Flora Growth (NASDAQ: FLGC) is one of the companies at the vanguard of formulating new products, but the company has also been financially innovative, listing on NASDAQ in the US rather than following most other sector companies with operations based in Colombia that list on Canada’s TSX.

With legal headquarters in Fort Lauderdale and almost 500 acres for cannabis cultivation in Colombia, Flora Growth’s business model spans consumer goods and medical formulations. Finance Colombia’s Executive Editor Loren Moss caught up with Flora Growth CEO Luis Merchan to discuss some recent developments with the company, and the significance of the decision by Colombia’s health ministry to Flora Growth, and to the sector more broadly.

Finance Colombia: One of the things I wanted to start with is that I noticed that you signed a distribution agreement for some of your products, is that correct?

Luis Merchan: That is correct. There are several of them that have been signed over the last couple of months. My team continues to expand not only on the wholesale side of our operations but also on the CPG side of the operation in terms of distribution and revenues.

“The change by the Secretary of Health, by the Ministry of Health, puts Colombia at the vanguard in terms of regulatory and legal framework for medicinal cannabis in the world. “

Finance Colombia: Can you tell me a little bit about the distribution deals? I think I saw that some of your products are going to go into Mexico and some other markets.

Luis Merchan: Yes, as you know Loren, Mexico is a very active cannabis market. There’s a new law that is being evaluated as of today that would allow several categories of products with less than one percent THC to be sold as normal, non-regulated CPG products, which would be an incredible step towards the distribution of wellness products in the country. Our agreement was for distribution initially of our floral beauty products. Those products are actually being sold already in major retailers in Mexico like Walmart.com and Coppel, which is a massive store chain with over 300 distribution points across the entire country, so clearly we continue to make inroads, not only from a distribution and sales standpoint but also from the regulatory standpoint.

Finance Colombia: I saw that the stock took a nice bump when that news was announced. Now, here in Colombia, we recently published an article and we see where the Ministry of Health, they issued a…in the US, we call it something like a pharmacopeia, but they issued updated guidelines for what medicines and treatments are covered by the EPS, by Colombia’s publicly supported health insurance providers or healthcare providers that are known here locally as EPS (Entidad proveedor de salúd, or Healthcare provider entity), and it’s interesting because one of the things that caught our attention was that they added cannabis, both CBD and also THC products to their list of medicines that insurance companies not only can cover but actually must cover. So I wanted to get your input on how impactful that is and what that means for the industry, specifically for patients, but then also specifically for Flora Growth.

Luis Merchan: Yes, Loren. It’s a significant change. I think there’s three major topics to cover here. First, the change by the Secretary of Health, by the Ministry of Health, puts Colombia at the vanguard in terms of regulatory and legal framework for medicinal cannabis in the world. This move is very meaningful; it allows patients that are suffering from major ailments such as anxiety, depression, pain, insomnia, all these ailments, they have access now to cannabis molecules. The doctors also now have the ability to prescribe such cannabis formulations, which is a very meaningful step, and also of course puts Colombia in a very strong position in terms of how to approach the medicinal regulatory environment.

For the patients, it’s significant, and obviously patients today have for long talked about the empirical benefits of cannabis and they secure most of their cannabis formulations from the black market today, and they do it because they have to. And of course what happens with those types of formulations is that they do not have the quality standards that medical formulations should have, so they inadvertently are putting themselves at risk. Now they are not going to have to do that, they can go to their doctor, they can ask for the formulation and the doctor can give them a prescription, and so it makes it safer for patients to have access to medicinal cannabis.

And for companies such as mine, it’s a major step towards not only broadly distributing products and formulations that are already in existence, but also a significant economic revenue that can be guaranteed, almost guaranteed in an environment like Colombia where you can actually bill public entities for the formulations that are being given to patients.

Finance Colombia: I know that there are all kinds of different treatment options. There are traditional hospitals, there are doctors that are private practitioners, there are clinics that are also known as IPS down here, which are obviously different than the EPS, which are more of like what we would call a PPO back in the States. But then I see that there have also been, on a limited basis, treatment clinics that have opened up, kind of for palliative care and for treating other different things. Now, one of the interesting things about Flora, about your company, is that you guys have a really interesting distribution model because you have cannabis derived products, you have things like cosmetics, you have health foods, you have hemp textiles. One of the things I don’t remember us talking about is pharmaceutical products or medicines. How are you involved in this space when it comes to healthcare or prescription medication?

Luis Merchan: Actually, our laboratory has the ability to manufacture a wide array of products including phytotherapeutics, dietary supplements and capsules. We today manufacture skincare solutions for almost a thousand doctors that develop custom formulations for their patients and distribute them on a one-to-one prescription basis, so for us it’s a plug-and-play move. We are going to now be able to manufacture our cannabis formulations, what in Colombia’s called magistral custom formulas, and be able to plug in to that network of doctors that is already in existence. So, that would be the easier shorter route to gain access, to give access to patients and doctors to our products and formulations.

