"The cannabis industry is now entering into a very expansive model," - Alvaro Torres, CEO Of Khiron

Alvaro Torres is co-founder and CEO of Khiron Life Sciences, a Toronto-based medical cannabis producer that is focused on developing markets in Columbia and Latin America.

He spoke with Civilized about the state of the cannabis industry, KLF's place in it, and his plans for the future. 

What makes your company different from others in the cannabis space

What makes Khiron different is that we are a patient-oriented company focused on a new market in Latin America, starting with Colombia. Our focus is not necessarily on becoming the lowest-cost producer in the world, which of course anybody can do in the country, but on developing strong domestic markets in Colombia and Latin America, which by themselves are very much larger than what the Canadian markets can be. In order to do that, we are extremely focused on patient and doctor education, which is the type of language that not many companies in the space in Latin America are talking about. Most people are talking about grams and volumes of extract, whereas we are talking about how to acquire patients and how to ensure that patients become a sustainable source of revenue by using medical cannabis. In order to do that, we need to educate doctors, to engage doctors through associations, and to educate patients so that they understand that this is a viable alternative for treatment. That closeness to the patient and doctor is what makes Khiron very unique in a market that is 20 times bigger than all of Canada.

How did you get into the cannabis space?

I went into the cannabis space because, three years ago, when the government of Colombia decided they wanted to legalize medical marijuana, the objective was Colombia as the capital of low-cost sourcing for the medial cannabis industry. It dawned on myself and Andres (the cofounder of the company and my partner): Why we should continue to sell commodity products to the rest of the world? We should be looking at how to create a differentiated product. Instead of continuing to sell coffee at a dollar a pound, and then having Starbucks come to Colombia to sell us the same coffee for $4 or $5 a cup, why don’t we try to focus on the domestic market – which is larger than Canada – instead of selling commodity product in a race to see who can eventually produce the cheapest? We believe that the guys who will see the advantages of the medical cannabis industry are the ones who are selling brands, and the ones that are actually getting as close to the patient as possible instead of developing another commodity product. From that conversation about developing a domestic market and a brand, that’s how we started Khiron.

Walk us through a normal day.

A normal day is based on the four strategic objectives that we have for this year. The first is to continue the construction and cultivation of our facilities and our strains. The second is to launch and start selling our wellness products this year. The third is to go into the international market – how do we open operations in another country in Latin America? Of course, the fourth is to be able to communicate our ongoing efforts to our investors in the capital markets. Our normal day involves activities in each one of those four aspects. We have a very strong team for each one of them, and my job is to make sure that all the resources, leadership and opinions are taken into consideration so that we can move forward on these four fronts.

What has been your biggest lesson about working in cannabis, and in business in general?

The cannabis industry is now entering, for me, into a very expansive model. There are a lot of places to go in the cannabis industry. I think in business in general, and in the cannabis industry in particular, the focus is always going to be the primary objective: how do you not deviate from your strategy and how do you believe in what you are trying to accomplish? There are so many things in the cannabis industry that you can explore. We have always been very focused on being a patient-oriented company. There are, of course, new technologies and new strains. There is a whole number of issues around the industry, and it is very easy to get lost in all of that noise. I would say that our biggest lesson is always to focus on what we know and what we believe in, because in the end, that is going to pay off. It is very easy to get distracted, because there are so many things going on at the same time – like new markets opening up all the time. But the more focused we can be, that is how we will be able to reap all the rewards much later. If you try to do everything at once, I think it will be a failure. If you try to focus on what you think is a differentiator strategy, I think that is where the long-term success of the company will be.

What do you see as your biggest opportunity?

The biggest opportunity for Khiron is the Latin American market. We are talking about a population of 640 million people, with countries that have major populations in major cities. In Bogota, for example, there are 9 million people. Mexico City has more than 30 million; Sao Paulo more than 25 million. We speak the language, and we understand the country because we are from here. The opportunity is to be able to replace opiate-based medication and analgesics with a natural product like medical cannabis in a market where it is just starting. It started with Uruguay, then Colombia, and now Mexico, Brazil, Argentina, Peru, and Chile. All these companies are coming online. Every country that opens up is a whole new opportunity for the company to develop its patient-oriented model. It’s a market that’s just starting, at the very early beginnings of the industry. In Latin America, there are many years to come until it peaks. I think that’s the right opportunity to be at.

