Canadian Cannabis Companies Set Their Sights On South America

Photo Credit: Reuters

Much has been made of the marijuana M&A spree afoot in Canada. Just this year alone, licensed producer Aurora Cannabis Inc. agreed to acquire CanniMed Therapeutics Inc for $852 million, which would create the largest cannabis company in the world. Bank of Montreal got into the weed game with a $175 million deal with Canopy Growth Corp. Skyrocketing cannabis stocks are leading to comparisons to the dot-com boom, and American marijuana companies are looking North for more capital and a friendly business environment.

Amid the frenzy, Canadian cannabis companies are increasingly setting their sights on South America, where several countries are liberalizing their cannabis laws.

Cannabis Wheaton, a Canadian cannabis streaming company, announced that it had acquired 80% of Uruguay cannabis company Inverell. The Montevideo-based business has a federal license to produce high-CBD, low-THC cannabis strains.

“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,” Hugo Alves, president of Wheaton, said in a statement.

Uruguay is the first country in the world to fully legalize marijuana, though the market is tightly controlled by the government.

Meanwhile, other South American countries have been legalizing marijuana for medical use. Peru, Chile, and Colombia have all passed medical marijuana legalization laws.

Canadian cannabis companies have taken a particular interest in Colombia: Three of the six federally licensed cannabis producers are headquartered in Toronto. PharmaCielo, one of those three, plans to export cannabis to Canada and beyond.

As the U.S. continues to deal with the conflict between state-legal marijuana markets and federal prohibition, Canada is clearly getting a jump on the growing international cannabis industry.

On Monday, Canadian cannabis company Aphria Inc. agreed to acquire Nuuvera Inc. in a $826 million deal. Here’s the catch: Nuuvera has no track record of cannabis cultivation and doesn’t even have a license to grow and sell marijuana in Canada. But it does have a license to import and export cannabis products, which Aphria hopes will give it access to international markets like Uruguay.

At the same time, Canadian companies are staking a claim in Europe, where countries are increasingly adopting medical marijuana legislation.

While there are fears that the U.S. will get left behind, America still dominates the global cannabis market. “I don’t see the [Latin American] market being so static that… a change in federal regulations would prohibit [American companies] from being able to catch up,” Bethany Gomez, Director of Research for Brightfield Group, previously told me.