Luis Merchan, the CEO of Flora Growth.

But as you mentioned, I think the bigger play here is to plug into the broader EPS network; educate doctors on the benefits of each one of the formulators that we have available so then they are comfortable prescribing patients when they’re coming, to treat a number of ailments. So, this is going to be a campaign that is going to take some time, but our intent is to educate the medical community in Colombia with the many partnerships that we have, and we actually have developed this very robust cannabis education programs for doctors and ensure that then they in turn start prescribing these safe formulations for the treatment of the many elements that patients are looking for today.

Finance Colombia: Like you mentioned, you have your laboratory. You guys have your INVIMA registration…INVIMA, for those who don’t know, is kind of like the Colombian version of the FDA, the Food and Drug Administration back in the States. You mentioned the magistral, the custom formulas. Now, I noticed that you have on your website, which is floralgrowth.com, where it talks about the laboratory, there’s a place for people that are interested in becoming Flora Lab distributors. What kind of companies are the good candidates for distribution? Pharmacies? CPG (Consumer Packaged Goods)? Are there maybe other companies that use the ingredients? How does your distribution model work in that respect?

Luis Merchan: When it comes to Flora Lab, we offer a broad array of products. There are branded products, over 65 of them that are INVIMA registered that we distribute worldwide, and any company that is a major distributor, that has access to points of sales in Latin America, in Central America, or all over the world can reach out to us and can become a distributor for those products. But there are other categories of products that are manufactured and sold at Flora. One of those is, of course, a prescription medication. We have a number of molecules that we plug into pharmacies and drug stores. We have, as I mentioned, phytotherapeutics, which is a very specialized area of therapy and treatment, and doctors and pharmaceutical distributors can reach out to us to plug into those categories of products. And then, lastly, we also have wholesale ingredients that we sell, and distributors that are interested in the wholesale side of distribution can also reach out to us and can become a part of the Flora distribution network.

“In North America we’re selling some of our products in 48 out of the 50 states, in Mexico, in Costa Rica. We are already selling some products into Canada. When you’re in Europe our footprint expands into Portugal, Malta, England…”

Finance Colombia: What markets, what countries have you guys expanded to so far? Where do you have a presence? I know you have different brands in different locations, but obviously you’re here in Colombia. But what other countries, obviously I think Mexico, I think Spain, but let me understand now what countries have Flora Growth products across your CPG and the pharmaceutical brands. Where can your products be found?

Luis Merchan: The list is exceptional, continues to grow, Loren, from a CPG perspective. We’re in the majority of Latin America as of today and at least the markets that are the most meaningful. I think the one market that is not there…It’s probably easier to tell you what market that we haven’t penetrated yet but we’re looking to, in South America is Brazil, because of the strict rules that they have in terms of distribution, but for the rest, in North America we’re selling some of our products in 48 out of the 50 states, in Mexico, in Costa Rica. We are already selling some products into Canada. When you’re in Europe our footprint expands into Portugal, Malta, England. We have now activated these distribution agreements in several countries across the globe, like Israel, like South Africa, Germany and Australia. Those contracts will activate this year so that the flag has been planted but the revenue generation will not start until 2022, and the good news here is that our team is a global team in terms of distribution, sales and regulatory, so we’ll continue to evaluate which opportunities are opening up in terms of the regulatory framework and when those do, then we are ready to very quickly enter the market, and that’s what happened for example in Mexico, and that’s what will probably continue to happen in other countries around the world, so look forward to more countries being added to this list.

Finance Colombia: That’s great to hear. Obviously, we want you to keep us posted as we continue to cover, not just obviously the stock from a financial perspective, but also your growth as a company and your product line. It’s really good to see Colombian companies becoming true multinationals and becoming companies that are expanding into markets, not just here in Latin America, but in North America and in Europe and beyond, so it’s really impressive what you’ve been able to do in such a short time.

The Toronto-based company plans to use the proceeds to fund the expansion of its cannabis-growing facility in Colombia, purchase equipment, construct clinics, and launch its line of “cosmeceutical” products. Some of the cash will also go toward “general working capital purposes,” stated Khiron Life Sciences.

The shares were sold at $0.90 USD per share on September 12 to raise the overall sum, including the “exercise in full of the over-allotment option,” stated the company that maintains is primary operations in Colombia.

The offering remains subject to final acceptance of regulatory filings by the TSX Venture Exchange (TSXV).

