Flora Growth, an organic cannabis producer enters into an agreement to buy Cronomed, a Columbian nutritional and dietary supplement provider. Flora Growth creates organic cannabis oils and CBD-infused food and beverage pharmaceutical-grade, cosmetic-grade, medical derivatives from the cannabis plants for a wide variety of purposes including nutritional and dietary supplements.
CBD has gained massive popularity over the past few years, owing to its alleged health benefits. It is an anti-inflammatory and non-psychoactive compound derived from hemp, a Cannabis Sativa plant. Since CBD is non-psychoactive it doesn’t produce hallucinations or gives a “high” to users who use it in any form.
The federal government has set stringent regulations surrounding cannabis-based products- the maximum amount of THC, the psychoactive compound of marijuana, permitted is 0.3% per unit dry weight. But many companies seem to be avoiding these policies and regulations, producing products that contain her THC.
As the legal cannabis market grew, so did the illicit market for cannabis companies. From small stores right around the corner to supermarkets to petrol pump shops, CBD based products have become easily accessible. CBD is known to treat a variety of ailments including stress, depression, insomnia, seizures in epilepsy, inflammation, muscle soreness, spasms, and much more.
It is also known to alleviate the symptoms of life-threatening diseases such as cancer, Alzheimer’s, Tourette, and epilepsy. In fact, the U.S. Food and Drug Administration has legally approved a cannabis-based medication, known as Epidiolex. It is an oral solution used to treat two rare and severe forms of epilepsy known as Dravet’s syndrome and Lennox Gastaut syndrome.
Many people have reported significant health benefits after using CBD products. These products can range from CBD based oil to topical, ointment, cream, isolate, vape pens, gummies, dietary supplements, pet products, and beverages.
The stigma around cannabis and its derived products have gradually faded away, leading to a wider customer base for cannabis-based products. Whether it is a farmer who wants to scale his agriculture business or a newly launched small-scale startup or a multi-national organization, every segment seems to be inclined towards the booming cannabis industry.
Flora Growth is one such prominent brand in the cannabis industry that has progressed plans to acquire a 100% equity interest in Cronomed (Grupo Farmaceutico Cronomed S.A.S) thereby centering on its expansion in wider Latin American and Colombian markets.
Cronomed is headquartered in Bogota, Colombia. The company produces both nutritional and dietary supplements. Cronomed has an array of products including vitamins, weight-loss supplements, and essential minerals along with 16 nutritional supplements including protein powders, collagen powders, hydrating drinks, meal replacements, and sweeteners.
All of the products of Cronomed are registered and approved by the Colombian National Food and Drug Surveillance Institute (INVIMA), which is treated the Colombian equivalent of the U.S. Food and Drug Administration (FDA).
With the INVIMA’s approval, the organization is all set to export its range of nutritional and dietary supplement products throughout the world. The Colombian brand sells its range of products in Colombia to a massive pharmaceutical distribution network.
After the success of its products in the Colombian market, Cronomed plans to expand its distribution to online retailers, sizable supermarket chains, and the Colombian government. According to the latest agreement between Cronomed and Flora, the later will team up with Cronomed’s existing R&D (research and development) team to analyze and understand how its product line can include and create Flora’s organic CBD oil to boost product efficacy.
CEO of Flora, Damian Lopez, said that acquiring Cronomed has been a significant milestone for the company. Lopez further commented that Cronomed is likely to be a great revenue source for Flora with its initial expansion in Columbia and then across the world.
Flora is now looking into the existing product range of Cronomed and asses the positive impact of the use of CBD oil in such products. First, Flora will explore how CBD can be seamlessly infused with other products and then start working towards getting regulatory approval from the INVIMA.
Lopez said that Flora believes in Cronomed and that it has the ability to deliver tangible results in 2020. Flora has structured the transaction in a way that the majority of the purchase price payments are conditional on Cronomed giving a boost to its sales in 2020.
Both the companies are now in the final stages of their transaction, which defines a number of financial conditions that Flora must meed to complete the agreement. Once the transaction is completed, Flora will pay $1,890,000 in cash to Cronomed. On such a date, that must occur before the 31st December 2020, Flora will pay approximately $2,000,000 in cash to Cronomed given it must increase its revenue by 20% from 2019.