A PotNetwork Exclusive
“I can assure you, if you go to Colombia today and ask about medical cannabis, the first name that will come up in everybody’s words and minds is Khiron,” said Alvaro Torres when asked to describe the progress of his company, Khiron Life Sciences Corp. (TSX-V:KHRN) over the past six months. As Chief Executive Officer of Colombia’s first company outside of the mining industry to go public on the Toronto Stock Exchange, which Khiron did this past May when listing on the TSX-V, Torres wears both the pride and burden of success on his shoulders. Every move that Khiron makes is scrutinized both through the lens of the emerging cannabis industry as well as the rich and tumultuous history of Colombia.
On this day, as Khiron celebrated their debut on the TSX-V, Torres balanced his exuberance with a solemn appreciation for the meaning of such an accomplishment.
“I never thought we could reach this milestone three years ago,” Torres noted. “I’m very thankful for my directors and the people that convinced me that we could do this in Toronto. So, personally, it’s a tremendous achievement to be able to have the opportunity to lead this fantastic company.”
And then he continued, “I think that this offers a new opportunity for Colombian entrepreneurs like myself when I was doing this three years ago, to know that there’s now other ways to raise capital in more efficient capital markets. I don’t think we should underestimate the impact that has on the venture capitalists in Colombia, the fact that we can take these types of companies public in other markets is extremely significant.”
Rounding back to the historical perspective, Torres paused for a moment. “I would say, without sounding too condescending of myself, that it’s quite historic.”
Khiron CEO Alvaro Torres
“Like an Apple store presence in the middle of Bogotá.”
Khiron Life Sciences Corp., and by extension Torres himself, has been very busy throughout the first half of 2018. A unique entity in the cannabis industry, Khiron is a Canadian company with operations based in Colombia. They are one of the first fully-licensed medical cannabis companies in the country, owner of cultivation and production licenses for both low- and high-THC which were awarded by the Ministry of Health and Social Protection, and Ministry of Justice.
Statistically, the company is impressive. Khiron was the first to market in Colombia’s emerging cannabis industry, a sector which boasts a possible six million medical cannabis patients. According to report, their Phase I facility has a production rate of 8.4 tonnes per year, and their management team comes from both the pharmaceutical and agricultural industries.
“On the regulatory side, we also obtained quotas for the cultivation of mother plants, we have been certified by the Minister of Agriculture as a cultivation unit,”, Torres remarked, expanding on Khiron’s laundry list of achievements. “So there are a lot of things yet to be done on the regulatory side. On the operations side, you know, we are cultivating our mother plants and right now doing the cuttings to take into the production/cultivation area and commissioning the design and construction of the GMP Certified lab, buying the field construction equipment and building our microbiological lab.”
Their main goal these days, though, is winning the hearts and minds of both doctors and patients across the country. As Torres noted, buy-in from the Colombian medical community is key to Khiron’s success. And on that front, the company has mounted a full-frontal effort.
“So far, we’ve hosted two conferences in Colombia,” Torres said. “We have been partnering with some of the country’s largest medical institutions, the Colombian Neurological Association, the Colombian Pain Association, and next week with the Colombian Internal Physician Association. These are all key opinion leaders.”
He summed up the company’s plan thusly, “This way, we start having this conversation on medical cannabis.”
The goal is to normalize medical cannabis as much as possible, to make both doctors and patients feel comfortable.
“At the same time, what we’re doing right now is complementing that by building our first clinic in Bogotá,” remarked Torres. “It’s going to be a beautiful, pristine, very high-quality, much more like an Apple store presence in the middle of Bogotá. And what this does to us is make us break the conventions for patients and doctors of what medical cannabis is. So this is designed to complement the treatment of doctors to not just feel that they can prescribe themselves, so we’re working all these referral-type of agreements – so the doctors that are not yet ready to prescribe but are convinced that medical cannabis can be an alternative, they’re going to be referred to our clinics.”
He continued, “We’re looking to have this expansion next year, have more clinics in Bogotá with a couple more in other cities while we are continuing to have this education platform so that we can engage and acquire more patients.”
“You cannot build a successful restaurant in an empty street.”
Of course, with success comes growth. On the day Torres spoke Khiron celebrated a major milestone in the company’s progress, one seen as a success for both Khiron itself, and for Colombia as a whole. As noted, Khiron is the first non-mining company from the country to be listed on the Toronto stock exchange, no small feat considering both the industry and the history of Colombia itself.
But in 2018 that history, while not gone, has made way for the next chapter —on both fronts. Cannabis is accepted more and more across the globe, from all of Canada to most of the United States, while Colombia has undergone a resurgence of its own. A 2016 peace deal between the Revolutionary Armed Forces of Colombia, also known as FARC and the government has brought a sustainable, if rocky, serenity to the country, allowing for businesses to begin to really thrive.
And Colombia has been at the forefront of the medical marijuana movement, legalizing by decree of the president in 2015. Patients can now access medical cannabis for a whole host of conditions, including pain, anxiety, depression, PTSD, and insomnia. Looking to grow into an international exporter of cannabis, the country is ideal for cultivation as it sits near the equator. As the country changes, so does Khiron, growing into a publicly traded company on the Toronto Stock exchange.
Torres, reflecting on Khiron’s achievement sees the listing as a net positive from multiple perspectives. “For Khiron. I would say, for the company, it’s validation of everything that we have done so far,” he said. “And it means a lot in terms of the credibility that we’re giving not only to investors but also to all the institutions in Colombia and to the government.”
