Video exclusive: Vicente Fox on Khiron Life Sciences, ethical leadership, and the rise of the Mexican cannabis industry
It’s estimated that upwards of seven million Mexican citizens have smoked cannabis at least once in their lifetime, with experts predicting that a legal recreational market could be as big as $2 billion for the United States’ southern neighbor. Combined with Canada, the potential for free trade in cannabis in North America could be as high as $6 billion by 2019 according to some analysts, and that’s assuming the U.S. continues to prohibit marijuana at the federal level.
“...in this industry, we cannot let wrongdoing happen,” said Mr. Vicente Fox on a cold winter afternoon in New York City, sitting in a high-rise on Madison Avenue. Speaking on behalf of Khiron Life Sciences, the former President of Mexico and one-time Coca-Cola executive spoke candidly of the upcoming onslaught of potential market suitors the country could see should cannabis become legal in the coming months.
“We cannot let a lack of ethics, we cannot allow crooks [to] get involved in this industry,” he continued. “It costs too much time and too much work to open the industry to legalize it, so we have to make sure that this is a long-lasting industry and economic sector, and not a gold rush.”
Ironically, or perhaps not, as Fox spoke those words, the global cannabis industry began to face one of its more significant moments of doubt within the past five years. In Ontario, a slew of entrepreneurs was disappointed to learn that an open-ended plan for retail licenses would now be limited to 25 in a hastily put together lottery system. One of Canada’s largest licensed producers, Aphria Inc., had just been thrown into chaos, either the victim of an underhanded short-seller attack or the perpetrator of something more nefarious.
What was to be a coming out year for cannabis was turning into, if not a moment of defeat, at least one of massive disappointment.
But, as Fox put it, Mexico is the fastest runway to anywhere in the world. And soon it will be the second largest economy in the world to legalize cannabis.
“But we have more population, more purchasing power, and more potential consumers than even Canada,” said Fox, proudly. “And we’re linked to all of Latin America, and Mexico is the most open economy in the world, over 49 trade agreements, we have worldwide.”
The former President sat with the New York City skyline behind him, steadfast in his opinion that ethics trump everything else in the cannabis industry.
“Let’s be very good social citizens so that we’re welcomed by the communities, so that we solve problems and not create additional problems with this beautiful plant of cannabis that we have taken away from criminals, from underground activity, from blood, from killings, to have a great new industry.”
“...you need to speak the language…”
It’s not hyperbole to call Khiron Life Sciences Corp., the Canadian cannabis company with core operations in Colombia the dominant player in the Latin American cannabis market. In September, Canaccord Genuity analyst Kimberly Hedlin, at the time the only person on the street covering Khiron according to Bloomberg, initiated coverage with a “speculative buy” rating and a CA$3.00 ($2.23) per share target price.
“In our view, Khiron Life Sciences is positioned to secure a sizeable market share given its first-mover advantage, low-cost operations, robust medical platform, and strong management team,” noted Hedlin at the time in her report. “We believe the stock provides an attractive entry point with rare exposure to LATAM medical cannabis.”
Speaking with the team at Khiron, their success is based on more than just a “first-mover advantage.”
“Being a Latin American player, it’s not because you’re just setting up operations,” said Andrés Galofre, Co-Founder and Chief Commercial Officer of Khiron. With a background in marketing and commercial operations at companies including Procter & Gamble, Kimberly-Clark, Pfizer, Galofre knows a thing or two about breaking into a market.
“You need to understand the cultural aspects, you need to speak the language, and you need to feel the local ambiance or know the local landscape in a way,” he continued. “So for us, originally being from Colombia, I do believe that it’s easy for us... it’s more convenient for us to move easily in all those countries.”
Galofre compared cannabis to managing Advil, a job he held once in the Andean region. When he started the company with his partner, Alvaro Torres, he engaged the industry as if he were launching a new brand — after all, there was no blueprint for how to run a cannabis company.
“And now it seems that what we thought back then is happening now, because now we’re launching products, now we have KUIDA which is the new cosmetic line that we launched, which is basically like launching a product in Procter & Gamble,” said Galofre on that cold December day in New York City.
In fact, as Galofre discussed his history with Khiron, was in the midst of experiencing an explosive third quarter. They commercialized seven wellness products in Colombia, expanded their agricultural land, and entered the Chilean market. Khiron’s new line of CBD cosmeceuticals, under the brand name KUIDA, had already seen success in Colombia and was set to enter the Peruvian market, giving the company access to another 32 million potential customers.
“...our vision has always been the same one, we haven’t changed the vision of the company to become the leader in the region,” said Galofre with a well-deserved sense of confidence.
