June 2018

No. 001 Junio 2018No. 001

June 2018

nostromo
LATIN AMERICA RESEARCH & ADVISORY

Table of
4 5 6
INTERVIEW ALVARO TORRES COMPANY PROFILE
News Round @ColCannIn nostromo.com.co
Contents Khiron Life Sciences Cleaver Leaves

FEATURE ARTICLE

Ripe to Reap
Despite a fractious election
campaign and strong differences
between the candidates,
Colombia’s nascent medical
marijuana industry looks set to
boom irrespective of the result.

C olombia enters a new era in 2018.

The country’s first new president
in eight years will inherit a post-conflict
nation and one that has recently
ascended to the OECD and become the
first Latin American member of NATO.
Ivan Duque (Left), Gustavo Petro (Right) Photo taken from Google
As it attempts to move firmly into the
ranks of upper middle-income countries, Images
already been pledged to the sector. sunlight and a range of altitudes and
Colombia faces a pressing challenge:
micro climates, Colombia has long been
providing jobs, investment and services
World Leader considered a perfect environment for
for post-peace development that could
While Canada remains the global cannabis cultivation. “The big advantage
cost anywhere from $30bn to $90bn
industry leader, Colombia has the is sunlight, which is key to raising
over the next decade.
potential to be a major player in the cannabinoid levels in the plant” Juan
The country also stands on the brink of
production and commercialization of Carlos Rey, who advises on marijuana
developing a new industry that could
medical marijuana. In January 2018, the licenses, told CCI. “Greenhouses are
play a growing role in this process.
International Narcotics Control Board not essential and harvests can also be
Medicinal marijuana has the potential
quickly rotated, making Colombia an
to provide foreign investment, export
excellent centre of low cost production.”
earnings, rural jobs and cheaper By May 2018 over 80 cultivation The country’s experience as a world
healthcare at a crucial juncture in the licenses had been approved – 31 class flower exporter also helps. “We
country’s history. for psychoactive cannabis and 43 can adapt the existing industry to serve
Following two years of discussions, in for non-psychoactive strains – and cannabis production, meaning we have
May 2016 congress passed Law 1787 a further 35 licenses had been good access to technology, qualified
with 83 votes in favour and 3 against. The approved for the processing of the personnel and providers,” Gustavo
law allows for the cultivation, processing plant. Escobar, CEO of Clever Leaves, a local
and export of medicinal marijuana
marijuana company, told CCI. “Overall
products and, while many of the finer
operational costs for cultivation could be
regulations have yet to be ironed out,
(INCB), the UN body that controls the 35% lower than in competitor countries.”
a number of local and international
global cultivation of medicinal narcotics,
companies have become the pioneers in
allotted Colombia 40.5 tonnes of Domestic Market
this exciting new segment. The law does
marijuana production, the largest quota Cost-competiveness could make
not legalize recreational use or permit
in the world and 44% of the total. The Colombia a big-hitter in the global export
the commercialization of the cannabis
US and Israel, the next largest, were market as soon as key destinations such
flowers.
allotted 33.4 tonnes and 10.1 tonnes, as Canada and Germany clarify their
One local executive estimates that
respectively. stance on imported products. But in
upwards of $50m of investment has
With fertile soils, 12 hours of daily the meantime, the domestic medicinal

