Colombian Company Clever Leaves To Export Cannabis To Canada

Posted: Feb 07, 2019

Clever Leaves, a vertically-integrated Colombian licensed producer of pharmaceutical-grade medical marijuana, will announce later today that it will become the first Colombian company authorized to export cannabis into Canada. Meanwhile, Khiron Life Sciences Corp., a Colombia-based integrated cannabis company with branded urgent-care-like clinics, announced a partnership with U.S.-based cannabis company Dixie, last week. Canadian-owned, Colombia-based cannabis company PharmaCielo, has an export license for medical marijuana oils. The moves by all three Colombian companies position Latin America to join in the global cannabis supply chain officially.

Health Canada, the government agency responsible for national public health and oversight of the medical cannabis industry has issued six authorizations to Clever Leaves on January 16, which allow the brand to import dry cannabis flower from Columbia, into Canada for scientific purposes.

This unprecedented move by Health Canada designates the first time a Colombian company is exporting native-grown cannabis legally into another country. According to a press release, Clever Leaves met all the requirements of Health Canada to obtain the import permit. On January 29, the Colombian National Narcotics Fund (El Fondo Nacional de Estupefacientes or the “FNE”) granted the approvals necessary to export the cannabis from Colombia. Clever Leaves expects to begin exportation by mid-February.

The initial shipment of Colombian cannabis is just for dried flower and is earmarked for testing purposes and will be transported directly to a Canadian lab. The ultimate end-market is the medical market, which is required by Colombian regulations. Whether or not their medical marijuana will measure up to Punto Rojo or Colombian Gold, remains to be seen.

Given the groundbreaking nature of what Clever Leaves is trying to accomplish, the company must establish credibility, inch by inch and compete with the likes of Canadian-owned PharmaCielo Colombia Holdings. PharmaCielo already has 150 registered strains and hold Colombian licenses for cannabis with unrestricted percentages of THC (tetrahydrocannabinol) and CBD (cannabidiol). The company aims to begin commercial sales in the first half of 2019.

"Even though this dried flower will not be able to be commercially sold, this is a critical step of ensuring our product meets international medical cannabis standards in terms of being free of contaminants and meeting other quality standards," says Kyle Detwiler, Chief Executive Officer of Northern Swan Holdings, Inc. "If Health Canada is pleased with the test results, we will plan to ship medical cannabis oil in the future to licensed operators in Canada. At the same time, Clever Leaves will also begin shipping CBD products to the nutraceutical markets in Europe as well as high-THC medical products to select markets, namely Germany." Northern Swan is Clever Leaves' financial sponsor and helped secure their import permit with Health Canada.

A young company, with merely two years of operation, Clever Leaves claims they currently have a working team of two hundred employees. The company also claims to have five hectares (.0193 sq miles or 538,195.521 sq ft) of fields in production, located in the Municipality of Pesca (Boyacá), an extraction and production lab located in Tocancipá (Cundinamarca) and corporate offices in Bogotá. Additionally, a representative for the brand says they are currently cultivating medical cannabis in the first phase of a 1.5 million square foot agricultural production facility.

According to PharmaCielo's website, their facility features 12.1 hectares (0.0467 square miles or 1.3 million square feet) of open-air greenhouses that utilize rainwater and are naturally ready for cultivation. They will also supply plant seedlings to over 1,000 hectares (2,471 acres) of contract growers’ open-air greenhouses for further cultivation.

As far as corporate social responsibility goes, PharmaCielo appears to be the most dedicated to "protecting indigenous communities, which have centuries of experience cultivating ancient Colombian strains of cannabis for spiritual and medicinal use." Through their foundation, the company wants to ensure that local cultivators "have their rightful seat at the table of the cannabis industry." The purpose of the foundation is based on the 2015 United Nations' approved global alliance, which includes an agenda on the 2030 sustainable development goals.

Meanwhile, Chuck Smith, CEO of Dixie Brands (CSE: DIXI.U), a U.S. edibles provider and exclusive manufacturer of entertainer Snoop Dogg’s weed brand, made an announcement regarding their global expansion, by establishing a 50/50 "joint" venture with Khiron Life Sciences Corp. (TSXV: KHRN). Dixie will manufacture and market Kuida products in the United States, as it executes its expansion strategy.

Highlights from Dixie's announcement include that the joint venture will allow for both companies to grab a foothold in the rapidly-growing cannabis market in Latin America. According to a Dixie Brand's press release, in addition to the business' market-ready products and formulations, the new entity will introduce a full line of cannabis-infused products that cater specifically to the Latin American market.

