The boom times for Colombian pot came to an end due to the onset of the War on Drugs—which President Nixon officially declared in 1971— and the rapid rise of indoor cannabis farming in the fifty states. Today, with nearly half of U.S. states having legalized recreational consumption, and with the end of federal prohibition perhaps in sight, is there any chance that Colombian cannabis can regain its former glory days—this time legally— in the American market? Much depends on if, when, and how federal prohibition is repealed, but also on Colombia’s capacity to reform its own byzantine drug laws.

A law approved in 1986 (no. 30) defined any quantity up to 20 grams of marijuana as the “minimum dose” for personal consumption, and it applied a series of criminal charges for its possession. In 1994, however, Colombia’s Constitutional Court ruled that no individual could be penalized for carrying said minimum dose. However, the law, which is still in effect, makes it a criminal offense to possess or carry a narcotic, “whatever its quantity, for the purpose of distribution or sale.”

As I wrote in Foreign Policy, the minimum dose rule provides a good example of Colombia’s trademark legalism: unless one grows cannabis oneself (more on which later), the only way to obtain a legal gram for personal consumption—or 20—is by buying it, illegally.

Eventually, local drug warriors would have their say. In 2009, former president Alvaro Uribe passed a Legislative Act (no. 2) which altered Article 49 of the constitution so as to prohibit “the possession and consumption of narcotic or psychotropic substances, unless prescribed by a medical doctor.” The following year, Uribe’s government introduced a bill (Law 248) that sought to regulate the legislative act and criminalize the minimum dose. The objective, professors Hernando Londoño and Adrian Restrepo argue, was to bolster the war against the drug cartels by targeting internal consumption. This latter initiative failed and the minimum dose was maintained. Nonetheless, by enshrining drug prohibition in the constitution, Uribe made any future reform of the country’s drug laws extremely difficult.

In 2015, when the government of former president Juan Manuel Santos sought to legalize medical marijuana, it had to resort to a decree (2467) that expanded on Law 30 of 1986. The decree regulated cannabis production for “strictly medical or scientific purposes.” While legalizing the medical use of marijuana was a step in the right direction, the local industry has been saddled by red tape.

This editorial originally ran June 15 in the Cato Institute Blog. It is generously shared under a Creative Commons license. The original can be read here.

For instance, physicians still are allowed to prescribe only manufactured cannabis‐​based products, not dry cannabis flower. Also, the use of CBD—a multibillion‐​dollar industry in the U.S.—is not allowed in Colombian food, beverages, supplements, or veterinary products. Since the local market has not been allowed to develop, local cannabis firms—including a few that raised funds in the U.S. and are even listed on the Nasdaq—are on the verge of bankruptcy. Potential investors, meanwhile, are eyeing other markets, and rightly so.

The black market, however, has thrived, not least because the 2015 decree allowed the “self‐​cultivation” of up to 20 cannabis plants for personal use without a license from the Health Ministry. Since each plant can produce around a kilo of marijuana, massive amounts of pot are grown legally, only to be transported and sold illegally. Which is to say, Colombian lawmakers have created the worst of all worlds for consumers and legal producers alike, this in spite of the industry’s immense potential to generate profits, jobs, and tax revenues.

But Colombia’s Congress now has a chance to unravel the marijuana muddle. A new Legislative Act, introduced by Representative Juan Carlos Losada, a member of the Liberal Party, seeks to insert an exception for adult, recreational cannabis consumption into Article 49 of the constitution. This would create a legal market to buy, sell, and distribute marijuana in Colombia. After being approved in seven debates in Congress, Losada’s project faces one final hurdle in the Senate on Thursday, June 15.

Legislators should approve the measure. Colombian conservatives should keep in mind that extreme leftist Gustavo Petro, the current president, did not bring forth the initiative (despite his supposedly revolutionary stance against the drug war). Hence, supporting marijuana legalization does not involve supporting the government. Center‐​right politicians also should remember the words of the great Alvaro Gómez, the conservative leader who warned as early as 1976 that the war on drugs was doomed to failure.

Regulating marijuana use for adults, on the other hand, implies seizing the local market from violent, criminal gangs and leaving it in the hands of the legal, regulated businesses that can assure quality, safety, and transparency. Eventually, when the United States and other countries open their markets to cannabis products from other latitudes, Colombia can regain its standing as a global exporting powerhouse. Far more than foreign aid handouts, the country could use a legal marijuana bonanza.

