fbpx Aurora Cannabis looks to dominate Uruguay’s weed market with latest purchase

Aurora Cannabis looks to dominate Uruguay’s weed market with latest purchase

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An Edmonton-based business has positioned itself to dominate the marijuana market in the one country that beat Canada to the punch on legalization. Aurora Cannabis Inc. announced Monday it had purchased South America’s leading cannabis producer ICC Labs, which holds 70 per cent of the market in Uruguay.

Uruguay passed legislation in 2013 to legalize cannabis, and implemented recreational sales last year. Fernanda Boidi, with the Latin American Marijuana Research Initiative and Uruguay’s Insights Research Group, said the country is facing a major cannabis shortage and having a heavy-hitter like Aurora step in could help remedy that.

“I’m pretty sure the government will be hoping for an increase in production, because so far, the demand exceeds the supply. So, in a way, cannabis regulation has not been totally implemented because it’s not reaching all registered users, because there’s been a shortage,” Boidi said.

“With a bigger company with bigger licences, this should improve.” ICC Labs was one of just two cannabis producers granted a licence by Uruguay’s government in 2015, along with Symbiosis, and also holds licences to produce medical cannabis in Colombia.

Boidi said Uruguay is especially short on medical cannabis, an industry that has hardly developed there. She said Aurora’s presence may push the country’s government to move quicker on developing medical regulations.

Boidi said the shortage, coupled with strict regulations, has ensured black and grey markets continue to thrive in the country. Adults have to register to acquire marijuana, which they can do in one of three ways: they can register to buy through pharmacies, join a cannabis club, or become a personal grower — but can only choose one of those three methods.

Boidi said consumers will often turn to the black market if they run out of product or there is nothing left at the pharmacy. When legalization first rolled out, pharmacies were running out quickly and taking up to two weeks to refill their stock.

If Aurora is able to boost the country’s supply, she said, that will likely shrink the black market. “As long as production increases and the product is made available to wider audiences, the black market should be reduced.” Monday’s deal will see Aurora acquire all issued and outstanding common shares of ICC, totalling about $290 million.

Aurora officials say the deal will establish their business as the industry leader in all of South America, a continent with a population of more than 420 million. With ICC’s existing and in-progress facilities on the continent — it has two greenhouses, three outdoor grow sites and two facilities under construction — the company has a production capacity of more than 450,000 kilograms of cannabis per year.

Aurora’s chief corporate officer Cam Battley said the grow-ops that are under construction will allow them to ramp up the amount of cannabis in the Uruguay market. Battley said Aurora will lobby South American governments to get on board with medical marijuana, and he expects more will fall in line with recreational legalization as well.

“Across South America, we are going to be working closely with policy-makers to help them establish effective, workable and sustainable medical systems, and also to begin the conversation about what future consumer systems could look like,” Battley said. “We do anticipate they will be moving toward acceptance of consumer systems, and that’s one of the key reasons why we’re very excited about the first-mover advantage that this gives us in South America.”

Aurora’s 800,000-square-foot facility at the Edmonton International Airport will be producing 8,000 kilograms of cannabis a month or more by January 2019. In total, the company has a capacity in excess of 500,000 kg per year and has sales and operations in 14 countries.

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