Cronos Group Investors Seem to Love its Latin Moves

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Cronos Group Inc. (TSX:CRON) (NASDAQ:CRON) said it has formed a 50/50 joint venture in Columbia

SmallCapPower | August 31, 2018: Cronos Group Inc. (TSX:CRON) (NASDAQ:CRON) Wednesday announced that it has formed a 50/50 joint venture named NatuEra S.à r.l. in Columbia with an affiliate of Agroidea SAS (AGI), Colombia’s leading agricultural services provider. Led by AGI’s executive team, the JV will develop, cultivate, manufacture and export cannabis-based medicinal and consumer products for the Latin American and global markets.

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As per the terms of the agreement, each partner will contribute capital as required to fund facility construction and operating expenditures of NatuEra. Initial cultivation and manufacturing operations of NatuEra will be custom-built on 207 acres located in Cundinamarca, Colombia, a region with favorable climatic conditions for growing cannabis.

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The JV expands Cronos Group’s international presence to four continents. Cronos Group already has multiple international production and distribution platforms in Germany, Poland, Israel and Australia. To capture the impending recreational opportunity within Canada, the Company announced on August 21, 2018, a series of supply deals with provincial governments as well as private cannabis suppliers, including Ontario Cannabis Retail Corporation, the BC Liquor Distribution Branch, the Nova Scotia Liquor Corporation and Prince Edward Island Liquor Corporation.

Cronos Group Mike Gorenstein CEO said, “We searched extensively for the right partner in Latin America. In AGI we have found an executive team with immense experience in running large scale horticultural operations and serving the needs of large, sophisticated international clients which will be crucial in establishing consistent and efficient supply chains for cannabinoid based products. By leveraging AGI’s expertise and Cronos Group’s cannabis know-how, NatuEra will enable Cronos Group to create a cultivation and manufacturing hub in Latin America for our global distribution channels in a manner that minimizes region-specific and execution risk.”

Following the announcement, shares of Cronos Group climbed 14% on the TSX and nearly 15% on the NASDAQ. Cronos Group currently trades at a market cap of $2.1 billion, or 313x its TTM sales of $9.26 million.

Disclosure: Neither the author nor his family own shares in the company mentioned above.

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