The marijuana M&A frenzy in Canada isn’t slowing down any time soon.
The Bank of Montreal even got into the weed game with a $175 million deal with Canopy Growth Corp (OTC: TWMJF).
And Monday, Canadian cannabis company Aphria Inc. (OTC: APHQF) agreed to acquire Nuuvera Inc. (OTC: NUUVF) in an $826 million deal. While Nuuvera doesn’t have any experience with cannabis cultivation nor a license to grow and sell marijuana in Canada, it does have a license to import and export cannabis products which Aphria hopes will give it access to international markets.
As marijuana stocks skyrocket, American marijuana companies look north to Canada for more capital and a friendlier business environment. But amid the mania, Canadian companies are heading to South America where several countries there are beginning to liberalize their cannabis laws.
Tuesday, Cannabis Wheaton (TSX: CBW.V)—a Canadian cannabis streaming company—announced that it was purchasing 80% of Inverell S.A., one of the few cannabis operators with a federal license in Uruguay. Inverell’s license allows it to cultivate and harvest their own hemp strains with variations of higher CBD and lower THC concentrations, which are ideal for medical prescriptions.
“This transaction helps us secure a significant amount of CBD-rich hemp production that can be exported to other federally legal jurisdictions for further processing into nutritional and pharmaceutical products,” said Hugo Alves, president of Wheaton, in a press release announcing the purchase.
Uruguay was the first country on the planet to fully legalize marijuana, but the market is tightly controlled by the Uruguayan government. Other South American counties have passed medical marijuana legalization, including Peru, Chile, and Colombia.
But Canadian companies have shown the greatest interest in Colombia. Legalization passed there in 2017, and three of the six companies that were granted federal licenses for commercial medical cannabis cultivation are headquartered in Toronto, which only underscores the promising partnerships forming between growers in Colombia and investors in Canada, which is the world’s top venture capital funding source for cannabis companies.
One of the three Canadian companies, PharmaCielo, plans to export cannabis first to Canada, and then beyond. The company was started in 2014 before medical cannabis was legalized in Colombia, and spent two years collecting different cannabis breeds from local farmers. “You have this country where you can find unique strains, historically used for medicinal and religious purposes by indigenous communities,” said Patricio Stocker, CEO of PharmaCielo.
Stocker was previously the CEO of DaimlerChrysler Colombia, and the company’s board includes executives from Philip Morris, a former World Medical Association chairman, two Colombian flower growers, and a Canadian retailer.
The company recently planted its first crop with 30 acres of open-air greenhouses in Colombia, and PharmaCielo’s nearby laboratory is prepared to produce the first medical extracts from this cannabis crop. The company has also partnered with rural communities for cannabis cultivation and has plans to expand to thousands of acres in the near future.
“We want to become one of the world’s largest suppliers,” Stocker said. “This may become a very, very huge model.”
Beyond South America, Canada is also setting its sights on Europe, where countries are increasingly passing medical marijuana legislation. Much like in South America, Canada’s largest cannabis companies are expanding their presence in Europe through strategic acquisitions.
In both the case of South America and Europe, it seems that Canadian cannabis companies are acting to secure a first-mover advantage in regions that are firmly on the path toward medical marijuana legalization. And as the international market for cannabis is projected to rake in $31.4 billion by 2021, it’s no wonder why.