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Canopy Growth Secures a Regional Supply Deal in Latin America

By Eric Volkman – Apr 22, 2020 at 12:26PM

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The company will receive cannabis extract products from new partner Clever Leaves.

The Latin American subsidiary of Canopy Growth (CGC 0.20%) has signed a new medical marijuana supply deal in the region with multinational cannabis company Clever Leaves, the companies announced in a joint press release Tuesday.

Under the contract, which will run for one year with an option to extend it for another two, Clever Leaves will supply Canopy LATAM with extracted goods produced in Colombia. And Clever Leaves has already made its first delivery to Canopy LATAM.

The companies did not reveal the financial terms of the arrangement.

Close up of a flowering marijuana plant.

Image source: Getty Images.

In the press release, Canopy Growth touted the advantages of working with a third-party grower and processor, saying that the new partnership "is furthering the implementation of Canopy LATAM's asset-light model and accelerating time to market with regionally produced GMP-certified medical cannabis products."

"GMP" stands for good manufacturing practices, a global quality standards certification. 

Several Latin American countries have legalized medical marijuana to some extent, notably Colombia, Mexico, and Uruguay, with the latter also permitting its sale and use for recreational purposes. The regional market is still somewhat limited, but there is room for a cannabis company with international ambitions to become a major presence there.

The news comes less than a week after Canopy Growth announced that it was reining in its global operations. Among other things, that strategic shift included the decision to shutter its cannabis growth facility in Colombia -- hence its need for a third-party provider there.

Canopy Growth stock was trading essentially flat at midday Wednesday, lagging behind the wider equities market, which was up by around 2%.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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