients the best possible care", stated Dr. Andres Vidal, founder of El Manantial. "We plan for our prescribing physician education program to be an important step in supporting the widespread adoption of cannabis treatments in Colombia and globally." Dr. Vidal, who has control and direction over El Manantial, is also a director of Blueberries.
Pharmacy Build-Out- Blueberries will make a strategic investment of up to C$400,000 in the construction of specialized pharmacies that are BPE (Good Elaboration Practices) certified. In addition to the pharmacies owned and operated by El Manantrial, the Company-owned pharmacies will also sell cannabis and cannabis-derived products exclusively from Blueberries. Completion of the build-out of the Company's pharmacies is expected to occur during Q3 2019.
Letter Agreement Terms
• Collaborate on the research, development, and commercialization of Blueberries cannabis derived medicinal products.
• Blueberries to be exclusive supplier of cannabis and cannabis-derived products to El Manantial for research and sale through their medical center network and pharmacies.
• Blueberries will make a strategic investment of up to C$300,000 for the development of educational programs for the medical community to deliver to patients. The program will include certification for physicians obtained through comprehensive training, and it is expected to come online in Q2 2019.
• Blueberries will invest up to C$100,000 for medical center facility upgrades to expand capacity in order to accommodate the rapidly growing patient base.
The proposed Joint Venture is subject to completion of satisfactory due diligence by each of the Company and El Manatial, and the execution of a definitive agreement.
About El Manantial - Founded in 2013 by Dr. Andres Vidal, El Manantial offers its patients the best of conventional medicine, and the best of alternative and complementary medicine, guaranteeing the best possible patient care. A diverse team of physicians and technicians of various specialties of conventional medicine, family medicine, nutrition, aesthetic medicine, homeopathic medicine, and natural medicine, bacteriologists, paramedics, pharmacists make El Manantial a leading center of medical expertise in Colombia. As one of the fastest growing medical center network in Colombia, the goal of El Manantial is to generate equitable access for all Colombians to medical treatment. The centers are actively engaged in the research and development of new and cutting-edge treatments to meet the needs of patients. For further information about El Manantial, please visit https://centromedicoelmanantial.co/.
About Blueberries Medical Corp. - Blueberries is a Colombia-based licensed producer of naturally grown premium quality cannabis with its primary operations ideally located in the Bogotá savannah of central Colombia. Led by a specialized team with proprietary expertise in agriculture, genetics, extraction, medicine, pharmacology and marketing, Blueberries has received all licenses required for the cultivation, production, domestic distribution, and international export of CBD (cannabidiol) and THC (tetrahydrocannabinol)-based medical cannabis. Blueberries' combination of leading scientific expertise, agricultural advantages, and distribution arrangements has positioned the Company to become a leading international supplier of naturally grown, processed, and standardized medicinal-grade cannabis oil extracts and related products."
PharmaCielo Ltd. (OTC: PHCEF) (TSX-V:PCLO) is a global company, headquartered in Canada, with a focus on ethical and sustainable processing and supplying of all natural, medicinal-grade cannabis oil extracts and related products to large channel distributors. PharmaCielo Ltd. recently announced that its Colombian subsidiary has received approval for the listing of 10 proprietary and unique tetrahydrocannabinol (THC) and cannabidiol (CBD) strains with the national cultivar registry. The Company can now proceed to commercial registration, production and sale of these strains within Colombia as well as for export to global markets. "Approval of these strains strengthens and confirms PharmaCielo's position as the leading producer in Colombia," said Federico Cock-Correa, President and Chief Executive Officer of PharmaCielo Colombia Holdings S.A.S. "Among those approved is an historic and unique CBD-dominant strain approved for commercial registration and sourced from the Colombian landrace strains held within our fuente semillera,1 the first and only one of its kind registered in Colombia."
CannTrust Holdings Inc. (OTC: CNTTF) (TSX:TRST) is a federally regulated licensed producer of medical and recreational cannabis in Canada. CannTrust Holdings Inc. recently announced that it has obtained the necessary authorization from the Town of Pelham to proceed with its Phase III expansion with the construction process set to commence immediately. The revised Phase III expansion is permitted for a footprint of up to 390,000 sq. ft., compared to the 600,000 sq. ft. in the Company's initial application. However, with enhancements to the Phase III facility above and beyond the specifications initially contemplated, CannTrust maintains its total production capacity forecast of 100,000 kg per year after completion of the Phase III construction. "We are pleased with the outcome of the discussions with the Town of Pelham," said Peter Aceto, Chief Executive Officer of CannTrust. "We believe this decision reflects our view that we are a trusted member of the community and that we are intent on listening to our stakeholders. The demand for our medical and recreational products continues to be well in excess of supply and we are keen to move ahead with the Phase III expansion and meet our capacity targets. We also continue to evaluate several strategic alternatives to meet and increase our initial production capacity goals. We are actively pursuing strategic acquisitions of land and facilities, both inside and outside Ontario and hope to update shareholders with these initiatives in due course. Our active patient count continues to increase, and the recreational market is currently undersupplied. We intend to make every effort to serve these markets with our award-winning products."
MariMed Inc. (OTCQB: MRMD) is a multi-state cannabis company that develops, owns and operates licensed cannabis facilities and develops and distributes branded cannabis and hemp product lines. MariMed Inc. recently announced the formation of MariMed Hemp, Inc., a wholly-owned subsidiary to be entirely focused on hemp-derived CBD products. MariMed Hemp will have a dedicated executive team, proprietary brand and product lines, and distribution and marketing relationships, all separate from MariMed's core cannabis business. The subsidiary builds on MariMed's recent investment in GenCanna Global, a leader in high-quality, fully compliant hemp cultivation and processing which is acclaimed for its genetics, proprietary cultivation practices and best in class processing procedures that produce world-class, GMP, quality CBD isolates and oils. GenCanna anticipates planting and processing over 10,000 acres of hemp in 2019, making it one of the nation's largest hemp producers and the key supplier of hemp CBD oil to MariMed Hemp. "With the recent signing of the U.S. Farm Bill that declared hemp fully legal at the federal level, we believe the hemp CBD industry may grow even faster than the cannabis industry," said Robert Fireman, Chief Executive Officer of MariMed. "Consumers and retailers alike seek the highest quality, trustworthy products. While many niche players may try to compete, the reality is that only a handful of suppliers can reliably deliver top-quality CBD products at scale that can serve the needs of major retailers."
General Cannabis Corp. (OTCQX: CANN) is the comprehensive national resource for the highest-quality service providers available to the regulated cannabis industry. As the legal cannabis industry grows throughout the United States, the industry's leading service provider, General Cannabis Corp. recently announced that it is expanding its presence on the East Coast with the opening of a New York office. The New York office provides General Cannabis a strategic location to better serve existing East Coast clients while also attracting new talent and partnerships as the cannabis market in the eastern U.S. continues to develop. Further, the opening of the New York office provides a hub for current clients looking for East Coast expansion opportunities. "Given our growing list of East Coast clients and the steps that states like Massachusetts and New Jersey have taken toward launching adult-use sales, this is the ideal time for General Cannabis to further invest and establish itself in the region," said Michael Feinsod, Executive Chairman of the Board for General Cannabis. "The growth potential for the market in this region is unparalleled. An East Coast office is perfectly suited to cater to this territory as General Cannabis continues to expand its presence nationwide. We plan on expanding our security, operations and marketing segments aggressively throughout the East Coast. In addition, we will be utilizing this office to expand and enhance our corporate, marketing and mergers and acquisitions teams."
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