Avicanna Acquires Majority Interest in Colombian Cannabis Cultivator

Published: August 16, 2018

Avicanna Acquires Majority Interest in Colombian Cannabis Cultivator

Avicanna Inc. acquired a sixty percent (60%) controlling interest in Santa Marta Golden Hemp S.A.S., a company that has been issued a full suite of medical cannabis licenses in Colombia. The other substantial holder in SMGH is controlled by El Grupo Daabon (“Daabon”), a global industrial scale organic agricultural company based in Colombia. Daabon has also committed to lead Avicanna’s IPO financing and subscribe for up to 20% of the offering.

This acquisition represents a significant milestone for the cannabis industry, being the first in which a major multinational agricultural corporation has taken a position in a joint venture of this nature. Daabon and Avicanna will be combining resources and expertise including Avicanna’s leadership in research and biotechnological developments in the cannabinoid sector and Daabon’s global leadership within the agricultural industry of industrial scale organic cultivation, processing and distribution. Daabon has agreed to dedicate all of its cannabis activities through SMGH, allowing Avicanna to capitalize on Daabon’s well established global roots in the agricultural industry.

The transaction contemplates: i) Avicanna’s acquisition of a sixty percent (60%) controlling interest of the total issued and outstanding shares of SMGH and ii) the issuance of 1,477,818 of Avicanna common shares, equivalent to 11.2% of its total issued and outstanding common shares as at April 30, 2018.

Key highlights of the transaction:

  • Best in class partnership and international vertical integration.
  • The partnership will combine a top Canadian biotechnological company focusing on advancements in cannabinoid research and product development with a multi-billion dollar global organic agricultural enterprise.
  • SMGH is situated on, and owns, a sixteen-hectare parcel of land on the Caribbean coast near Santa Marta.
  • Access to sustainable, and environmentally responsible agricultural business and expertise with over 15,000 hectares certified for organic cultivation which will allow SMGH to scale operations significantly.
  • Potential for the development of industrial scale extraction plant in line with Daabon’s current palm oil processing plant, which has the largest capacity in the Americas to extract 1,200 tonnes of raw materials a day.
  • Enhanced infrastructure, and access to duty-free zones controlled by Daabon paving the way for the development of a global distribution network.
  • Distribution and global footprints of both organizations, including Avicanna’s offices in four (4) countries and Daabon’s offices in six (6) countries with sales in over twenty (20) countries worldwide.
  • Anticipated API and final product sales, inclusive of Avicanna’s skin care and medical cannabis products, which utilizes the research and product development carried out in MaRS and through research partnerships with the University of Toronto and University Health Network.

Daabon to place lead order in Avicanna’s IPO Financing

Daabon, through its closely held corporate entity, has agreed to lead Avicanna’s IPO financing round by taking up to 20% of the brokered private placement. Proceeds from the IPO financing will be used for Avicanna’s R&D projects in Canada, clinical projects around the world, funding of infrastructure in its agricultural projects in Colombia, and the growth of commercialization and distribution channels in Latin America and Europe.

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