Incidentally, former President of Mexico, Vicente Fox, who failed to legalize cannabis in his country during his term, is ubiquitously on the Boards of various cannabis companies, including Khiron’s.

Regarding the company's other strategies for Dixie in Latin America, "The region is among the world’s fastest-growing cannabis markets as numerous countries move towards legalization," says Smith.

In Mexico, a global top-15 GDP country, the government has introduced legislation to permit medical and adult use for cannabis in 2019. Smith says that according to IQVIA consultant company (formerly Quintiles IMS), there are approximately 68 million potential patients in Latin America that could benefit from medical marijuana.Khiron claims the company has entered the markets in Colombia, Peru, Chile and Mexico, and recently announced plans to enter Brazil and Uruguay through its proposed acquisition of NettaGrowth International Inc. (“NettaGro”). Upon completion of the NettaGro transaction, Khiron asserts that the company will be present in markets which collectively represent more than 75% of the total Latin American population of 620 million people.

According to their letter of intent, Khiron will operate the Latin American joint venture from its base in Bogota, Colombia, with responsibility for regulatory matters, cultivation, manufacturing and distribution. Dixie will contribute intellectual property including its brand portfolio, product formulations, and production processes. The two companies will collaborate on the development of new brands and products as appropriate for local markets.

Colombia is a volatile nation with a high kidnapping and assassination rate, as outlined in There Are No Dead Here, by Executive Director of the Drug Policy Alliance, Maria McFarland Sánchez Moreno.

As for how Clever Leaves plan to assure the safety of their export, Detwiler says, "Colombia has improved dramatically as a country in the last few decades. For starters, the murder rate, in Colombia is now lower than that of Milwaukee and Kansas City.

"Moreover, we have invested over $500 million in Latin America, so we know how to operate successfully. For example, security begins with site selection. In the area in which we farm, which is also less than 15 minutes from a military installation, the murder rate in the last few years has been literally zero."

Colombia's stranglehold on the illicit marijuana trade of previous generations was surpassed by Mexico. According to the Washington Post, "As more countries approve some form of legalization, Colombia is bent on recapturing its global dominance, albeit through export licenses and customs procedures instead of clandestine shipments in the night."

Clever Leaves fits the narrative. "With a robust security protocol, we also are only shipping extracted product. So, strike the image of an ocean freighter full of bales of dried cannabis (under Colombian regulations dried flower product is not permitted) and replace it with an image of precious containers of distilled cannabis oils being transported in humidity-and-temperature-controlled planes departing Bogota’s airport and heading to Toronto or Frankfurt. Since the company was founded in 2016, we are happy to report zero security incidents," Detwiler insists.

Additionally, says Detwiler, "Behind having traditional layers of physical security in terms of private security teams, electric fences, more cameras than I can even count, we will be coordinating closely with police and military officials as well as utilizing a seed-to-sale tracking system to ensure traceability and control."

Detwiler says magnanimously of his competitor that "Khiron has done a tremendous job developing one of the first Latin American CBD brands as well as bringing significant recognition to the world about the potential for Colombia."

Clever Leaves strategy is a bit different from Khiron's– it focuses on international medical cannabis exports, more on large-scale, low-cost farming combined with pharmaceutical-grade processing. Detwiler insists that currently Clever Leaves' farming operation is approximately five times the size of Khiron’s and should be ranked among the purportedly six most substantial producers, measured against the Canadian companies such as Canopy and Tilray.

While the partnership between Dixie and Khiron plans to take over the Latin American market, Clever Leaves plans to join Tilray and Aurora in Canada. A Northern Swan company executive said they have entered into preliminary conversations with Canada’s leading pharmacy chain, Shopper's Drug Mart; although, currently Clever Leaves will not be joining Canadian licensed producers (LPs) Aphria, Aurora, Flowr, Tilray, and Zenabis on the shelves, just yet. However, the company has also set its sights on Germany, via affiliates.

The area of Colombia where Clever Leaves is working "has the second highest sunlight levels," Detwiler points out, "so it’s important to remember that Colombia is also famous for things other than crime, such as coffee and flowers. Most Americans are surprised to learn that about seven in ten cut flowers (albeit not cannabis flowers) imported into the U.S. come from Colombia."

If Khiron, Clever Leaves and PharmaCielo have their way, Colombia will swiftly become world-renowned not only for its coffee, and flowers, but for its legal cannabis.

By Sarah Brittany Somerset
February 7, 2019

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