Finance Colombia: So, I’m here with Luis Merchan. He’s the CEO of Flora Growth. So, thanks for your time. It’s always great to talk to you and it’s fun to report on you guys because it’s always good news and that’s more fun to report than bad news.

Luis Merchan: [laughs] for sure Loren, it’s good to be here. Thank you for the invitation.

Finance Colombia: So, Flora Growth. I think you guys have a really interesting business model because when it comes to cannabis products, a lot of companies specialize kind of more on lifestyle brands and on the CPG side of things, Consumer Packaged Goods and then there are other companies with more of a medical focus, but you guys are really broad and you guys have kind of…I know you have your House of brands which focuses on CPG products and we’ll get to that.

But let’s talk about you recently received a certification kind of a lab certification and I’m not an expert in cannabis or well, so maybe if you can kind of explain what a CGMP certification is and what that means for the company?

Luis Merchan: Yeah, of course Loren. Look, you’re absolutely right. Our strategy has been the core of our company is it has been our guiding pathway to achieve the revenue growth that we have been able to achieve over the last four years and it’s anchored under 3 pillars. It’s Consumer Packaged Goods which we call House of brands; commercial, wholesale and pharmaceutical.

In pharmaceutical, we focus specifically on the manufacturing and distribution of pharmaceutical grade product, as well as scientific based research that supports those pharmaceutical good products. So yesterday we announced, actually this morning I believe, we announced that we achieved a CGMP certification in our lab that is anchored under the third growth pillar pharmaceutical that’s called Flora Lab four and CGMP stands for Current Good Manufacturing Practices and is the designation that is given to laboratories that manufacture compound medications that are prescription grade products, that are specifically tailored for that one patient.

So, for a just achieve that certification specifically for cannabis products, which means that we now are going to be able to manufacture and distribute these products which are covered by medical healthcare in Colombia to patients to the millions of patients that are looking for these types of products inside the country.

Finance Colombia: That’s good to know. So now we’re my understanding is that you guys are going to release several different prescriptions, I think 8. Now how does that work? Are these like, is that analogous to medicines where it’s like I can go and buy atorvastatin or I can go and buy, I don’t know, acetaminophen or paracetamol or something like that, or is it going to be more of a custom type of thing? Are you guys coming out with medications? And forgive me, I’m not an expert in that area, so I don’t really understand how that works?

Luis Merchan: Yeah, but you’re absolutely right, Loren. So, we do have 8 medications that have either cannabidiol or THC in the formulation, various different levels of ratios. So, we have 2 to 1 formulation, 3 to 1 formulation depending of the ailment or the condition that each formulation is intended to try, but that formulation, once is prescribed to that patient; the doctor and the patient will work together to adjust the dosage of that of that formulation to tailor the specific needs of that patient.

So, it’s a lot of feedback and interaction between the patient and the doctor to find the perfect customized formula, which is precisely what customers and patients are looking today and you know you mentioned acetaminophen and what consumers and patients do today is they self-prescribe, they kind of go and they get 100 milligrams or 200 milligrams or 500 milligrams and if they want to get something more than they just really have to get prescription and get 800 milligrams, but these type of interaction removes that type of guessing from the patient and allows for better clarity and interaction and more importantly, better efficacy when it comes to treating the conditions that the patients are going to the doctor for.

Finance Colombia: Now are these formulations? Are they THC or are they CBD or are they some other type of thing?

Luis Merchan: They are both. So, we have 4 formulations with CBD alone. We have 4 formulations that have THC and a combination of THC and CBD.

Finance Colombia: OK, good to know. So, let’s get into to the good stuff. You guys had recently come out, just this week, you had your earnings call and you’ve generated almost $40 million in revenue. Is that U.S. dollars or Canadian dollars?

Luis Merchan: US Dollars. we report all in US dollars.

Finance Colombia: So that’s right. I forget you guys are on NASDAQ, which is interesting because a lot of a lot of Cannabis oriented companies are in Toronto, so forgive my brief lapse there. That’s over 300% compared to 20/21. Not bad. Well, so maybe you can explain, you know, normally when the CEO, they say explain yourself, it’s usually something bad happened, but I’m going to say explain yourself because these are some this is some pretty good news.

