Cronos Group Inc (NASDAQ:CRON) is making its way into the Latin American market through its latest joint venture agreement.
The Canadian cannabis company is partnering with an affiliate of Colombian agricultural provider Agroidea SAS to create a new entity known as NatuEra.
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News of the expansion sent the Ontario-based company’s shares rose 9.1% to C$15.70 in Toronto while the US-listed shares added 10% to US$12.02 in Wednesday morning trading on Nasdaq.
The newly formed company will set up a custom-built facility on 207 acres of land in Cundinamarca, Colombia. The tropical climate of the region is said to be well-suited for growing cannabis.
As per the 50/50 joint venture agreement, each partner will contribute capital to fund the construction of the facility. Construction will begin once the proper permits and approvals are in place.
"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,” said CEO Mike Gorenstein in the company’s press release.
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AGI has worked with several big-name clients, including food processors like Frito-Lay and McCain as well as agricultural suppliers like Bayer Agriculture and BASF.
The partners said they plan to create the cannabis industry’s first contract manufacturing organization in Latin America, allowing cannabis brands to outsource their development, cultivation and other manufacturing.
“We look forward to creating in NatuEra a CMO that will support the growth of the global cannabis industry,” said NatuEra CEO Nicolas Nannetti in the company’s press release.
Cronos currently has several international production and distribution platforms including in Germany, Poland, Israel and Australia.