Khiron Life Sciences (CVE:KHRN) Targets More Growth in the World’s Key Cannabis Destination

Khiron Life Sciences Corp (TSX-V:KHRN) (OTCQB:KHRNF) is expanding in presence in Uruguay, the first country in the world to have established a legal and regulated cannabis market for medical and recreational use. Khiron acquired NettaGrowth International Incand its subsidiary Dormul, also receiving TSX final approval as of July 30th), securing the first license to produce and export THC cannabis for medical use. Accordingly, Khiron will increase its overall production capacity in Uruguay through a new 9,800 m2 (of which 8,000 m2 will be for cultivation) 17 ton/year cultivation and processing facility located in Juan Lacaze, which should be ready by the end of Q3 2020.

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Khiron expects the new facility – built to comply Good Agricultural Practices (GAP) and Good Manufacturing Practices (GMP) standards and optimized to ensure the best possible irrigation, humidity and temperature conditions – will help expand Khiron’s sales to Uruguayan customers as well as boost its export capacity and reach the most important international markets in Latin America (the MERCOSUR trading bloc countries) and Europe. A GMP-compliant1,800 m2 processing plant will ensure the crops will be dried and processed to achieve pharmaceutical grade quality standards. As a testament to its innovative approach, Khiron has submitted its own strains as part of Uruguayan government-Khiron co-sponsored pre-clinical studies.

Uruguay is the Key

Khiron has its headquarters in Bogota, Colombia, which has been one of the most attractive destinations for business in the Americas over the past decade. But, Uruguay serves as the critical supply of leverage in the Company’s overall strategy to establish itself as a global cannabis company. Indeed, Uruguay, with a population of no more than 3.4 million, is becoming a world cannabis power. Uruguay, offers serves as a strategic gateway to the Brazilian market, both because of geographical proximity, and because as MERCOSUR members, Uruguay and Brazil enjoy free-trade and other commercial and regulatory advantages.  The South American country, better known for tango, mate and for being the first ever winner and host of the FIFA World Cup, was the first country in the world to legalize cannabis for recreational use – five years before Canada.

Former president Jose Mujica, an icon of the political Left, expected cannabis legalization to challenge drug trafficking. It’s still too soon to evaluate the impact on criminal activity, but it’s clear that allowing the cultivation and sale of cannabis has already generated considerable economic benefits. Inadvertently, and somewhat ironically, Mujica triggered the start of a significant new source of wealth. His successor, Tabare Vasquez, who tended to oppose cannabis legalization not long ago, has quickly changed opinion, expanding Mujica’s efforts. Thus, the Government intends to facilitate steps to ensure the cannabis industry generates millions of dollars.

Uruguay has granted more licenses to companies and public entities to expand the cannabis sector, dedicating more land for cultivation (over 1,000 hectares and 22,000 square meters in greenhouses. Source: Grizzle.). Whereas, Montevideo is aiming to create more jobs for Uruguayans, cannabis companies like Khiron will exploit the favorable regulatory environment to develop new cannabis-based products for export to foreign markets in Latin and North America, Europe and beyond. In this sense, Uruguay, small though it may be, is a founding member of the MERCOSUR trading bloc. As such companies like Khiron, when operating from Uruguay, can take advantage of all MERCOSUR trading agreements: Uruguay exports cannabinoids to the United States, Canada, Australia, Brazil, Peru, Chile, Colombia itself and Israel. But, the entire European Union (perhaps the largest single market with its 500 million plus population) also has solid and favorable commercial exchange treaties in place.

All this might be sufficient to turn Uruguay into the key cannabis exporting power at the global level. Accordingly, Uruguay wants to grant cannabis companies even more freedom to operate. The Ministry of Public Health wants to permit the use of cannabis in food and other derivatives. (Source: MarketRealist.). Therefore, it has become ever more important for cannabis companies to set up operations in Uruguay – and Khiron has been one of the pioneers, securing a significant position for itself in the giant of the global cannabis industry. By 2028, the cannabis market is expected to be worth $100 billion in the EU alone.

From Uruguay, Khiron can develop products for all of the intended markets: medicinal, wellness, pets, nutritional supplements, , food and any other market, which may arise as more research goes into cannabis. If there’s one major effect that the legalization of cannabis has had, and will continue to have, it’s research. Research will inevitably lead to new discoveries into how to exploit cannabis. Uruguay’s progressive legislation and strong government support have established ideal conditions for the entire cannabis industry to develop and grow.

Cannabis, which human beings have used since the Neolithic period (ca. 10,000 years ago) is one of the super-materials of the future. And Uruguay is at the forefront of the re-evaluation of cannabis from pariah to fulcrum for economic development and, through companies like Khiron, investor return.

Alessandro Bruno

Alessandro Bruno, born in Naples, (BA and MA in International Relations, University of Toronto). Alessandro is a research analyst and writer in various business sectors and international politics. He was a Programme Officer for the UN in North Africa and a senior for one of the first international sustainable investment...
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