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Colombia 2019 | HEALTH | INTERVIEW

Khiron runs a tight ship and is prepping for deregulation across the continent.

Chris Naprawa
BIOGRAPHY
Chris Naprawa brings extensive institutional capital markets experience to the company. Prior to joining Khiron, Naprawa was Partner at Sprott Capital Partners, Head of Equity Sales at Macquarie Canada, Head of Equity Sales and Trading at Dundee Securities, and Managing Director at Primary Capital. He was also previously founder and CEO of Startcast Solutions, a company successfully sold to a large telecommunications company. Naprawa holds a bachelor’s degree from Queen's University.

What are the next big markets for your products?
The biggest news is cannabis and the proposed end of prohibition in Mexico. Mexico is a country of 130 million people with a massive middle class. In any economic category, Mexico is around eighth in every category. Cannabis is no different. This is massive news, though this is also a complex market. We have a former president of Mexico on our board of directors, and our medical director lives in Mexico City. We will make more hires there as well. Another massive market no one talks about is Brazil, with 240 million people. It is a complex market that we are playing attention to and planning for any future deregulation. We are not waiting for a press release from the government; we are working there and building partnerships. Europe is the next big battle ground globally, and we should be able to have low-cost products in Colombia sold at full retail in more developed countries. This is something we can contemplate. We have already diversified the agriculture component of our business. We are up and running here in Colombia, we have recently announced our dealing in Chile, and a third region will be coming out in the region shortly and then a fourth. We are diversifying our climate, geopolitical, and regional risk across multiple jurisdictions. It is not about square feet but diversifying our risk. We want to create wealth in the countries where we are operating. That is an important distinction between us and everyone else. We are hiring Chileans in Chile and Mexicans in Mexico. We do not want to have one central business and spread it out from there, but rather a regional business that embraces the spirit of the regulation. Colombia did an amazing job; the spirit of the regulation here is a matter of public health. The second leg of that is creating economic opportunity. We have as many people in marketing as we do in cultivating. Our vendor list went from something like zero vendors in 2018 to over 200 now.

What is your capital market strategy, and how does it help you stand out in this market?
We have adopted a public markets strategy. We have leveraged capital markets to raise the capital we needed to grow the company and have raised around USD40 million. In the meantime, we have maintained over 30% insider ownership. We have about three extremely supportive shareholders that make up another 30%. We have spent the last 12 months from a capital markets perspective, building a strong foundation. We are the first non-resource company to go public out of Colombia. That is a massive achievement for us. We have been able to tap capital markets efficiently while keeping our share count low. Our capital structure is tight and allows us to be nimble and look at other opportunities without diluting ourselves too much. We have adopted a strategy of communicating with high-net-worth individuals. They provide us with the capital for the business so far, and they will continue to support us.

What is your advantage in facing uncertainties?
From a regulatory standpoint, we have an exceptionally great handle on the regulations and how they are changing. We operate in multiple jurisdictions, and our regulatory team has done an essential job in keeping us on top of that. There is no political risk in things changing. It is not only a hot topic in banking and finance, but in politics as well. We have to be experts on the regulatory environment. On the commercial side, we have to be focused on what consumers actually want. We spend time in mature markets like California and Colorado, and we observe the patterns and learn what people want.

What future do you see for Khiron in the US?
I believe in the imminent end of prohibition in the US, and it will be sooner than people think. 63% of people agree on legalization; that is more than people who agree on god. The same numbers apply in Mexico and other markets where we operate. We have excellent optics on all kinds of ideas in the US today.