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  • Writer's pictureTed Ohashi

Cannabis developments in Colombia for KHRN, WEED, APH...

Since we first outlined the investment potential for Khiron Life Sciences (TSXV: KHRN) the awareness of Colombia as a natural center for cannabis growing and processing continues to increase. Most recently, Canopy Growth (NYSE: CGC) (TSX: WEED) established a new division, Canopy LATAM Corporation to focus on Latin America and its initial foray is the acquisition of Spectrum Cannabis Colombia that is a Colombian grower expanding its facilities. In addition, Aphria (TSX: APH) has a tentative international supply agreement with ColCanna, a Colombian grower that is associated with Scythian Bio (TSXV: SCYB). PharmaCielo, another Colombian operator, is planning to go public on the TSXV later this year and MYM Nutraceuticals (CSE: MYM) has a Memorandum of Understanding (MOU) with NEWCANNA of Colombia to create a jointly owned cannabis company in Colombia. ICC Labs (TSXV: ICC) holds licenses to grow in Colombia through a subsidiary.

We are often asked if the involvement of others in the Colombian industry will hurt Khiron. It won’t hurt them. In fact, the entry of CGC into the region is a strong confirmation that KHRN is onto a good thing.

But more than that Canada is a country with a population of 36.3 million people. As of today, Canada has issued 113 cannabis cultivation licenses and 11 for starting materials (plants and seeds).The population of Colombia is 48.7 million. As of May 2, 2018, Colombia had issued 80 cultivation licenses: 43 for non-psychoactive cannabis, 31 for psychoactive cannabis and six for seeds. As of today, Canada does not have a natural marketing area as the U.S. remains closed. Colombia’s natural marketing area including Latin America is 626 million people while South America adds 422.5 million more. There is some overlap between the two but it is still at least twenty-five times more populous than Canada. Acknowledging that this is a less developed area of the world, it shows that Khiron Life has huge markets to expand into and the rest of the world in which to develop exports.

This highlights the importance of the recent announcement that the Colombia National Food and Drug Surveillance Institute (INVIMA) has granted KHRN authorization for the production, sale and export of four additional cannabidiol (CBD) based products for skin and body care. KHRN now has authorization to commercialize eight products under its wellness business unit, which aims to target the growing skin care market in Colombia, a market of over CAD $530 million in annual sales. As mentioned in our initial report on Khiron, the company has a department actively developing cosmetics combining the local knowledge of the special requirements of the regional populace combined with the benefits of cannabis.

"As we move to bring cannabis-based skin care products, in addition to medical cannabis, to market, we….see tremendous opportunity to lead the cannabis-based wellness product sector, a category with untapped potential to meet consumer needs using natural, innovative ingredients with proven scientific results," said Andrés Galofre, VP Marketing and Sales at Khiron. The first wellness product is anticipated by Q4 2018, with initial distribution in Colombia and commercialization potential across Latin America.

To the extent that the market underappreciates and undervalues the progress Khiron is making in this and other areas that target the specific wants and needs of the population, there is a significant investment opportunity that may not be available forever. Buy KHRN now.

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