Aurora, Uruguay's future cannabis producer?

Aurora Cannabis, one of Canada's leading cannabis companies with capital of $4.5 billion last April and 12 subsidiaries, is currently in negotiations to acquire ICC Labs, one of only two companies licensed to produce for the legal recreational cannabis market in Uruguay.

A deal with the government

Uruguay's two recreational cannabis producers are authorized to produce 2 tons of cannabis per year. The for sale in pharmacies is set at 1.30$ per gram, the majority of which, 0.90$, goes to the producer. The rest goes to the pharmacy, and a tiny fraction is used to fund the government's non-profit regulatory agency. Producers grow their cannabis in greenhouses located in Uruguay.

In the second half of 2017, the two growers sold around 512 kilos of dried flower, which represents just 3 % of Uruguayans' total estimated consumption for the same period. The latter have two other legal means of accessing cannabis: they can obtain it from the country's 80 or so Cannabis Social Clubs, or grow some at home. But above all, Uruguay has suffered major supply problems cannabis in pharmacies.

Once the program is firmly in place, the two producers' market segment could prove very promising. Uruguay's legal situation also offers a comfortable position for producers, since competition is virtually non-existent. The Uruguayan cannabis regulatory agency must, however, examine Aurora's proposal and give its prior approval.

ICC Labs

The agreement includes the ICC Group's license for Uruguayan medical and recreational cannabis, as well as plans for facilities in Colombia, where the company obtained a government license earlier this year. On its website we read: «ICC is pleased to announce that the Ministry of Justice and Law of the Republic of Colombia has granted ICC Labs» Colombian subsidiary a license to cultivate psychoactive cannabis for medical purposes for domestic and international distribution". The agreement currently being negotiated could therefore ensure Aurora a way to infiltrate the Latin American market.

The company also produces hemp for the export of concentrated CBD products, and recently announced an increase in production capacity in its extraction laboratories. It has distribution agreements with Brazilian, Mexican and Canadian companies for CBD products. The company declined to comment on the agreement with Aurora and it's unclear whether the hemp CBD segment will be included in the deal. On the recreational side, the company reported sales of 164,126$ for the first quarter of this year. Following the announcement of a possible deal with Aurora, ICC's coastline increased from 12% to Canadian Venture Exchange.