Aphria-backed cannabis deals reflect allure of South America

A pair of announcements this week from a small cannabis company backed by industry powerhouse Aphria Inc. point to increasing interest in South America from Canadian marijuana companies.

Scythian Biosciences Corp., which counts Aphria as its largest shareholder and is chaired by Aphria CEO Vic Neufeld, announced Monday its intention to acquire Ontario-based MMJ Colombia Partners Inc., which is in the process of buying a Colombian cannabis company.

It also announced that an Argentinian company it is trying to buy has secured a licence to import cannabis oil into Argentina for medical research. The oil will be supplied by Aphria.

Both deals are small, uncertain steps, and are conditional upon several other deals closing. But they are part of a wider trend of transactions that have seen Cana- dian cannabis executives warm to the possibilities of South American markets. Those opportunities — Latin America is both a potentially large medical market and a source for low-cost agricultural exports — have for months been eagerly pitched by smaller Canadian or Canadian-financed cannabis companies active in South America.

“It just doesn’t make sense to spend $10 million retrofitting a warehouse in Paris, Ont., to grow cannabis,” said Michael Galego, director of ICC Labs, which operates a facility in Uruguay, the first country in the world to allow legal recreational cannabis. “We want to be a wholesale, low-cost producer for any Canadian LP that wants us.”

His company, which intends to focus on cannabis extracts like cannabidiol (CBD) oil for export, has signed supply deals with Ontario licensed producer Emblem Corp. and Nuuvera Inc., which was recently acquired by Aphria.