Luis Merchan: Yeah. Look Loren, once again, this is a result of our strategy. We anchor the company and I think it’s good to look back at 2019 where we were a pre revenue company and is it crazy to believe that just 2019 we’re a pre revenue company and just last year we delivered close to $40 million but it’s a testament to the strategy that we have put in place. We understood early on that some of the regulatory framework to activate the export of cannabis of high THC flower, which amounts for almost 60% of the trade globally, was going to take some time and then in fact, that didn’t take place in Colombia until April of last year.

So, we were operating without being able to activate the most important source of revenue in the cannabis industry. But even beyond that, you not only need the country of origin to have some regulatory changes, you also need at the destination to have meaningful regulatory movement so you can actually connect the supply chain and for that reason we focused early on CPG, because CPG has lower barriers of entry. They are very high and we focused on brands or our food and beverage products and these portfolios of brands where the outstanding outliers of the industry and I would say of our company last year performed exceptionally well both from a Consumer-Packaged Goods standpoint, as well from an M&A perspective, we acquired a couple of companies that really allowed us to hyper charge the growth in inside of company.

Finance Colombia: Now, you mentioned CPC. You guys recently did a deal and I think your products are now in the Juan Valdez chain, which is kind of like the Colombian version of Starbucks. Because you know, Juan Valdez is owned by the Coffee Growers Association and outside of Colombia, it’s mostly known as kind of the export brand for coffee. But here in Colombia and actually increasingly internationally, Juan Valdez is kind of like the Colombian Starbucks, so tell me about that deal that you guys have done. Tell me about their products. You guys are now distributing through Juan Valdez and what you see in the future for those types of arrangements?

Luis Merchan: Yes, we have been very active in the Colombian territory for a number of reasons. We operate there. So, we should own that market and we do, so that’s number one, and we understand very well how to operate in retail, how to operate distribution both in supermarket chains, small chains, coffee chains as well as pharmaceutical drug stores. We are in thousands of distribution points in Colombia already. Juan Valdez It’s just another major deal that we have inked inside the country and our strategy is key there, It’s very simple.

We know eventually regulation is going to catch up to what consumers are wanting and that means access to CBD from a wellness and lifestyle perspective, access to THC from a recreational perspective, the government is moving very efficiently through the debates and through the amendments to make that happen, but as we make that a reality, we knew we needed to have distribution everywhere because those are those companies that already have established a brand, have already established relationships with distribution have already established a relationship with consumers, are going to have an easier time introducing products that have CBD or THC in them.

So, to deal with Juan Valdez is a juice deal. We sell our Mamba juices there. When you go to a Juan Valdez store the only juices that they’re selling right now on their shelves are mamba juices. These are juices that we make in Colombia. That we manufacture with fruits that are endemic to the country and we work with communities to do so. So, it’s a very beautiful social equity story behind the brand and it connects really well with the Juan Valdez story inside Colombia and we expect that in the midterm we’ll have perhaps the opportunity to add products that have our cannabinoids inside of them.

Finance Colombia: Interesting. So, you mentioned that you’re in thousands of…you went from pre-revenue in 2019 to now you’re in thousands of retail points of distributions. You know companies can grow or they can be profitable. It’s extremely difficult to do both. Your profits are up almost 500 percent, 494%, which is astounding and gross profits of over $14 million on revenues of $37 million.

That’s a hell of a margin. How are you able to? Because you’ve got to invest in growth, you’ve got to build out your supply chain. Especially as a new company, you’ve got to ramp up production. You’ve got to build capacity. How is it that you’re able to grow rapidly but still maintain such a high margin and resulting of course in a high gross profit?

Luis Merchan: Yes, I would say that the answer to the margin question is we fail very fast. We should fail faster by the way, and that means that you know we put products to market and if the margins are not there, if they’re not turning, if the inventory turn out not adequate to what we’re expecting in terms of margin, then we fail very quickly and discontinue that product and then we moved two products or categories that actually have high margin contribution.

And an example of that, these are our Just Brands, product portfolio, our CBD gummies are the most some of the bestselling gummies in in the entire world, in the United States specifically, but by extension in the world. We have one of the best sleeping gummies out there selling multi millions of dollars on an annualized basis, but we innovate and like last year, a good example was that we a CBD plus line and that basically meant adding additional cannabinoids and the dosage of each one of our products. So, we could capture those consumers that tried CBD in the past, but they had bad experience with other brands.

