Aurora Cannabis Inc. (NYSE: ACB) announced on December 10th that the company has officially entered into a letter of intent (LOI) to acquire all of the issued and outstanding shares of Farmacias Magistrales S.A. after it has received approvals from regulatory and government officials.
Chief Executive Officer of Aurora Cannabis, Terry Booth, said: “This transaction positions Aurora with exclusive access to supply THC-containing medical cannabis to a large market of more than 130 million people, while also enabling us to capture the full margin of the medical cannabis we sell there.”
Farmacias Magistrales happens to be the only federally licensed importer of raw tetrahydrocannabinol (THC) materials that can also distribute, store, and manufacture medical cannabis products with more than 1% of THC in Mexico. Farmacias’ 12,000 sq. ft. facility that it owns and operates in Mexico City is currently licensed for the importation of raw pharmaceutical-grade cannabis ingredients for both THC and cannabidiol (CBD).
The process to obtain the required permits and licenses is reported to have taken more than 4 years to complete with a successful end result.
Risk of Prosecution for Marijuana-Related Companies. If you are considering investing in a company that is connected to the marijuana industry, be aware that marijuana-related companies may be at risk of federal, and perhaps state, criminal prosecution. The Department of Treasury recently issued guidance noting: “[T]he Controlled Substances Act (“CSA”) makes it illegal under federal law to manufacture, distribute, or dispense marijuana. Many states impose and enforce similar prohibitions. Notwithstanding the federal ban, as of the date of this guidance, 20 states and the District of Columbia have legalized certain marijuana-related activity.”