Fotmer CEO talks low-cost production, challenges, opportunities and more
In this edition of "Rising High," The Fly conducted an exclusive interview with Jordan Lewis, chairman and chief executive officer of Fotmer Life Sciences, a medical cannabis cultivator and extractor based in Uruguay. Here are some of the highlights:
CULTIVATION: Fotmer Life Sciences is a medical cannabis cultivator based in Uruguay that aims to alleviate unnecessary suffering through its provision of a supply of pharmaceutical-grade cannabis for safe and effective medicine. The company’s standardized cannabis products are created with characterized genetics and certified chemical compositions using traceable and fully GMP complaint processes. “We realized that there’s a very good opportunity to position ourselves as a low-cost producer of cannabis for the emerging market so that was our aim from the outset,” Lewis said. “We very diligently applied our knowledge and experience to create a production system which will enable us to accomplish that well into the future.”
COMPETITIVE EDGE: When asked about the company’s key differentiators, Lewis said by virtue of being early to the game Fotmer has been able to establish partnerships and regulatory pipelines that have given the company a significant first-mover advantage. “We hope in the near-term to capitalize on that first-mover advantage while leveraging our knowledge and our advantages being in a low-cost environment in Latin America and that’s really going to propel us into the future,” he said. The CEO added that being in Uruguay’s Zona Franca, a tax-free zone, also offers a significant advantage to a lot of the competition. “Our focus is production in a low-cost environment and supplying into higher-value markets like Europe,” he said. “We’ve already been very successful in that regard.” In addition to the climate in Zona Franca, Lewis said one of the main benefits of being in Uruguay is the fact that it was the first country in the world to federally legalize cannabis. “We’re in a very unique position in that we’re one of just two or three licensed medical producers in the country,” he said. “We’ve established very good relationships with the government and agencies that regulate and it’s very manageable from a policy perspective and government perspective.” He added Fotmer is also able to extend that into the world markets like Europe and Israel. “It’s sort of like we’re a big fish in a small pond and we’re emerging to be a large player in the major markets on the other side of the ocean,” he said.
CORONAVIRUS: The coronavirus pandemic has impacted many companies within the cannabis industry and Lewis said it created some logistical considerations for Fotmer. “As far as having our workforce hitting peak of production at an excess of 200 people, that created some issues but as far as demand goes, we’ve seen the demand increase quite a bit,” he said, adding the demand enabled the company to ship well over two tons into Europe and Israel during the period. “We made the largest shipments over the course of the last six months,” he said. “From my perspective the pandemic has created some logistical challenges on the ground but overall from a very high-level perspective, we’re seeing that it really has not impacted the industry.”
LEGALIZATION: When asked about the potential federal legalization of cannabis in the U.S., the CEO said its going to be interesting to see what happens in the election. “Certainly whatever happens, I think generally speaking, the public has spoken and there’s broad support certainly for the legalization of medical cannabis,” he said. “Based on the outcome of states like Colorado and California and now probably more than half the states in the U.S., we’re seeing clear evidence that legalization was very, very positive in the sense that it created tax revenue and jobs and the negative impacts that were of concern have turned out to be really not validated by the data.”
DELIVERY SYSTEMS: As technology advances and delivery systems for cannabinoids become more diverse, Lewis said Fotmer believes the use of delivery systems in the global market is going to mature along the lines of early mover locations like Colorado. “We saw initially the flower represented the bulk of the market, then it shifted to about 50% of the market and then vaporizers, tinctures and other edible formats have become much more prominent,” he said. “It’s certainly our inclination that the world markets are going to follow suit.” The CEO added he expects that delivery methods are going to move away from combustible cannabis to forms that are easily titrated and those which physicians are used to prescribing.
CHALLENGES: When asked about the biggest challenges facing the cannabis industry, the CEO said regulatory issues remain as the largest obstacles. Governments around the world will need implement laws and ensure that their controlled substances visions see eye-to-eye and they can coordinate internationally, he said. “Beyond getting the laws passed, it’s implementing them,” the CEO said. “There’s always a lag from the laws with legislation being passed to the implementation. As we move forward, I think we’ll see less trepidation in instituting legislation but I think that has been one of the challenges that we noticed.”
OPPORTUNITIES: As the cannabis space develops, Lewis said Fotmer is really excited about its progress toward becoming a dominant player in the global cannabis industry. “In a very short period of time, we’ve positioned ourselves to be the second largest exporter worldwide and we expect to claim the lead as the leading exporter in the coming months,” he said. “Our focus is to continue to expand our production to meet the needs in Israel, Europe and other markets that develop and move into derivative products, which we feel are going to play a more significant role in the future.” The CEO also noted that Fotmer is currently going to market and raising an additional $20M in a Series C round. “That will set the stage for us to meet the demand that has already been clearly demonstrated,” he said.
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Akerna (KERN), Aleafia (ALEAF), Aphria (APHA), Aurora Cannabis (ACB), Auxly Cannabis (CBWTF), Biome Grow (BIOIF), CannTrust (CTST), Canopy Growth (CGC), Canopy Rivers (CNPOF), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos Group (CRON), CV Sciences (CVSI), CURE Pharmaceutical (CURR), Delta 9 (VRNDF), Emerald Health (EMHTF), FluroTech (FLURF), General Cannabis (CANN), Greenlane (GNLN), Green Thumb Industries (GTBIF), GrowGeneration (GRWG), Harborside (HBORF), HEXO (HEXO), Hemp Inc. (HEMP), India Globalization Capital (IGC), Indiva (NDVAF), Indus Holdings (INDXF), Innovative Industrial Properties (IIPR), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm Labs (MEDIF), MedMen (MMNFF), Mjardin (MJARF), Neptune Wellness (NEPT), Omnicanna (ENDO), Organigram (OGI), Planet 13 (PLNHF), Sproutly (SRUTF), Stem Holdings (STMH), Sunniva (SNNVF), Supreme Cannabis (SPRWF), Valens (VLNCF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Village Farms (VFF), Vireo Health (VREOF), Wayland Group (MRRCF), WeedMD (WDDMF), Wildflower Brands (WLDFF), YSS Corp. (YSSCF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).