We’re targeting those consumers and we’re getting some great results from a margin perspective, 60% margin, 65% margins on those categories. We just continued then those products that have 10% margin, 20% margin and move those dollars to the high margin contribution. Now there’s still work to be done in terms of operational efficiencies, but we certainly have been making a tremendous amount of progress as we continue to accelerate growth.

Finance Colombia: Now I don’t want to get you in trouble. But you’ve mentioned the kind of moves that the administration, the current Colombian administration is making. What has there been, you know, the country, the President right now has submitted a health bill. The Congress, the health bill is very controversial. A lot of people don’t like it because of things unrelated to the cannabis market, because of maybe the role of government in providing healthcare.

But what has the…how is the administration stance regarding cannabis products and also cannabis cultivation and exporting? How has that changed compared to the previous administration and what has your experience been now coming? Closing out the first year of the of the new administration, how is that? What’s the administration? What’s it been like working with the current administration?

Luis Merchan: You know it’s a great question and I’ll answer in a fair way. I would say there certainly is at the highest levels of government a tremendous push towards doing two meaningful things: supporting native communities that have been disproportionately impacted by the War On Drugs and by doing so, legalizing those drugs that have those plants that have been considered to be illicit drugs and for that reason, those communities have been disproportionately impacted.

So, it’s very clear that the government is working on that transition and supporting those native communities. You could hear that from the President, from the Vice President, from the highest levels of government,  but when you come down to the regulation and operating in today’s environment, Colombia has a company like mine has to deal with four or five separate regulatory agencies to put a product to market and that type of bureaucracy creates a tremendous amount of stoppage and bottlenecks that is not allowing companies to move as quickly and efficiently with go-to-market strategies as they as they should and that just means there’s a lot of confusion about what’s legal and not legal, some products that have licenses like last year don’t have licenses this year.

So, it’s very complex to operate in an environment where the mid-level government officials do not understand or have a clear perspective or point of view of how to support these companies and for that reason, it has been mixed.

Finance Colombia: Now you guys, I know that you guys over the past couple of years have made announcements. You guys have deals now all over the world. You have a strong and growing presence in Europe. Here we are kind of closing out the first calendar quarter. I know that the fiscal year runs differently. What can investors and consumers expect over, let’s just say over the next 12 months because you guys are kind of, I don’t know if it’s fair to call you a startup anymore even though the company’s not that old, you guys are really maturing and becoming a mover in the sector.

So, as you guys really gain a foothold and kind of solidify yourself as a presence, what can we expect? as you execute on your strategy, what’s that going to look like over the next 12 months, maybe from an investor and kind of corporate point of view, but then also let’s talk about because it’s also fun to talk about the new products and the new points of distribution because after all, that’s what the company does.

Luis Merchan: There’s a lot of things that we’re very excited about. The first one is our revenue guidance. We provided just a couple of weeks ago revenue guidance between $90 and $105 million USD. So that means already over 200% growth this year, year over year, we are going to become $100 million company potentially right between $90 and $105 million. That would put this in the top 25 ranking in terms of revenues for cannabis companies worldwide, which is a significant milestone that we that we’re looking for to achieve, so that’s number one.

We are diligently working on gaining efficiencies across our entire operation as we integrate our recent acquisition franchise, Global Health, which is a pharmaceutical distribution company out of Germany. That integration I’m very excited about because it provides us with the opportunity to move cannabis, high THC cannabis, from Colombia into Germany and other geographies around the globe.

The FGH network is 28 countries, so the possibility of exporting high THC flower out of Colombia to all these countries globally is very exciting. It should be something that investors should look forward to and then lastly, from a from a product perspective, it’s twofold.

We continue to innovate and we have some great products, the CBD plus line is something that I’m very excited about, because she’s allowing us to recapture consumers and expanding what we consider a very small substrate out what the total aggregate demand should be. We totally believe that there’s millions of consumers out there that have yet to give CBD and cannabis, either minor cannabinoids or THC, an opportunity and we have to put those products in front of them so they can actually experience the benefits and from a medical standpoint, our pharmaceutical grade products, our cannabis compound formulations are going to market now this week and it’s going to be very exciting to see how patient’s lives are going to improve because they will now have access to high quality cannabis medications.

