A Canadian cannabis producer is moving forward with the acquisition of an official Mexican company capable to import medical cannabis products.
On Monday (December 10), Aurora Cannabis (NYSE:ACB,TSX:ACB) formalized its entry to the Mexican market by announcing a complete acquisition of Farmacias Magistrales, a pharmaceutical laboratory based in Mexico City.
The Canadian licensed producer (LP) will complete this purchase through its own shares at a price not yet confirmed, set to be determined “on a valuation of the proforma distribution revenue projections of Farmacias.”
Neil Belot, chief global business development officer for Aurora, said the company was impressed with the quality of assets and operations from Farmacias Magistrales.
Aurora’s interest in the Mexican venture comes after the LP confirmed an exclusive partnership to import Aurora’s medical cannabis product.
On the benefits of the acquisition, Aurora said:
Farmacias recently became Mexico’s first and only federally licensed importer to date of raw materials containing [tetrahydrocannabinol] THC, gaining the necessary licenses, facilities, and permissions to import raw THC material, and manufacture, store, and distribute medical cannabis products containing over 1 [percent] THC
For both announcements, Aurora touted the advantage of a legal market with 130 million people in it.
“Farmacias has a large distribution network of both retail outlets and pharmacies, which will enable us to quickly scale up our operations across Mexico,” Aurora CEO Terry Booth said.
Shares of Aurora opened on Monday at a price of C$7.80 in Toronto while in New York the company started the day with a US$5.90 price. Near the end of the trading session Aurora stock was marginally down in both exchanges.
While Aurora’s deal is for a position in the medical marijuana market, Mexico made headlines in November when it was reported incoming interior minister Senator Olga Sanchéz would be introducing legislation for the drug.
The legislation was introduced after the Mexican Supreme Court ruled in favor of two new cannabis cases, which created a new standard in Mexican law to abide by.
“From a point of view of the negative side effects, there isn’t any reason for which cannabis isn’t illegal, while alcohol and tobacco are,” an early version of the bill from Mexican leading party Morena indicated.
Aurora isn’t the only company to have announced plans for the Mexican market, with fellow LPs competing for a position additionally in the overall Latin American space.
Aphria’s expansion plans have recently come under scrutiny as the company was targeted by a short seller report based on the method it went about acquiring these assets.
The company obtained this entry thanks to its subsidiary, Kuida Life Mexico, getting approval from Mexico’s Federal Commission for the Protection against Sanitary Risk, the authority on cannabis products.
Former Mexican president Vicente Fox, who made his own entry into the cannabis space as a board member for Khiron, said the steps Mexico has taken to legalize the adult use of cannabis have the potential to “reduce crime, increase prosperity and improve the health of our citizens.”
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Khiron Life Sciences is a client of the Investing News Network. This article is not paid-for content.
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