A Canadian company jumped to the leadership of the industry in just 6 years, now seeks to expand its influence to several countries in the region
Section grower Corey Evans walks between flowering marijuana plants at the Canopy Growth Corporation facility in Smiths Falls, Ontario, Canada, January 4, 2018. REUTERS/Chris Wattie
LatinAmerican Post | Pedro Bernal
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In 2001, Canada began a long journey towards the legalization of the consumption and production of marijuana, first opening the door to its use for medicinal purposes, and only last year, for recreational purposes. Although the legal distribution of cannabis for private consumption is still limited, Canada became a world leader in production, with several private companies listed on the world's stock exchanges, demonstrating that this is a growing industry that will begin to make waves in the global economy.
Leer en español: Conozca al mayor jugador de la industria de la marihuana y sus negocios en América Latina
Undoubtedly, currently, the most important player in the cannabis industry is the Canadian firm Canopy Growth Corporation. The company was born in 2013, founded by Bruce Linton and Chuck Rifici under the name of Tweed Marijuana Inc.
A dreamed start
The two acquired a production plant in Smiths Falls, in the province of Ontario, went to the Toronto Stock Exchange where they raised about 24 million dollars and grew from 0 to 8 employees in just 8 months.
This spectacular early development was followed by a stormy time, in which Rifici sued the company after what he perceived as an unjustified dismissal of his position on the company's board of directors. Rifici retained his shareholding in the company and went on to hold important positions in other firms and investment funds around the production of marijuana.
In 2015, when the Canadian government expressed its willingness to carry out the legalization of marijuana for recreational purposes, the value of Rifici's shares increased by 25% instantaneously. When legalization became a reality, Canopy Growth sales exploded again, growing 360% according to Market Watch.
Now, in the third quarter of 2019, the first to consider marijuana sales for recreational purposes, Canopy Growth sales increased by 13% to approximately $ 93.5 million.
Financial success has led Canopy Growth to start expanding its operations beyond the limited Canadian market. Their greatest ambition seems to be to capture the United States market as legality breaks through.
To secure its position in this country, Canopy Growth has concentrated its efforts on acquiring similar American companies that have already been coupled to the legal landscape of their State. This allows them to have an advantage over the competition as legalization progresses in states like Massachusetts.
As an example, in April 2019, Canopy Growth acquired 100% of the shares of Acreage Holdings for 3,400 million dollars conditioned to the total legalization of cannabis in the United States. Acreage also listed on the Toronto Stock Exchange, and it became one of the largest marijuana firms in that country, according to Bloomberg.
Operations in Latin America
Canopy Growth has also sought to enter Latin America, but with other intentions. Although this region may be an interesting market for medicinal products, whose legalization is advancing in many countries, it is still not seen as lucrative due to the legal obstacles involved.
Latin America is seen as fertile land for marijuana and as a producer of inputs for the industry since it offers climatic advantages that result in a reduction in cultivation costs.
Not only can you grow the plant throughout the year due to the tropical climate, but you can grow outdoors without the need to heat huge facilities as they had to do to grow in Canada. This, added to the possibility of paying lower salaries, makes the region attractive in the eyes of the cannabis industry.
"It does not make sense to spend 10 million dollars adjusting a warehouse in Paris, Ontario to grow cannabis. That alone does not make sense from an agricultural or agronomic perspective, "said Michael Galego, director of the cannabis company ICC Labs, which already has operations in Uruguay.
Canopy Growth, on the other hand, arrived in Latin America through Brazil and Chile, acquiring the companies Bedrocan Brasil and Spectrum Chile.
"Canopy owns 85% of Spectrum Chile SA and carries out research and development activities in Santiago. In Brazil, Canopy owns approximately 39% of Bedrocan Brazil SA, which facilitates the importation of Cannabis into the Brazilian market, as well as 38% of Entourage Partiçipaoes, which carries out research and development activities in Sao Paulo "reads a statement from the company to its investors of January.
The company also looks at Colombia, having established an alliance with the Colombian pharmaceutical company Procaps for the encapsulation of medicinal products based on cannabis.
"This agreement adds instant capacity to Canopy Growth's global production chain and positions the company to serve Latin American markets with a wide range of differentiated and high-quality products based on cannabis," said Mark Zekulin, president and co -CEO of Canopy Growth to the Portafolio newspaper.