DENVER and TORONTO, Jan. 30, 2019 /CNW/ - PRESS RELEASE - Dixie Brands Inc., a cannabis consumer packaged goods (CPG) company, and Khiron Life Sciences Corp., a vertically integrated medical cannabis company focused on Latin America, have signed a binding letter of intent to establish a 50/50 joint venture to introduce a full line of cannabis-infused products to the Latin American market. Dixie will also manufacture and distribute Khiron's Kuida brand of cannabidiol (CBD)-based cosmeceuticals in the United States, targeting the growing Hispanic population. Completion of the JV is subject to TSX Venture Exchange approval.
By combining Dixie's market-ready portfolio of cannabis-infused products with Khiron's established footprint throughout Latin America, the companies aim to capture first-mover advantage and establish leadership in one of the world's fastest-growing cannabis markets. The agreement also creates a framework for the development of new products and brands tailored to Latin America, allowing Dixie and Khiron to take full advantage of opportunities resulting from cannabis legalization throughout the region.
Alvaro Torres, co-founder and CEO of Khiron Life Sciences, stated, "This joint venture is a combination of two companies coming together to bring great brands with highly complementary products, distribution capabilities and expertise. The joint venture gives us important access to expand the reach of our Kuida cosmeceutical brand into the U.S. market, and by introducing a proven set of product formulations, we can more effectively leverage the infrastructure and relationships we are putting in place across Latin America."
Chuck Smith, president and CEO of Dixie Brands, stated, "This joint venture will launch Dixie's portfolio of brands throughout Latin America and demonstrates the value and scalability of the product portfolio we have developed and marketed over the past nine years. Khiron is the clear leader in the Latin American cannabis space with an excellent operating team and a growing presence across the region. We look forward to aggressively supporting this push into Latin America as Dixie executes against its plan to expand into new international markets and build the leading global CPG cannabis company."
Joint Venture Details
Pursuant to the letter of intent, Khiron will operate the JV from its base in Bogota, Colombia with responsibility for regulatory matters, cultivation, manufacturing and distribution. Dixie will contribute intellectual property including its extensive brand portfolio, product formulations and production processes. The two companies will collaborate on the development of new brands and products as appropriate for local Latin American markets.
Dixie's flagship Dixie Elixirs brand offers more than 100 SKUs spanning 15 product categories in the regulated infused tetrahydrocannabinol (THC) industry, with products currently sold in more than 1,000 regulated dispensaries in four U.S. states. Dixie's two hemp-derived CBD wellness companies, Therabis and Aceso, are focused on pet and human supplements which are sold through its e-commerce platform as well as traditional commercial retail distribution relationships expected to reach thousands of locations in 2019. Dixie will manufacture Kuida products in the U.S. and market them through its growing network of channels as it executes its expansion strategy.
Hillcrest Merchant Partners Inc. acted as advisor on the JV and, upon completion of the JV, will receive an advisory fee payable equally by the parties in shares of Dixie and Khiron.
Completion of the JV and the commencement of operations is subject to the execution of definitive agreements and receipt of all required regulatory approvals, including final acceptance of the TSXV.
Latin American Cannabis Market
The Latin American region is among the world's fastest-growing cannabis markets as a number of countries move towards legalization. In Mexico, a global top-15 GDP country, the government has introduced legislation to permit medical and adult use for cannabis in 2019. According to Quintiles IMS, there are approximately 68 million potential patients in Latin America that could benefit from medical cannabis.
Khiron has entered the markets in Colombia, Peru, Chile and Mexico, and recently announced plans to enter Brazil and Uruguay through its proposed acquisition of NettaGrowth International Inc. Upon completion of the NettaGro transaction, Khiron will be present in markets which collectively represent more than 75 percent of the total Latin American population of 620 million people. Kuida, its comprehensive portfolio of CBD-based skin and body care products for women, can be seen at www.kuidaskincare.com.
U.S. CBD Market
The Hispanic population in the United States is estimated at almost 60 million and is among the country's fastest-growing demographic groups. CBD-based products have become increasingly popular in the U.S., and the legalization of hemp through the recently-signed Farm Bill is helping to increase acceptance both by consumers and major retailers. Market research company Brightfield Group projects hemp-derived CBD sales in the U.S. of $22 billion by 2022. Kuida will be one of the first CBD brands specifically targeting Hispanic Americans.