What sets you apart to make you a potential leader in cannabis?

For us, what sets us apart is education – understanding patients, and understanding doctors. Most people are focused – and I would say almost everybody is focused – on the supply side of the medical cannabis industry, but in Colombia and Latin America, supply side is going to be a challenge. We can all grow at very low costs, and there is plenty of land because land in our country is a commodity. The issue here is how to develop demand – and nobody talks about demand because everybody assumes demand is going to be there, but it’s not going to be that easy. In order to generate demand, we need to educate doctors. Those doctors are the gatekeepers to the patients so that they can start using medical cannabis. There are a lot of questions about efficacy, efficiency, and needs. There’s a whole bunch of things that patients don’t know about medical cannabis, and so, education of doctors and engaging with medical associations and patients associations is going to be key, so that we can actually generate the demand. That’s what makes Khiron different. Our approach to winning is to ensure that we are top of mind in the minds of every doctor and patients in Colombia and Latin America.

What is the most frustrating aspect of the cannabis industry today?

The cannabis industry is very new, and because it is new, there are a lot of unknowns that everybody is trying to solve at the same time. And so, the same thing happens with Khiron – not necessarily on the production side, but mostly along generating demand. Of course, you also start to see new companies coming out. Everybody wants to get in this industry, but I don’t think it’s going to be that easy unless everybody understands how to generate patient awareness of medical cannabis.

Of course, there are always frustrations and delays for every government in Latin America when it comes to finally regulating medical cannabis. I think we have to be patient though because three years from now, when all these countries have legalized, Khiron will be there. Starting in these countries depends a lot on the political climate and on elections. And there is, of course, conservatism in the population in every one of these countries. In order to fight the frustration, we need to engage in education on many touch points – education through patients, governments, banks, and insurance companies. That education process is long, but I am very certain that when that education process is finished – at least in the first phase – we’ll be able to generate a very position environment for medical cannabis.

What advice would you give to anyone looking to get into the cannabis space?

I would say it is the same advice I would give to anybody getting into business – it’s about differentiation. If you want to be a cannabis company in Colombia that’s just focused on growing at a low cost, you are going to be faced with ten, twenty, maybe thirty companies that are aiming to do the same thing. But the cannabis industry has so many opportunities across the entire value chain that any entrepreneur that wants to get into it should explore more than just growing cheaply because that’s going to be a saturated market. If you want to receive investment, you have to always convince investors about what makes you unique and what makes you different. The medical cannabis industry is getting harder and harder because everybody just wants to grow cheaply. I would say: try to find a way to differentiate yourself, and try to look for ways to help the industry across the entire supply chain. I think that’s where the opportunities will be.

What are your biggest tips for branding cannabis?

It’s about understanding the fears and motivations of patients and of doctors, and that’s what we are doing with our brand. For medical cannabis, I would say that’s the focus of what a company is doing. Understanding all of that will allow you to develop brands that communicate with patients and doctors in an efficient way.

Do you see any big changes coming in the future of cannabis?

There are many changes that are coming in the future of cannabis because this industry really only started three or four years ago. We are just at the start of this race. From our point of view, we think the biggest changes will always be regulatory, which includes countries opening up to medical cannabis and health authorities allowing medical cannabis products in the market. Those are the biggest catalysts for change for us, particularly in Latin America. Of course, the United States’ decision on medical cannabis will be very significant to the industry. So, we have to always pay attention to the regulations.

Do you consume cannabis? And if so, what's your favorite way to consume?

I personally don’t consume medical cannabis, because luckily for me, I don’t have any of the conditions that apply to medical cannabis. I can tell you that if I were to experience any of the symptoms, I would definitely choose medical cannabis over anything else because now we understand it. It’s very clear that it has a lot of advantages over what somebody would use for chronic pain. I haven’t had the health conditions to use it, but I am certainly an advocate of using it under the right conditions. 

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