The share sale was completed by a group of agents led by Canaccord Genuity Corp. and including GMP Securities L.P., Sprott Private Wealth LP, and Cormark Securities Inc.

Gordon, former managing partner in Canada for global public relations firm Cohn & Wolfe, will formally step into the role on October 1.

Photo: David Gordon will take over as chief corporate Officer of PharmaCielo on October 1. (Photo credit: CNW Group/PharmaCielo)

The company said in a statement that the incoming executive has previously served as an “essential advisor” to PharmaCielo and will now be charged with managing relations with stakeholders, regulators, and the press as well as overseeing development plans overseas.

Company subsidiary PharmaCielo Colombia Holdings S.A.S. is based in Rionegro, Colombia, and has been the centerpiece of the firm’s plans for growth in the country’s medical marijuana sector.

The company has been developing its nursery and harvest in the Antioquia city in recent years as it has navigated the regulatory requirements in the still-emerging industry following nationwide legalization for medical cannabis in late 2016.

“The emergence of a new industry that challenges convention on multiple levels — including international trade, public policy and communication to name but a few — encapsulates the various fields of challenge I have experienced throughout my career,” said David Gordon.

“I look forward to continuing to work with my colleagues in Canada and Colombia to help expand to the global market the leadership that PharmaCielo has demonstrated in the Colombian marketplace.”

The Toronto-based Avicanna now has a 60% stake in the firm, with Colombian agricultural company Grupo Daabon maintaining the minority stake. Both Santa Marta Golden Hemp and Grupo Daabon are headquartered in Santa Marta on Colombia’s Caribbean coast.

“Daabon has also committed to lead Avicanna’s IPO financing and subscribe for up to 20% of the offering,” said Avicanna in a statement.

“This acquisition represents a significant milestone for the cannabis industry, being the first in which a major multinational agricultural corporation has taken a position in a joint venture of this nature,” added the firm.

“Daabon and Avicanna will be combining resources and expertise including Avicanna’s leadership in research and biotechnological developments in the cannabinoid sector and Daabon’s global leadership within the agricultural industry of industrial scale organic cultivation, processing and distribution.”

Photo credit: herbalhemp / Pixabay

The new plants are a THC-dominant variety, which due to the properties of tetrahydrocannabinols trigger a psychoactive response when smoked or ingested, whereas the earlier crop were cannabidiol, or CBD, dominant.

PharmaCielo Colombia, a subsidiary of Canadian medical marijuana firm PharmaCielo Ltd. with operations in Rionegro, expects the flowering CBD crop it previously planted in late 2017 to begin to be ready for harvest within a matter of weeks.

The company also plans to add an additional hectare of cultivation per month, as allowable under Colombian law, which PharmaCielo Colombia CEO Federico Cock-Correa categorized as representing “rigorous regulatory structures that must be complied with.”

The company’s operations in Rionegro currently span nearly 28 hectares, including 12 hectares of open-air greenhouses used for cultivation of cannabis plants.

The firm is bullish on the long-term potential for a cannabis oil market amid expectations of rising international market demand.

READ MORE: PharmaCielo Begins Planting Medicinal Marijuana in Rionegro, Colombia

“As demand for medicinal cannabis oils continues to grow on an international level, the ability to have a secure source of supply, consistently high quality and purity of the product is essential,” said Anthony Wile, CEO of PharmaCielo Ltd. of Toronto. “From speaking with global healthcare clients, we know that they need to be assured of the company’s ability to consistently provide necessary volumes as well as product quality of the highest level.”

(Photo credit: SeaweedJeezus / Pixabay)

The company, which became listed on the Toronto Stock Exchange earlier this year, operates in Colombia from its Bogotá headquarters with plans to cultivate and sell its cannabis products in the country. It is also has longer-term plans to expand in the region, with Mexico representing a key market its top executives hope to tap.

Photo: Former Mexican President  Vicente Fox speaking at the 3rd Annual Southwest Cannabis Conference & Expo in Phoenix, Arizona.(Photo credit: Gage Skidmore)

In addition to his experience governing the hemisphere’s third biggest nation, Fox has earned his business bonafides as CEO of Coca-Cola Latin America. Through his current foundation, Centro Fox, the former president has advocated for wider medical marijuana adoption.

Fox, who served as head of state in Mexico from 2000 to 2006 and made history as the first candidate from outside of the Institutional Revolutionary Party (PRI) to win the presidency, has gained further fame in recent years for his outspoken opposition to U.S. President Donald Trump’s pledge to build a wall along the entire Mexican border. He has repeatedly lambasted Trump on social media and television, continually repeating his claim that “we won’t pay for that f***ing wall.”

Khiron Chief Executive Officer Alvaro Torres says that the company advanced a relationship with Fox at the CannaMexico 2018 medical cannabis conference that was organized by Centro Fox.

