Doña Blanca to invest $2.5 million in the medical cannabis business in Colombia

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.

Visit our Hemp.im mobile application to check the latest news in marijuana and other trending topics like hemp and cannabis. Hemp.im will bring you the best business news experience on your Android and iOS devices.

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.

__

(Featured image by Adeolu Eletu via Unsplash)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Hemp.im, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in elEconomista, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Hemp.im assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Hemp.im is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.