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  • Writer's pictureTed Ohashi

Arcview Group outlines advantages of cannabis companies based in Colombia

Recently, Troy Dayton, Chief Executive Officer of The Arcview Group outlined the advantages Colombia offers compared with Canada and the U.S. Arcview Group describes itself as the first and largest group of high net worth cannabis investors and is co-hosting the inaugural Latin American Cannabis Investment Summit in Bogota, Colombia. Specifically Dayton mentioned Canopy Growth, Aprhia, Khiron Life Sciences and PharmaCielo.

The advantages listed include:

  1. Geographically, Colombia is positioned in a substantial regional export market, of around 600 million people or 650 million including the Colombian medicinal domestic market. Colombia has relatively easy access to North America about five to six hours away by air.

  2. Colombia is one of the most efficient and possibly cheapest places to grow some of the best cannabis in the world at a cost of around $0.05 per gram.

  3. Located on the equator, Colombia has 12 hours of sunlight and 12 hours of darkness - all year. This is a nearly ideal light cycle that will enable growers to harvest four or five crops a year. [By Ctrl+Click on the link Khiron is growing] you can see Khiron’s grow facility and note the absence of grow lights.

  4. Colombia has a sophisticated cultivation industry combining less costly land and experienced but less expensive labour. It is possibly one of the cheapest places to grow cannabis at around $.05 per gram.

  5. Colombia is already a top five exporter of coffee, cut flowers and bananas. It has an established network of distribution channels.

Dayton concludes, “For investors and operators, Colombia makes an exciting proposition if you have an eye to the future for competitive, high-quality, high margin cannabis products.”

From my perspective, it is hard to see Canopy Growth (TSX: WEED) (NYSE: CGC) or Aphria (TSX: APHA) (NYSE: APHA) as plays on Colombia because the region is such a small part of their overall portfolios. Aphria, in my opinion, still has unanswered questions raised by Quintessential Capital Management and Hindenburg Research. Regarding PharmaCielo (TSXV: PCLO), I initially questioned management because of Anthony Wile, who was listed as President, CEO, Director and co-founder as recently as December 2018. Wile has had serious issues with the U.S. Securities and Exchange Commission. I am more comfortable now that he is gone but I still have concerns about their business plan of becoming a low cost producer and seller of cannabis. This is the path to becoming a farmer. To the extent they are moving off this position and attempting to enter consumer products, I believe they are far behind my favourite.

Everyone knows my pick of the litter is Khiron (TSXV: KHRN) (OTCQB: KHRNF). They have the management leadership in Alvaro Torres, CEO, in Colombia and Chris Naprawa, President, in Canada and a strong team mostly in Colombia but also in Canada, the U.S. and Mexico. I like the Khiron business plan that focuses on vertical integration using cannabis as an input for higher margin consumer products. Khiron also progresses its business plan at a steady pace. Every few weeks or a month, they announce a significant step forward in their business. From an investment point of view, there is also value. At a market cap of around $350 million, I think KHRN offers exceptional value relative to its comparables.

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