He continued, “I would say, from a medical cannabis standpoint in Colombia is that, of course, now we’re breaking new ground. I think that you will start seeing, after this, an inflow of many more Colombian stories that want to take advantage of this door that Khiron has opened and try to go public in the exchange. And that’s never a bad thing because, in the end, you cannot build a successful restaurant in an empty street. The more we talk about Colombia, the more we talk about Latin America and the more companies that are successful at that, the better our company will do.”
And speaking of Latin America, Khiron’s next move is expansion across the whole. Now that Colombia has been conquered, so to speak, Torres sees an opportunity not just to grow, but to bring opportunity to other countries across Latin America.
“We’re looking now to enter into Mexico,” Torres noted. “We believe that, now that the government of Colombia has done all of this regulation, every county in the region is following suit.”
“We see Mexico, Chile, Argentina, and Brazil coming in the next ten months, and there will be countries that will start with the importing of medical cannabis from Colombia, of course, because it would be more cost-advantageous. But in the meantime, I would say that I expect those countries to be looking at how to develop their own cultivation industry because they all want to receive the same level of foreign direct investments that Colombia is receiving. For Khiron, this is particularly interesting because, as much as I love our facility and I think we are doing a great job, we are more interested in how to acquire patients. If we can grow medical cannabis in Mexico, Brazil, and Argentina, and make sure that we can bring a positive impact to the country, we will. So it’s going to be very exciting times to talk, I think, for Latin America, and you can expect that Khiron will be leading those conversations in all these countries.”
“This is where we live and we understand it better than anybody.”
One would be hard-pressed to miss the confidence and pride in Alvaro Torres’ voice when he speaks of Khiron and Colombia’s place in the emerging cannabis industry. As all eyes look to Canada this week and the impending legislation to repeal marijuana prohibition for good, and investors shake their heads at the volatility of the cannabis markets, Torres knows in a positive but not cocky way that Khiron is leading the way for the next big movement in the cannabis industry.
Part of that confidence comes from being in the right place at the right time. While the North American cannabis sector seems to be oversaturated at this point, international markets are thriving. Asked if he is worried about competition, Torres humbly talks about Khiron’s strength in the Latin American market.
“Well, of course, we always worry about the next competition coming into our countries. I have to say that this is a Canadian incorporated company, but this is a company that was started by Latin Americans. We know our country, we know our regions. I’ve done business in Latin America all my life, and so I’m more concerned about making sure that the companies are competing with the right companies to do so. But still, this is where we live and we understand it better than anybody.”
He continued, “So I would say that all the companies looking for Colombia in this regard, they also have to step it up because this is not the same market as Canada and unless people don’t understand the cultural differences and the difference between what patients are looking for in Colombia, and Mexico and Canada, it’s going to be complex to execute on those promises. So, we think we are well positioned, we’re not sleeping in our laurels, of course, because we have a lot of work to do. But, as I said before, it’s all about having a really good team that knows what they’re doing and understands the region.”
And as for the volatility of the market, Torres reminds investors that new opportunities now exist in Colombia. “Well, you know, this is a thing of – we’re reaching the peak in Canada. This is, we’re talking about a new region that has 20 times the population of Canada. So yes, there may be adjustments to our pricing in the stocks, but now we’re talking about a company like Khiron that’s basically transporting investors to what Canada was four years ago with a bigger market,” he said.
“A million patients in five years in Latin America.”
Torres is not shy about Khiron’s plans for the future —and those plans are big. “My five-year plan is to be able to reach a million patients in five years in Latin America. We’re starting to do this, this year, in Colombia. I think there’s going to be exponential growth as we start telling this story. The ability of Khiron to go public today also gives us credibility in all these markets.”
Moreover, on the same day that Khiron began trading on the Toronto Stock Exchange, another cannabis company, Canopy Growth Corp. (TSX:WEED) (NYSE:CGC) uplisted to the New York Stock Exchange, becoming just the second pure-plat cannabis stock to trade on a major American exchange. Asked if a similar move could be in Khiron’s future, Torres agreed it was a possibility.
“Yes, I think, absolutely because, in the end, what you’re looking for is to generate more liquidity in the market and you see that cannabis is also peaking in those. It wouldn’t be out of the question to be thinking about that.”
“So I can only see positives here.”
According to some reports, Colombia has already issued 33 licenses and hopes to grow as much as 40.5 tons of medical marijuana per year. With those numbers, the country would account for nearly 44 percent of global cannabis licenses. Some growers estimate that the nation could grab about one-fifth of the global market —a market that could be worth upwards of $40 billion a year. With all of this in mind, Torres sees cannabis as turning around Colombia for the better.
“I think there’s going to be tremendous things that are going to be positive,” he said. “So this is extremely good for Colombia in terms of the perspective everybody has. In terms of –this is going to be a new industry, of course, and so we’re going to be creating a local industry, with local patients, with local people, and this is something that we need at this time when the country is looking for alternatives of bringing in foreign direct investments. If you think about it, with everything that everybody’s looking at with Colombia, it could be looking at foreign direct investments upwards of $100 or $200 million. There are few industries in Colombia that have that type of impact, and that brings jobs and that brings economics, it’s going to be tremendous. And for the patients, it’s going to be tremendously beneficial because now they’re going to be accessing more affordable products that do not have long-term health hazards, and that’s going to also be also a good option in the cost of social care for the government.”
Asked to sum everything up, Torres noted, “So I can only see positives here.”