© 2018 Colombia Cannabis Investor Newsletter. All Rights Reserved. 1/6

 June 2018
No. 001 Junio 2018

market holds excellent – and immediate has rejuvenated the Colombian left and Company List by License Distribution
– potential. spooked investors in the country’s oil Approved licenses
In 2015, a statutory law reform expanded and mining sectors. Despite the novelty National Scientific
Company Use Research Exports
access to healthcare to all Colombian and controversial nature of the cannabis
Pharmacielo Holdings* l l l
citizens. The obstacle, unsurprisingly, industry, however, executives remain Cannavida* l l l
is funding and the development confident that it will remain unaffected Ecomedics* l l l
of cheaper marijuana alternatives by the election result. Econnabis* l l
to existing opiate medicines seen “The right-wing is against recreational Cannalivio l l
favourably by the government. Khiron use, but Duque is in favour of new Pideka l l
Life Sciences, an integrated company business and he won’t stop the Khiron Colombia* l l l
Medicamentos de Cannabis (Medcann)* l l
backed by Canadian capital, estimates current process,” says Escobar. “Petro Cannabis Medicinal Colombia l l l
there are 5 million potential patients in is more liberal, there’s no real risk of Cannabis Medical Group l l
Colombia and has focussed its business expropriation and there is the potential Colombian Organics l l
development on educating local upside of recreational legalization. But Med Colombia l l
doctors. At present plants with THC we’re not thinking about that now, we’re Original Natural and Effective l l l
values of under 1% can be sold over the very much focussed on the medicinal
Santa Marta Golden Hemp* l l
Tailormed l l l
counter, while higher values require a market.” Pharmacol Cannabis l l
license from INVIMA, the country’s 4-tier Having passed congress and acquired Green Cannahealth l l l
food and drug licensing agency. the status of law, to repeal or modify the Biominerales Pharma l
“It’s great to have a cost advantage, law would require a concerted political Sativa Nativa l l
but my concern is whether that’s will that simply doesn’t exist. “Colombia Vital Green Products l l
sustainable in the long term,” Alvaro has strong institutions, and the law was
One World Pharma l l
Organic Sativa l l
Torres, Khiron’s CEO told CCI. “I find passed by 95% of congress,” says Torres. Inversiones Colcana l l
Colombia as a domestic market more “The country and the community are l l
Company Profile Nusierra Colombia

interesting because we don’t have supportive of this industry. It creates Biocannabis Life l l
to register patients. If we can make a jobs in the countryside, brings in FDI and Procanmed l
quality product here, it’s good for the – with growing formalisation – will help Colombian Cannabis SAS* l l l
Colombian industry as a whole.” reduce illegal cultivation.”
4Front Colombia l l
ICC International Cannabis Corp l l
Estado Verde l
Easy Run-off Ripe to reap Bionatural Solution l l l
Following the first round of presidential However, as with any industry built Greenfarma l l
elections held in late May, two on the back of regulatory change, Colmed Pharmaceuticals l l
contrasting candidates will face off on Colombia’s marijuana segment faces Wellness Farmacéutica l l l
17 June. The favourite, Ivan Duque, is a a number of future challenges and the
Lasanta l l
Pharma Dream l l
centre-right, pro-market candidate with early entrants have bound together to Cannabis Buen Destino l l
the formidable backing of Alvaro Uribe, form ASOCOLCANNA, the first cannabis Puriverde l l l
who was president from 2002 to 2010. business association. Uncertainties The Green Mile l l
The outsider is Gustavo Petro, the left- remain over the application of a cannabis
wing former mayor of Bogotá whose tax, the export process and intellectual
impressive performance in the campaign property issues. Sourcing domestic
financing, given the novelty and risk of
the sector, is also a pressing concern for
local growers and manufacturers.
Colombia Cannabis Investor was
established to shed light on and
bring clarity to the challenges and
opportunities presented by this new and
exciting market. Through interviews and
research with key government, private
sector and health care professionals our
monthly publication aims to become the
premium source of timely and accurate National Use, Exports
business intelligence for local and National use, scientific research and exports
National use
international investors. Exports

Public data retrieved from the Ministry of Health (May 2018)

*: Members of Asocolcanna

© 2018 Colombia Cannabis Investor Newsletter. All Rights Reserved. 2/6

 No. 001 Junio 2018

The Path to Growth

Can be Confusing
Let Us Show You the Way
Colombia is set to become a major global provider of medicinal
marijuana products. There is strong government support for
an industry that has the potential to provide rural jobs and cut
domestic healthcare expenditure. But the nascent industry is
fraught with challenges and start-ups must account for regulatory
risks, access to finance and a morphing security situation.

