Australian Doña Blanca is going to invest $2.5 million in the Colombian medical cannabis company Medcolcanna. The company has a team that has succeeded in innovating and converting ideas into new forms of production and business models that are sustainable over time. Colombia is pleased with this great news and looking forward to executing the final agreements between companies.
Medcolcanna Organics Inc, a Canadian medical cannabis company with operations in Colombia, announced the signing of two letters of intent totaling $2.5 million with Doña Blanca Limited, an Australian-based cannabis company with operations in Colombia.
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Doña Blanca investments include the building of greenhouses and a stake in Extralia Labs
In accordance with the first letter, Doña Blanca will invest approximately $1 million to build two additional hectares of greenhouses on the Medcolcanna licensed farming property. This investment will be made in order to obtain a 70% operating interest in the economic rights to the production of such greenhouses.
In accordance with the second letter of intent, Doña Blanca will invest another $1.5 million to obtain a 15% stake in Extralia Labs S.A.S., a wholly-owned subsidiary of Medcolcanna, designed to have an annualized extraction capacity of 300,000 kilograms of dried flowers in Colombia. Its operations include the provision of services for MCCN, Dona Blanca and third parties.
The aim of the agreement
“The signing of this agreement is an acknowledgment of MCCN’s operational effectiveness at our facilities in Cota, Colombia. The experienced management team of a partner like Doña Blanca, who entrusts MCCN to operate its facilities, confirms MCCN’s ability to deliver high quality, low-cost cannabinoid oils and extracts. The construction of the additional 2.0 hectares will begin immediately, the licensing process has already been completed, and we expect to have our first revenues from the new facility in the fourth quarter of 2020,” commented Felipe de la Vega, MCCN’s CEO.
Medcolcanna is looking forward to the final agreements
“Our company is pleased to execute these letters of intent with Doña Blanca and look forward to executing the final agreements. These agreements are expected to provide Medcolcanna with a non-dilutive source of financing, boost treasury, and also provide additional capital and help Medcolcanna achieve the goal of becoming a leading self-sustaining cannabis company in 2020,” said Chris Reid, Medcolcanna’s CFO.
“The additional greenhouse cultivation area that Medcolcanna operates under its partnership with Dona Blanca, will reduce fixed costs per unit of production across its entire cultivation area. It will also generate additional income from the 2.0-hectare, of which 0.6 hectares net will benefit Medcolcanna, based on the 30% interest under the joint venture,” added Reid.
“MCCN is pleased to have Doña Blanca as its partner. They will be valuable in helping to obtain high impact sales channels in the emerging European and Asian markets,” added Medcolcanna’s Director of Corporate Development, Daniel Herrera.
Medical cannabis business in Colombia
The medical cannabis industry continues to grow in Colombia. However, as it is a regulated activity, before investing in this industry entrepreneurs must go to various public entities for the processing of all types of licenses: from seeds to processing and distribution of cannabis-based products, whether with a psychoactive component (THC) or a non-psychoactive component (BD).
The cannabis industry, which has grown worldwide, has transcended industries related to medical use, recreational consumption and now it extends to the cosmetics and food sectors.
It is estimated that by 2025 the legal cannabis business will grow by 77% with sales in excess of $160 billion. Colombia has the potential to be a major player in this sector given its geographical location, production costs, and regulatory conditions.
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