The News\r\nCanopy Growth Corp. (TSE: WEED)\u00a0announced a deal to buy the Colombian licensed producer Colombian Cannabis S.A.S for $96 million US dollars of Canopy stock.\r\n\r\nColombian Cannabis S.A.S. will be renamed Canopy LATAM Corporation, a subsidiary of Canopy Growth the parent company.\r\n\r\nColombian Cannabis is based out of the state of Huila, southwest of Bogota, Colombia. The company owns a 13.5 million sq. ft. farm with current licenses to grow and process marijuana on 4.5 million sq. ft. of the property.\r\n\r\nThis property will be Canopy's regional growing and processing hub for all of South America.\r\n\r\nConstruction on the initial greenhouse and processing facility will commence by September of 2018 and take 12 months, according to the company.\r\n\r\n \r\nCanopy LATAM Management Team\r\nTo lead the LATAM subsidiary, Canopy lured Antonio Droghetti Neto, an executive with strong business ties in Brazil.\r\n\r\nDroghetti Neto has ties to Silvio Santos, the billionaire behind Grupo Silvio Santos, the third-largest media conglomerate in Brazil.\r\n\r\nHe was also listed as an attorney-in-fact of an entity listed in the Panama Papers, leaked documents that showed the vast network of offshore tax havens utilized by the global elite.\r\n\r\nPerversely, these papers along with his prior position at Grupo Santos prove that Droghetti Neto has deep relationships with the political elite of Brazil.\r\n\r\nTo convince him to join the LATAM subsidiary, Canopy had to buy out his investment firm, Canindica, for $56 million and\u00a0agree to pay him shares worth 6% of the value of Canopy LATAM in 2023.\r\n\r\nSpectrum Colombia will be run by the current CEO of Colombian Cannabis S.A.S. Bibiana Rojas. She previously worked as assistant to the CEO of Grupo ORO, a conglomerate based out of Bogota Colombia.\r\n\r\n \r\nWhy Did Canopy Growth Buy Into South America\r\n\r\n\r\nThroughout 2017 and into early 2018, Europe and Australia were the two most promising growth opportunities for licensed producers.\r\n\r\nAll of the largest players including Canopy Growth, Aurora Cannabis, Aphria, and others signed dozens of import and export deals and purchased European land and assets outright in a bid to serve the growing medical markets abroad.\r\n\r\nHowever, in the last two months South America, and Colombia in particular, have begun to steal the limelight.\r\n\r\nAs previously explored on this site HERE and HERE, Colombia presents an attractive place to grow marijuana with a cost of production 75% lower than Canada due to its abundant sunlight, low electricity costs and longer growing season.\r\n\r\nThe two largest growers in Colombia, PharmaCielo and Khiron Life Sciences (CVE: KHRN) successfully raised over C$75 million from Canadian investors in the past year, giving them the capital to compete for exports on a global scale.\r\n\r\nCanopy is well aware of the cost advantage enjoyed by South American growers and has kicked off what we think is the beginning of a Canadian stampede to buy up growing assets there.\r\n\r\nLarge Canadian growers are smart enough to know they can never compete with South America on costs, so the only way to survive is to compete on an equal playing field using the same assets.\r\n\r\n \r\nWhere Big Cannabis Leads Others Follow\r\nThe four largest producers in Canada have been in a figurative arms race to see who can establish the largest global growing and distribution system first.\r\n\r\nWhen one company signs an import deal in Germany you know the others won't be far behind.\r\n\r\nNow that Canopy has fired the first shot by buying direct growing capacity in Latin America, we would not be surprised to see Aurora Cannabis, Cronos Group, Aphria, and others follow suit.\r\n\r\n \r\nPotential Targets\r\nTwo companies we see as potential targets are PharmaCielo and Khiron Life Sciences (KHRN).\r\n\r\nBoth companies hold all required cultivation, processing, and sales licences in Colombia and are already operating, in the case of PharmaCielo, or will commence operations by the end of 2018, in the case of Khiron Life Sciences.\r\n\r\nBuying these companies would give another Canadian producer a head start on Canopy Growth, with the Canopy LATAM greenhouse not scheduled for completion until the middle of 2019 at the earliest.\r\n\r\nPharmaCielo in particular could already be in play as the company has gone silent since they announced plans on April 23rd to do a reverse merger in Canada and begin trading on the Toronto Venture Exchange.