Nostromo, publisher of Colombian Cannabis Investor, counts

with a team of experienced consultants and lawyers to help new
firms navigate these challenges. Contact us today to find out
how our team could help you build and grow your medicinal
marijuana company in Colombia.

nostromo
LATIN AMERICA RESEARCH & ADVISORY @ColCannIn
© 2018 Colombia Cannabis Investor Newsletter. All Rights Reserved.
nostromo.com.co 3/6

INTERVIEW
The First to Enlist
CCI: In a nascent industry, how
did Khiron formulate its growth
strategy?
AT: When I first read about Colombia’s
cannabis potential it occurred to me
that the country is really good at making
commoditized products - such as coffee,
bananas and oil - but we don’t make
added-value products. My partner Andrés
Galofre used to be the general manager
for Advil, and had experience creating
added value for a commoditized product.
Cannabis is just like ibuprofen: anybody
can produce it. How do you differentiate
yourself? For us, it was about brand
creation in an industry in which you have
​​Photo provided by Khiron Life Sciences Corp. to educate doctors and patients. Every
month we host conferences to educate
Alvaro Torres,
CEO, Khiron Life Sciences doctors on cannabis products. Today,
when people think about medicinal
cannabis in Colombia, they think about
Khiron. That’s exactly what we set out to
In May, Khiron Life achieve.
Sciences became the first
first Canadian cannabis CCI: What has been the response
company with core from doctors and what is the scale
operations in Colombia of opportunity in the Colombian
to list on any exchange market?
globally with their listing in AT: A couple of years ago, maybe one in
the TSX:V Ventures. five doctors would have been open to
prescribing cannabis products. However,
this is not because they weren’t open to
the idea, they just had lots of questions
about dosages and associated risks.
We have hosted 3 conferences, and
reached out to 2000 doctors so far. We
interviewed 200 Colombian doctors and
nearly four out of five said they could
prescribe medicinal marijuana. They
understand the risks of opiate addiction.
In comparison, no one has ever died of
a cannabis overdose. The conferences
have been a huge success, and medical
associations have started to talk about
cannabis. Colombia has a population of
nearly 50 million people and around 5.6
million patients who can benefit from
medical cannabis. We can have open
conversations with doctors and patients,
create loyalty and build lasting patient
© 2018 Colombia Cannabis Investor Newsletter. All Rights Reserved.
June 2018
No. 001 Junio 2018
relationships, which to us are essential
CCI: What influenced the decision to
list on Khiron on the Toronto Venture
Exchange?
AT: Unfortunately, venture capital in
Colombia is many years behind. It’s an
ongoing effort, you can´t just ask for
2 million USD, you need more capital
constantly to be ahead of the curve. We
decided to go to Canada, where I had
some experience in my previous position
with SNC Lavalin. In May, we became
the first non-resource based Colombian
company to list on the Toronto Stock
Exchange (TSX). I spent the last 18
months travelling around Canada
promoting Colombia and informing them
The firm maintains a strong focus
on brand-building, the Colombian
domestic market and aggressive
regional expansion with the goal
of reaching a million patients in
the coming five years.
that it isn’t the country they see in Narcos.
It’s clear there is a huge opportunity. The
domestic Canadian cannabis market
is oversaturated and they’re looking
internationally, some of them to Uruguay
but predominantly to Colombia. I think
we’ll see more Colombian companies
listing on the TSX.
CCI: What plans does the firm have
for the coming five years?
AT: It’s everything at once. We can’t
afford to lose focus on any aspect of the
industry. We’re now working on getting
our quotas from the government so we
know how much THC we can grow. We’re
also working on our facilities, developing
our lab and having our own product
on the market by the end of this year.
Unfortunately, you can’t go one step at a
time, so we’re already planning our move
into Mexico where regulation is set to be
issued in the coming months.
4/6