“It was clear that the collaboration between Khiron, former President Fox and Centro Fox provided the opportunity to greatly advance our shared interests in increasing the level of education and understanding of the benefits of medical cannabis for all of Latin America.”

Torres added that adding Fox to the board of directors “significantly expands our scope of influence and relationships within the Latin American market.”

Through the country’s formal “quota allocation” process, which is based upon guidance by the International Narcotics Control Board (INCB) and ultimately allotted by the government in Bogotá in accordance with a company’s production potential, Khiron Colombia SAS has now acquired the regulatory approval necessary to start growing what it characterized as “a variety of medical grade cannabis strains,” including tetrahydrocannabinol (THC) and cannabidiol (CBD) strains.

READ MORE: Khiron Life Sciences Transfers 100,000 Shares to Settle Dispute with PharmaCielo

These strains have been chosen specifically to target “patients identified as having unmet medical needs within the Colombian market of 50 million people and the Latin American market of 620 million people,” according to a statement from Khiron Life Sciences.

According to Khiron, the government approved the company’s full initial quota request. The company says that it plans to increase the volume of its request in its proposal to the government next year.

“The granting of quotas for cultivation is part of the ongoing involvement of the government of Colombia to ensure an orderly and controlled market for medical cannabis,” said Alvaro Torres, president and CEO of Khiron Life Sciences Corp. “I would like to thank the government for its continued support.”

(Photo credit: eujava / Pixabay)

The company, which already has received approval to process cannabis oil extracts for medical and scientific purposes, is among the first to submit an application to legally cultivate marijuana. The Colombian government’s announced last week on August 10 that it was now accepting applications.

The review period is expected to take no more than 30 days, “provided the specific requirements for the license have been met,” according to PharmaCielo Colombia Holdings, a subsidiary of the Canada-based PharmaCielo Ltd.

“This is an essential next step in the establishment of our complete operations in Colombia,” said Patricio Stocker, President and CEO of PharmaCielo Ltd. “PharmaCielo is ready to commence cultivation immediately upon receiving license approval.”

The purchase was made by its Colombian subsidiary PharmaCielo Colombia Holdings SAS and will be the site of the company’s planned cannabis processing plant, oil extraction facility, and research center. The firm stated that it signed the purchase agreement on April 25 and expects the deal to close in the coming days.

The new land is adjacent to PharmaCielo’s 27-hectare marijuana plant nursery in the central Colombian department of Antioquia. The firm says it has already brought equipment sourced from abroad to the country in preparation for the expansion. In the coming months as construction is finished, PharmaCielo plans to begin installing the new equipment “in readiness for commercial cultivation in 2017,” said the company.

The research facility, which like the other equipment will meet standards required by the governmental licensing authority, is going to be used to test different strains of cannabis and processing methods.

Federico Cock-Correa, director and CEO of PharmaCielo Colombia Holdings, called the expansion “an important next step in the development of PharmaCielo’s capacity for both cultivation of cannabis and processing of cannabis flowers into oil extracts.”

PharmaCielo received its license to process and manufacture cannabis oil extracts in 2016. It formally requested the license in February 2016, just weeks after President Juan Manuel Santos signed a law to legalize medical marijuana in December 2015.

This cooperative of farmers includes more than 50 farmers throughout five municipalities who first met with public officials last summer to outline their plans to begin producing crops for the country’s budding medicinal marijuana industry. According to PharaCielo, the mayors in these communities see the venture as something that could curb illegal marijuana production in the area.

Under legislation passed in December 2015, the group plans to apply for a cultivation license to begin producing medicinal-grade oil extracts and related products along with the 53 farmers from Corinto, Toribío, Miranda, Caloto, and Jambaló. PharmaCielo says that, per the agreement, it will buy land in the region to build “open-air greenhouses” similar to ones it is already operating in Rio Negro, Antioquia.

“Regional partnership with Cooperativa Caucannabis is a reflection of our commitment to leading Colombia’s newly formed cannabis industry in a way that should benefit all of Colombia,” said Federico Cock-Correa, CEO of PharmaCielo. “As fellow Colombians, we believe that supporting small producers is essential.”

In making the announcement, the company highlighted the role this development could have in an area of Colombia that has been devastated by more than a half-century of conflict with the Revolutionary Armed Forces of Colombia (FARC).

“A former FARC stronghold ravaged by decades of conflict, the small cannabis farmers living in the war-torn towns and villages throughout this historic cannabis-producing area of Colombia deserve to participate in Colombia’s newly legalized cannabis industry,” said Cock-Correa. “We look forward to developing additional strategic partnerships with regional associations of small producers throughout the country in the future and supporting the country’s post-conflict rebuilding efforts.”