“He’s a hypocrite. He’s a poker of cattle…”
In early 2018 the American media swooned when former U.S. House Speaker John Boehner joined the board of cannabis firm Acreage Holdings. A hard-liner on the topic of drugs, and a typical tough-on-crime politician, his evolution on the matter had analysts, investors, and industry insiders hailing the second coming of cannabis in the United States. A little less than a year later, Boehner has done a few infomercials for Acreage, and the U.S. is no closer to legalizing cannabis than it was the day Jeff Sessions repealed the “Cole memo.”
Vicente Fox is a tall, imposing man with big ideas who is not afraid to speak his mind. And while Khiron’s addition of Fox to their board this year came with less fanfare, it has arguably made a more significant impact.
In fact, while the U.S. wastes time wondering whether or not the next Chief of Staff supports cannabis, Fox is planning for the day when cannabis is part of NAFTA (or whatever it’s called at the moment).
“Well, it’s clear,” he said, matter-of-factly. “Within NAFTA you have the agricultural sector, you have the agribusiness sector, you have the automobile sector, you have the manufacturing sector, you have the technology sector, you have the academic issues, so it’s chapter-by-chapter. I think it will pretty soon become a part of those chapters, maybe on the manufacturing side or maybe on the technology or innovation side.”
The problem, of course, according to Fox is the United States’ unwillingness to address the cannabis issue. Like so many other things these days, it’s pushing the country off the world’s stage.
“It’s very possible that we make some agreements in this sector between Canada and Mexico, waiting for the United States to take the decisions that are needed to be taken,” said Fox.
Fox was pretty blunt about whom to blame for the United States’ cannabis woes — for the United States woes in general.
“Absolute conservativism shown by Señor Trump, shown by Republicans are extremely conservative and they don’t have the right – Trump and those conservative Republican leaders – to stop the economy from moving on,” Fox said, speaking his mind, as he has been wont to do so often.
He continued: “So, who is then stopping and putting limits to industry? Señor Trump. He’s a hypocrite. He’s a poker of cattle, what’s the poker that the bible says? He speaks about Christianity, and God, and love, and he acts exactly the opposite. I think the United States is losing its leadership throughout the world. I think the United States would be losing its best opportunities because this guy is so limited, so ignorant, so small that he wants to make this nation as small as he is, and that would not happen.”
In fairness, the broader issue of populism is one not owned by the United States, according to Fox. In his words, Mexico has their own populous demagogue in Andrés Manuel López Obrador.
“López Obrador, he’s harming the economy so much, so rapidly, that we must resist, we must stop him from moving and changing Mexico as he pretends,” said Fox.
“That’s kind of the vision that we have.”
“We’re looking now to enter into Mexico,” Alvaro Torres, Co-Founder and CEO of Khiron Life Sciences told PotNetwork News earlier this year. “We believe that, now that the government of Colombia has done all of this regulation, every county in the region is following suit.”
He continued: “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.”
Today, almost six months later, Alvaro Torres sounds like one of the smartest men in the room considering the political moves Mexico has made in the cannabis sphere. The country has become a priority market for KUIDA, with Khiron recently announcing the extension of an agreement with digital drugstore Farmalisto to market and distribute the cosmeceutical brand. Subject to approvals from the Federal Commission for the Protection of Health Risks, which is Mexico’s version of the Food and Drug Administration, the deal will open up Khiron to a potential market of 120 million consumers.
“In my perspective, Mexico is a huge market,” Galofre stated, agreeing with his Khiron co-founder’s sentiments from earlier in the year. The country is a dominant player in several large industries as well, he noted, placing it high on Khiron’s radar under the most typical of circumstances.
But, of course, these are not typical circumstances. “Mexico definitely is a game changer in the whole atmosphere,” Galofre said enthusiastically.
There’s an unfortunate tendency for outsiders to view Latin America as a singularity, as opposed to a rich tapestry of intertwined cultures. As simple as it may seem, some tend to forget that Colombia is not Peru, and Peru is not Mexico. The key to Khiron’s success in Mexico, and in the whole of Latin America, comes from adapting their vision to each locale. As Galofre said, it’s about understanding local partners who are the key players.
Having recently received an allowance to sell KUIDA in Peru, and now working on a commercial deal to sell the product itself in the country, Galofre and Khiron have a pretty solid roadmap for future expansion.
“Working with serious partners in each of these countries allows us to dominate the landscape,” said Galofre when asked about the differences between each country.
“I think that what we do is we understand that it’s a win-win equation and it’s not just, I will print everything and then you’ll just be my distributor or something like that for us,” continued Galofre. “It’s just, allowing everyone to be a part of this whole industry. That’s kind of the vision that we have.”
*To read the rest of PotNetwork’s interview with President Vicente Fox and Andrés Galofre of Khiron Life Sciences, be sure to check out PotNetwork Magazine, available this January. To sign up a FREE copy, register here.