COMPANY PROFILE
Clever Leaves
Photo taken from Clever Leaves official webpage.
Even the bold entrepreneurs who bought up the first wave of
Colombian cannabis licenses have been taken aback by the
explosive growth and international interest in the medical
marijuana sector.
Gustavo Escobar, CEO of Clever Leaves, has 13 years prior
experience in the Colombian healthcare sector, advising
insurance companies, IPSs and laboratories. “The scale of the
opportunities in the medicinal sector is hard to comprehend.
Its developing far faster than anyone imagined” he told CCI.
With connections in the regulatory arena, entrepreneurship
incubators and some phytotherapeutical labs, Escobar was
well placed to enter the marijuana industry in response to
regulatory changes beginning in 2015. The company’s
partners also had experience in the healthcare sector, and
Clever Leaves was able to strike up a partnership with
Labfarve, a local laboratory specialized in phytotherapeutic
medicine. Later, in 2016, following receipt of the license for
transformation of cannabis for medical and scientific grounds,
Clever Leaves was officially born.
Research
The company began to investigate the adaptation of different
plant varieties with thermic floors and the cannabinoid profile
development of the plant. Finally, they decided to establish
the cultivation operation in Boyacá and the extraction and
formulation operation near Bogota.
Since the definition of the initial business model, Clever Leaves
has focused on high quality products and prime materials that
provide alternative solutions for patients suffering from diverse
pathologies and develop the medicinal cannabis market at a
local and international level.
“You can’t just plant a large-scale production when
© 2018 Colombia Cannabis Investor Newsletter. All Rights Reserved.
June 2018
No. 001 Junio 2018
Cultivation:
15ha GAPC Compliant; Boyacá
Extraction:
GMP compliant 15m ml cannabis oil per
year capacity
HQ: Bogota
regulations specifics are still missing and developments are
still in process”, says Escobar.
Development
By March 2018, the firm had built infrastructure to cultivate
the first hectare, of 2018’s initial 5 hectares. Clever Leaves
continues in the gradual process of cultivating with research
and commercialization purposes. The firm plans to produce
cannabis from 100 hectares in the next five years and have
decided to triple the original planned size of the laboratory.
As other local players have found out, international investors
were very interested in a toehold in the market. “When we
set out our goal it was to create a minimum-viable product,
test the market and when the investor realizes the product is
good,then he invests,” says Escobar, “but in these business
models it works the other way around; investors value
companies pioneering the licensing processes and building
initial operational basis with solid and experienced teams.”
Investment
In 2017 the firm signed a deal with NYC based Northern Swan
venture capital group, with an investment ticket de inversion
around 15MM U$. Escobar says his firm had received
anumber of proposals but recognized Northern Swan, a firm
with significant overseas experience, as “the smart money”
since it allows Clever Leaves to become part of a platform of
companies focused in the cannabis industry at a global level
and thanks to the synergies it can bring in the future. Evidence
of the benefits came in March 2018, when Clever Leaves
signed an agreement with Namaste Technologies to import
product to Canada.
5/6

