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Tilray acquires Chilean partner and continues its dominance of the Chilean market

In February 2017, Tilray, Inc. (NASDAQ:TLRY), a global cannabis seed to patient supplier with operations on five continents, announced approval from the Canadian and Chilean governments to export medical cannabis to the South American country. Two years later, Tilray has acquired its Alef Biotechnology, SpA and continues to dominate the Chilean market.

Chile, a country with one of the highest marijuana consumption rates in the Americas, began deregulating cannabis for medical and personal use in the early aughts. In 2015, it fully legalized medical marijuana, including statutes for medical home cultivation.

Tilray is one of the top medical marijuana companies in the industry. Founded in 2013 and based in British Colombia, they made a name for themselves as the first company in Canada to examine cannabis and PTSD in 2014, the first cannabis company in the Americas to receive Good Manufacturing Practice certification in 2016, the most prestigious certification available in manufacturing, and the first pure-play cannabis company to IPO on the NASDAQ in 2018.

Alef was a Chilean medical marijuana research, import, and distribution company. It was one of the first to receive a license from the Chilean government. Like in many Latin American countries, once local firms receive national licenses, global firms begin to court them to gain a market share in the rapidly deregulating Latin American Market.

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Tilray’s differentiation across the world as a high-quality medical cannabis producer. The acquisition of Alef follows its MO to participate, and dominate, the cannabis market on every continent.

Tilray enters the Latin American market

In February 2017, Tilray announced a partnership with Chilean cannabis license holder and distributor Alef Biotechnology. The agreement allowed Alef to distribute Tilray cannabis products both in Chile and in Brazil.

“The Chilean government has been a pioneer legitimizing and regulating medical cannabis in Latin America, and we are thrilled to be investing in one of the region’s most exciting markets for biopharmaceutical development.” Brendan Kennedy, President, and CEO, of Tilray, announced after the acquisition.

There are an estimated $88,000 medical patients in Chile suffering from conditions that could benefit from medical cannabis products.

In 2017, Alef became the first Chilean company to receive permission to market medical cannabis products. Its partnership with Tilray to distribute high quality, internationally certified, cannabis products was key for a government looking to monitor and maintain quality.

Alef and Tilray partnered with the Chilean pharmacy, Salcobrand, which was authorized to release the first Tilray products in May 2017.

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In a press release about the partnership, the former President of Alef’s board, Roberto Roizman said, “Alef Biotechnology is committed to improving the quality of life of patients in need. By importing Tilray’s medical cannabis products to Chile, we intend to ease the suffering of those in need by offering pure, precise and predictable medical cannabis products.”

With the Latin American cannabis market valued over 100 million dollars and climbing, and Alef already proving itself to be a pioneer in the Chilean market, for Tilray, just a partnership was not enough.

The acquisition, two years in the making

On October 9, 2018, Tilray announced in a press release that they acquired Alef for, in total, CA$5 million ($3.79 million), CA$250,000 ($189,326.53) in cash and the remaining amount in class 2 common stock.

Alef’s CEO and Chief Sales Officer will remain in charge of Tilray’s Chilean branch, which is now called: Tilray Latin America SpA.

Acquiring Alef gives Tilray a central location to distribute its products in Latin America. It gives Tilray an even stronger relationship with the Chilean government, who had already granted permission to Alef to build a high-tech facility to produce and process cannabis medicine in Chile, one of few such facilities in Latin America.

The acquisition of Alef and promise of advanced cannabis process facilities highlights the Tilray’s skill in selecting strong global partners. The facility, when finished, will allow countries such as Brazil and Argentina, that have yet to permit companies to grow and process medical cannabis in their borders, to import medicine from closer to home.

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Tilray’s stock closed at $77.03 per share an increase of 71 percent since the start of the day. Their stock has tumbled this month with shares valued at $83.27 on February 5.

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