Garayev brings over 25 years of experience in finance supporting successful organizations through the development and implementation of accounting and reporting policies as well as building  finance teams. Prior to joining the Flora team, Garayev served in a variety of financial leadership roles at companies such as Amazon, Boeing BP and RPK Capital, managing a diverse array of initiatives at various companies including reporting, accounting, investments, private equity, international operations, mergers and acquisitions, energy services, and manufacturing.

“I am very excited to join Flora and to become its Chief Financial Officer. As one of the largest cultivators licensed by the government of Colombia, their robust portfolio of brands and the future of research in the space, Flora presents a truly amazing opportunity to lead the global cannabis supply chain,” said Garayev. “Through financial discipline, transparency and industry-leading reporting practices, I believe Flora will lead the way for the next generation of cannabis companies.”

As CFO, Garayev will focus on financial controls and governance, management of cash position to optimize the utilization of resources across the organization and continued evolution of systems and processes as Flora moves towards quarterly financial reporting. Garayev will also play a critical role in assisting in the execution of Flora’s strategy to drive profitable growth and enhance shareholder value.

“Mr. Garayev is a deeply talented and experienced individual, and I am thrilled to welcome him to the Flora team at this exciting time in the Company’s evolution. As Flora seeks to establish itself as a global leader in cannabis, adding someone of his caliber will further strengthen our position,” Flora’s Chairman and CEO Luis Merchan said. “On behalf of both our executive leadership team and our Board of Directors, I want to personally thank Mr. Leiderman for his commitment and service to Flora through an incredible growth phase for the company. He has played an important role in setting the foundation for our future success and we look forward to continuing to work with him in his new capacity.”

The offering will be marketed by a syndicate of underwriters led by Canaccord Genuity Corp. and will be priced and sized in the context of the market, with such terms including the offering price of the units and the exercise price of the warrants to be determined at the time of entering into an underwriting agreement for the offering.

The underwriters will be granted an over-allotment option to purchase up to an additional 15% of the units offered pursuant to the offering on the same terms and conditions for a period of 30 days following and including the closing date of the offering. The over-allotment option may be exercised by the underwriters to acquire units, unit shares and unit warrants.

Khiron will apply to list the unit shares and the warrant shares to be issued upon exercise of the unit warrants on the TSX Venture Exchange (TSXV). The listing will be subject to Khiron fulfilling all of the requirements of the TSXV.

The net proceeds of the offering will be used for general corporate and working capital purposes. Closing of the offering will be subject to a number of customary conditions such as, receipt of all necessary regulatory approvals and stock exchange approvals, including approval of the TSXV and the entering into of an underwriting agreement with the underwriters.

The offering is being made in the provinces and territories of Canada except Quebec, and in the United States on a private placement basis compliant with exemptions from the registration requirements of the United States Securities Act of 1933. The units will be offered in each jurisdiction through those underwriters or their affiliates who are registered to offer the units for sale in such jurisdiction and such other registered dealers as may be designated by the underwriters.

The Offering is expected to close on June 10, subject to the satisfaction of customary closing conditions and the receipt of regulatory approvals, including the approval of the TSXV. The offering will be conducted pursuant to a prospectus supplement to the company’s existing Canadian base shelf prospectus dated May 21, 2021filed with the securities regulatory authority in each of the provinces and territories of Canada.

Such legislation takes a further step, building on last year’s Decree 811 creating a licensing scheme and legalizing export of commercial marijuana, after allowing its use for scientific and medical purposes in 2016 with Law 1787.

Signed February 20, the new law enables domestic production and marketing of non-psychoactive cannabis products, and further defines import and export rules.

“This resolution allows, defines and establishes all the mechanisms and procedures for the industrial use of the cannabis plant in sectors such as food, beverages, alcoholic beverages and dietary supplements, defining, of course, that these uses have to do with the non-psychoactive component,” said Colombian President Ivan Duque.

“There has already been progress in credits for small and medium-sized producers. These credits continue to be developed through the Agrarian Bank, where cannabis producers are also provided with all the issues of foreign exchange management, monetization and marketing from Colombia,” The president continued.

Colombian Health Minister Fernando Ruiz Gómez added that the regulation is important for the safe development of the legal cannabis industry, including oversight by Colombia’s food and drug regulatory agency INVIMA (Instituto Nacionál de Vigilancia de Medicamentos y Alimentos).