News Round
Financial
PharmaCielo to raise 60 million USD
with Private Placement of Subscrip-
tion Receipts in partnership with
AAJ
PharmaCielo Ltd., the Canadian parent
company of Colombia’s major cannabis
oil producer, appointed a syndicate of
agents led by Echelon Wealth Partners
Inc., Cormark Securities Inc. and GMP Se-
curities L.P. to sell subscription receipts
of PharmaCielo in a private placement
basis. The company expects to obtain
gross proceeds of 60 million USD, at a
3.35 USD price per subscription receipt.
Aurora Cannabis (TSX: ACB) and
MedReleaf Corp. (TSX: LEAF) join
efforts to expand by signing an Ar-
rangement Agreement
Former Canadian competitors Aurora
Cannabis and MedReleaf Corp. merged
to become a global giant in the canna-
bis industry. Through the signed Ar-
rangement Agreement, Aurora Cannabis
bought MedReleaf Corp. for 2.900 mil-
lion USD worth in stocks, an operation
that promises to increase production
capacity up to 570,000 kg of hemp, as
well as expand from North America and
Europe with currently 11 laboratories to
Australia and Latin America.
Aphria Inc. (TSX: AHP) seals supply
deal with Colombian pharmaceuti-
cal.
Aphria Inc., a Canada-based pharma-
ceutical producer of medicinal cannabis
products, signed an exclusive supply
and distribution agreement in May with
Colcanna SAS, a Colombian licensed
trader for cannabis medicine. Via this
agreement, Aphria Inc., currently list-
© 2018 Colombia Cannabis Investor Newsletter. All Rights Reserved.
ed in the Toronto stock exchange, ex-
pects to enter the Colombian market in
a strong position and continue its first-
class growth rates, evidenced by its mar-
ket capitalization of 2.68 billion USD on
the TSX.
International Cannabis Company
(TSX-V: ICC) expands to European
markets
After starting works on a 124,000-sq. ft.
greenhouse in a leased land near Bo-
gotá, International Cannabis Company,
fully licensed cannabis producer in Co-
lombia, has recently signed a letter of in-
tent for cannabis exports with CanPhar-
ma, a licensed narcotics importer based
in Germany. ICC expects this exports
agreement for cannabis-based medi-
cine, as well as their recent acquisition of
25% of Spanish company Global Group
Kalapa S.L., will allow them to expand to-
wards Europe. The company hopes the
negotiation of THC products to be cul-
minated and signed by the second half
of 2018, a challenge that is not stopping
them from growing cross-borders.
Khiron (TSX-V: KHRN): the first fully-
licensed company listing in a highly
quoted stock exchange.
On May 24th, Khiron Life Sciences, one
of the first companies to acquire a full
cannabis cultivation and production li-
cense in Colombia, announced its entry
in the Toronto TSX Venture Exchange.
The company expects to promote its
growth in Colombia and Latin Ameri-
ca after developing a strategic alliance
with the Colombian Neurological Asso-
ciation, listing on the Toronto Stock Ex-
change and acquiring a 7,500-sq. meter
land ready for commercial cultivation.
Khiron (TSX-V: KHRN) begins Latin
American expansion in one of the
June 2018
No. 001 Junio 2018
biggest markets
One week after listing in the TSX, Khiron
Life Sciences Corp. has announced its
sponsorship of the Cannamexico World
Summit as their first step in entering the
11.7 million patient Mexican market. In
the following months, Khiron expects to
open a Mexican subsidiary, subject to
TSX approval, which will allow the com-
pany to keep a competitive advantage
even before regulation is fully issued.
Khiron has carefully studied the Mexi-
can market in terms of regulations and
market needs, and CEO Álvaro Torres
has publicly stated the company “sees
an attractive opportunity to transfer the
wealth of knowledge we have created
into this new market.”
Licensing
Khiron (TSX-V: KHRN): the first
cannabis producer in Colombia to
receive INVIMA approval for CBD
products
After going public on TSX and announc-
ing a Latin American expansion, Khiron
received approval from INVIMA, the lev-
el 4 WHO drugs and food surveillance
entity, to produce, sale and export can-
nabidiol (CBD) based products. This
approval will not only reassure Khiron’s
advantageous position in the medicinal
cannabis industry, but will also allow
them to fulfill their objective of launch-
ing the first products by the fourth quar-
ter of 2018, in a domestic market with an
estimated potential of 530 million USD a
year. Moreover, Khiron expects INVIMA’s
approval to have positive effects in for-
eign markets, given it has the same level
WHO status as USA’s FDA and Canadian
CFIA and Health Canada.
6/6