This week Wayland Group (CNSX: WAYL) became the latest Canadian operator to move into the flourishing Colombian cannabis market by purchasing local producer Colma Pharmaceutical.
Producing a gram of cannabis in Colombia is estimated to cost just $0.05, compared to around $1.50 in Canada, so there is a clear motivation for the country’s producers to pile in. In September, Aurora announced a $300 million deal to buy leading South American producer ICC, which holds Colombian production licenses. Aphria tied up a similar deal to buy LATAM Holdings and Canopy Growth Corp. bought Colombian Cannabis S.A.S for $96 million in July.
Wayland now takes the number of regulated Canadian cannabis producers operating in Colombia to at least eight, and the country is becoming a key battleground for the leading lights in the rapidly flourishing marijuana industry. It spent C$22 million ($16.7 million) to purchase Colma, valuing it at C$2.00 per share.
When the acquisition is completed, Wayland will begin to cultivate cannabis year-round due to Colombia’s ideal growing conditions. It believes it will enjoy at least two full harvests per year, yielding THC and CBD along with “importantly commercial quantities” of lesser-known CBG and CBN. It will cultivate cannabis flower outdoors on 125ha of land, while isolating different cannabinoids in a 415,000 sq ft greenhouse.
“We continue to move aggressively in the international market, creating a global presence, built on a rational business platform of geographic cost centers,” said Wayland chief executive Ben Ward. Wayland was founded in 2013 and has offices in Burlington, Ontario and Munich, Germany. Its initial plan is to conduct crude extraction in Colombia and then ship it to Germany for further distillation into a range of products ready to hit the international market.
Wayland heralded its move into Colombia as an important step in creating a reliable and consistent supply of cannabinoids for the global market. Producers have thus far struggled to meet demand in Canada, and there is not enough marijuana to go round, so ramping up production in a hot country like Colombia is crucial to shore up stocks.
The country is a bit of a paradox, as all this activity is taking place and ICC is building a state-of-the-art Cannabis Park near Bogota, but personal consumption of cannabis is outlawed, so there is no domestic market for producers to target. Yet it has issued more than 30 cultivation licenses and it is set to become a major player in exports.