“The different sanitary provisions that must take place by INVIMA, with good manufacturing practices, and all labeling and packaging requirements, are fundamental for all the progress of the industry,” said Dr. Gómez.

“This opens the possibility, with the components of the cannabis plant and its non-psychoactive derivatives, of producing dietary supplements complementing the existing dietary supplements in Colombia, in order to advance in the entire process of supporting nutrition and support to people who require dietary supplements”.

Cannabis Industry Pleased

Bill Petron, CEO of PharmaCielo (TSXV: PCLO) (OTCQX: PCLOF), a Colombian cannabis producer with Toronto headquarters commented on the news, saying in a statement: “The passing of Regulation 227 is a historic development for the Colombian cannabis industry, opening the large and growing global dried flower market as well as multiple CBD-based opportunities, to Colombian producers. The Colombian government has consistently demonstrated its desire to build this industry into a global leader, and in our opinion the announcement makes Colombia the most export-friendly and competitive jurisdiction in the world.

Dried flower accounts for up to 50% market share in most mature cannabis markets globally and represents a massive opportunity both for the Colombian industry, and PharmaCielo. With scalable cultivation and processing capacity in place, a structural cost advantage, and the sophistication to ensure consistently high-quality products, PharmaCielo is positioned to capture market share against current international exports from markets like Canada.

The government’s revised approach to the quota system will both ensure speed to market, as well as greater efficiency throughout the sales process. We expect 2022 to be a very exciting year of growth for PharmaCielo, as we launch and expand dried flower exports, bringing global patients access to high quality, affordable medical cannabis products.”

Above photo: Wilson Ruiz Orejuela, Minister of Justice and Law, and Juan Gonzalo Botero, Deputy Minister of Agricultural Affairs of the Ministry of Agriculture and Rural Development join President Ivan Duque at the podium and health minister Dr. Fernando Ruíz Gómez announcing the legislation.

“We are very excited about this new Zerenia format and our ability to treat more patients and create closer relationships with insurance companies in Colombia. Our Zerenia clinic network now has more than 13 locations in Colombia, Peru, and the UK, and we will soon open new locations worldwide. Our unique strategy has allowed us to grow medical cannabis sales by more than 900% in Colombia in 2021, increasing patient conversion and retention rates,” said Khiron CEO Álvaro Torres.

“The selection of this new location follows a deep desire to be closer to our patients and offer insurance companies better access for their patients while maintaining the service standards that are making Zerenia a leading global medical cannabis clinic network. Now that the Colombian Government has mandated medical cannabis to be covered by all insurance companies, we believe this new location strategy will continue to drive great growth and profitability for Khiron and will continue to allow us to improve the quality of life of more patients.”

Khiron retains investor relations firm

Khiron also announced that subject to the approval of the TSX Venture Exchange, it has retained Arrowhead Business and Investment Decisions, LLC, a US-based investor relations firm which is headquartered in New York City and was established in 2008. For the initial six-month term, Arrowhead will be paid $50,000 USD. Khiron said in a written statement that Arrowhead is not related to the company and has no interest, directly or indirectly, in Khiron or its securities.

According to Flora, the company seeks to establish a partnership with the Artos team to expand their offering of cannabis products for the Israeli market to also include oils and, when regulations permit, finished THC and CBD consumer products. The export of the high-THC product is pending the dried-flower checklist from the Colombian government from the 2021 update to the cannabis law.

“As Cosechemos continues to reach full-scale commercial production, our team remains focused on increasing our presence in international cannabis markets through distribution agreements that will serve as a gateway into the markets,” said Luís Merchan, CEO of Flora Growth. “With Artos’ extensive distribution network, this agreement will ensure that safe, high-quality cannabis products are provided to the Israeli cannabis market and offer a valuable source of health and wellness products to the country.”

On November 23, 2021, the board of directors granted a total of 1,400,000 options and 950,000 restricted stock units to certain officers of the company. Certain of the options and restricted stock units are subject to performance-based vesting conditions. The options are exercisable at a price of $0.75 per share and will expire on November 23, 2026. Unvested restricted stock units will expire on December 15, 2024.

Khiron has a sales presence in Colombia, Peru, Germany, UK, and Brazil and is positioned to commence sales in Mexico. The company is led by Co-founder and Chief Executive Officer, Alvaro Torres, together with a diverse executive team and board of directors.

