Creso Pharma Limited (ASX:CPH) announced that it has successfully gained a foothold in the Latin American medicinal cannabis market with the proposed acquisition of Kunna Canada Ltd., and its wholly-owned Colombian subsidiary, medicinal cannabis group, Kunna S.A.S.
The acquisition is for a total of US$7.15 million in shares to be issued at a deemed issue price of A$1.10 each; up to US$1m in performance shares to be issued at a deemed issue price of A$1.10; and a US$250,000 exclusivity option payment payable immediately. Creso intends to seek shareholder approval for the issue of the consideration shares and the issue of the performance shares will be subject to regulatory approval.
The move means Creso is the only Australian-listed medicinal cannabis company with direct exposure to the Colombian market. It also gives Creso a foothold in the wider Latin American medicinal cannabis market, enabling the Company to further expand in this strategically important region.
The Colombian government enacted the legalisation of medical cannabis in June 2016 and subsequently in April 2017, issued a decree outlining the framework for the cultivation, production, and domestic and international distribution of low and high THC-based medical cannabis extracts. This decree was further defined by the enactment of four resolutions specifying the application fees, security requirements, quality controls and responsibilities of the license holders and government administrators.
The groundbreaking regulatory framework enacted by the government of Colombia sets the standard for other jurisdictions in Latin America. The Colombian regulations focus on extracts to generate a purely medicinal product market and provide for product quality and consistency through the country’s federal food and drug regulator. In compliance with international laws, these regulations also provide for legal exportation, thereby leveraging the agricultural and scientific competitive advantages of the country.
There are many advantages to growing cannabis in Colombia. In addition to its equatorial location and ideal microclimates, it is one of the most economically advantageous countries in the world for the production of large volumes of high-quality, low-cost cannabis due to its expertise in the flower industry, knowledgeable and skilled labour force and supportive government.
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