Australian medicinal cannabis producer AusCann (ASX: AC8) is teaming up with Colombian counterpart Khiron Life Sciences (CVE: KHRN) in a bid to dominate the Latin American market.

AusCann and Chilean producer Fundación Daya own a 30ha production facility in Chile called DayaCann, which has already yielded 1000kg of medicinal marijuana. Some of it is used by Knop Laboratories to create medicinal cannabis products for Chilean patients via a special access scheme. DayaCann has now signed a memorandum of understanding with Colombia’s Khiron to “address the unmet needs in a market of over 620 million in Latin America”.

Leading Canadian producers Aphria (TSE: APH) and Canopy Growth Corp. (TSE: WEED) are making great inroads into Latin America. They have both lauded the huge potential of this market and they’re busy moving around their main pieces on the continent’s chessboard. AusCann and Khiron have responded by joining forces and they feel that Chile can become the perfect regional hub for their operations.

There are 18 million people in Chile and the GDP is just north of $24,000 per capita, leading Khiron to hail it as the most stable and prosperous country on the continent, with the strongest economy. There are already 1.8 million Chileans licensed to buy medicinal marijuana products and Fundación Daya has long been a pioneer in this emerging market. DayaCann is the only firm in Chile to hold a medicinal cannabis license.

“The memorandum of understanding will not only expand DayaCann’s presence in Chile, but also give DayaCann wider access to the Latin American market,” said AusCann managing director Elaine Darby.

As part of the agreement, Khiron will provide $1 million in capital to help the two companies devise alternative ways of supplying Chileans with medicinal cannabis. Khiron is based in Colombia, but in May 2018 it listed on the Toronto Stock Exchange.

DayaCann will provide cultivation and manufacturing services to Khiron, with the aim of producing a minimum of 5 tonnes of dried flower exclusively for the firm. This will be turned into products to treat patients suffering from epilepsy and neuropathic pain. The duo will also team up for clinical trials, and create a lab to manufacture innovative products. They aim to begin distributing products by the start of 2020.

Khiron and DayaCann said the deal will allow them to create new jobs in rural areas and contribute to the scientific and technological development of the flourishing global cannabis industry. They will also provide training to medical professionals across the continent, presenting cannabinoid medicines as a viable medical option.