Khiron to Participate in the Lytham Partners Winter 2021 Investor Conference

Khiron also announced today its CEO, Alvaro Torres will be participating in the Lytham Partners Winter 2021 Investor Conference taking place from December 13-16, 2021. During the event, the company will be participating in a webcasted Fireside Chat discussing its vision for 2022 and conducting 1×1 virtual investor meetings.

The webcasted Fireside Chat will be available for viewing at 11:00am ET on Monday, December 13, 2021 on the Company’s website at https://investors.khiron.ca/investor-information or https://wsw.com/webcast/lytham3/khrn/2039430. The webcast will also be available for replay following the event.

The company, led by CEO and Co-Founder Álvaro Torres, said in a SEDAR filing that Europe now makes up 31% of medical cannabis revenue. Gross margins increased for clinical services to 26% of revenues, up from 12% in Q3 of 2020, and 15% in Q2 2021. Net loss is down 50% year over year to $3.3 million CAD compared to $6.7 million in Q3 2020. The company reports $15.4 million in cash on hand as of September 30, 2021.

“In Q3, we achieved strong results and broke revenue and profitability milestones, surpassing our first million dollars in medical cannabis revenues and gross profits. Prescription growth were driven by our patient-focused operations in Colombia and Germany. In the first 9 months of 2021, we have already exceeded 2020 medical cannabis sales by more than 600% while maintaining medical cannabis margins of over 89%,” said Torres.

“As expected, Europe is becoming a more significant region for Khiron, representing 31% of our medical cannabis revenue. With the opening of Zerenia Clinics in the UK, we have now established an international clinic footprint that will continue to drive sustainable growth in the future. A year ago, our company was just starting medical cannabis sales in Colombia, and now we have 15 clinics in 5 countries, and soon in Mexico. We are very excited about our quarterly growth rate, and the growing evidence that Khiron is fulfilling its mission to improve the quality of life of our patients.”

Above photo: Khiron’s agricultural facilities in Ibagué, Tolima, Colombia (courtesy Khiron)

“Our integrated clinic model continues to connect patients, doctors, and insurance, helping improve patient outcomes.  The integrated medical clinic approach offers a range of treatments and services, including medical cannabis, that help patients save time and money by not having to travel to seek out individual treatments.   Almost half of our patients have insurance coverage now, a tremendous improvement since our first covered prescription in December of 2020,” said CEO Alvaro Torres

Medical Cannabis

Latin America

• Medical cannabis prescriptions grew by more than 40%, from Q2 2021
• Year to date medical cannabis prescriptions have exceeded 35,000 units, 600% more than the entire 2020 fiscal year
• Total medical cannabis patients in Q3 increased to more than 9,600, up 32% from Q2 2021
• 62% of the patients in Q3 were returning patients, up 35% from Q2 2021
• 47% of units sold were covered by insurance
• New satellite clinics accounted for 10% of prescriptions

Europe

• Europe generated 30% of the company’s medical cannabis sales in Q3 2021
• Germany revenues expected to grow more than 80% and UK revenues expected to grow more than 70% quarter on quarter
• The company has increased its imported volumes in the U.K., ensuring uninterrupted supply for all Khiron patients

Health Services

• Year to date patient visits at Khiron clinics have exceeded 104,000, topping all patient visits in 2020
• Revenue in health services is steadily returning to normal at Zerenia clinics as pandemic measures ease
• Total quarterly patient visits at Zerenia were up 18% quarter on quarter
• Khiron will expand its flagship clinic brand, Zerenia to the UK, with the first Zerenia opening in London in Q4 2021.

“Through the end of Q3, the company continued to make steady progress in helping more patients access medical cannabis. Europe is starting to become an important market for the company, and we will soon be opening our first Zerenia medical cannabis clinic in the UK,” added Torres.

October Investor Conferences

Khiron also announced it will be participating in the MJBIZ Conference on Thursday, October 14th at 4:00 pm ET as a member of the panel ”The Latin American Cannabis Supply Chain: Do’s, Don’ts and Industry Domination” and also the Benziga Cannabis Capital Conference on October 15^th at 3:45pm ET along with a Virtual executive interview with Khiron board member and former President of México, Mr. Vicente Fox: Thursday, October 14th & 15th at 1:10 p.m ET

The panel hosting Khiron is titled “International Spotlight – Continued Cannabis Expansion in European Markets,” and will be Friday, October 15th at 2:10 p.m ET