Ikänik Farms wants to bring California’s cannabis culture to the world and this week the vertically integrated, seed-to-sale company made a big move by acquiring Pideka, a medical cannabis cultivator based in Bogotá, Colombia, which it can leverage to export weed to Europe and across the globe.
Analysts expect Colombia will be a game changer for the global marijuana industry — both in a good and bad way — as the country eases cannabis laws. The South American nation is bad news for major pot players in the U.S. and Canada because Colombian growers say they can produce a gram of weed well below 50 cents, which would drive down global prices. But Colombia is good for companies that have already started setting up shop there and can take a first mover advantage.
“I’ve done the math and the margins are ridiculous – I’ll crush everybody coming out of Canada if we sell to Germany, no problem, no sweat,” said Brian Baca, CEO of California-based Ikänik Farms in an earlier interview with Mugglehead.
Aphria Inc. (TSX:APHA) and other major Canadian producers have already invested in Colombian operations, but Baca said Ikänik’s acquistion of Pideka gives the company the most available hectares for cultivation than any other competitor.
Pideka is currently building out a 80,000 square foot cannabis camp in Tocancipá, a suburb of Bogotá, for cultivation, extraction and manufacturing called Casa Flores that will provide Ikänik with annual capacity of 16,000 pounds (7,260 kilograms) of dried flower.
Ikänik Farms said it is aiming to gain Good Manufacturing Process (GMP) certification for its Colombian operation so it can eventually export medical cannabis products to international markets like the European Union.
But down the road, Pideka gives Ikänik the ability to add significant scale in Colombia through Campo Esmeralda, an outdoor cultivation site that sits on a total of 3,200 acres, and will provide the U.S. cannabis company 1.9 million square feet of growing, production and manufacturing capabilities by 2021.
Baca said Ikänik plans to go public sometime in the final months of this year or by the first quarter of 2020. But the veteran California cannabis aficionado is also a historical banker and wants to make sure “fundamentals are down tight” before the company’s initial public offering (IPO) takes place, which means generating meaningful revenues from its California operations first.
For investors, the Pideka acquisition and its cultivation potential could make Ikänik an interesting pot stock to watch when it goes public. For example, after The Green Organic Dutchman (TSX:TGOD) went public the Canadian pot producer marketed its 1.6 million square feet in global production and cultivation capacity, which helped it reach a $1 billion (CAD) valuation throughout 2019. But Ikänik will be able to use Colombia’s ideal growing climate and produce cheaper cannabis, and its Latin American assets don’t include
“I am excited to welcome Pideka into the Ikänik family,” said Baca said in a press release. “Pideka’s strong leadership team and reputation as an innovator in Latin America’s medical cannabis industry makes it a powerful addition to Ikänik’s future growth plans. This acquisition marks a major milestone for our company as it enables a multi-national presence, strategically positioning us for the global cannabis market.”
Closer look at Ikänik-Pideka deal
Ikänik said Casa Flores is currently in Phase 1 of construction and the cannabis camp is the first site being built to meet GMP specifications in Colombia, which the company will provide an update in the near future.
Pideka has obtained licenses from the Colombian government to cultivate, manufacture and export cannabis derivatives, extracts and seeds for medical, scientific and commercial use. It has developed numerous cannabis products, including soaps, creams, oils, capsules, vape pens, and more.
The South American company also has its hands in several research and development projects, including looking at treating colon cancer with cannabinoids at the Pontifical Bolivarian University of Medellin. The founders of Pideka have deep roots in medical cannabis research, having treated over 1,600 patients to date and registered 55 cannabis strains with Colombia’s principal agricultural research institute.
As mentioned earlier, Ikänik will not only be able to leverage Pideka’s medical marijuana expertise, but also its massive long-term ability to scale up.
After the first phase of the Casa Flores complex is complete, Phase 2 will add 260,000 square feet of cultivation space. The expansion will bring up the total growing area to 340,000 square feet and annual production of 52,000 pounds (23,600 kilograms) of dried cannabis flower by the middle of 2021.
As well, the third planned phase of Ikänik’s strategic expansion in Colombia will include building plans for Campo Esmeralda that will provide the company with 1.9 million square feet of cultivation space.
Back on its home soil, Ikänik Farms has been building cultivation sites in Adelanto and Sacramento, California, which Baca says will start harvesting by the first quarter of 2020.
Ikänik Farms is best known for its deep roots in California’s cannabis culture as the company hosts action sports, music and entertainment events along with selling its dynamic portfolio of award-winning cannabis lifestyle brands.
The company will be launching a retail cannabis shop in Palm Springs, Calif. that will feature a consumption lounge. Earlier this month, the first cannabis cafe to legally operate in the U.S. opened its doors in West Hollywood.
The Ikänik team brings decades of expertise in R&D, cultivation, retail, branding and corporate finance and plans to bring its inclusive California positive vibes around the globe through the cannabis plant.
Disclosure: Ikänik Farms is an advertiser