Sun | Nov 17, 2019

Coffee farmer diversifies to ganja - Canadian investor takes stake in Marigold

Published:Wednesday | October 24, 2018 | 12:00 AMSteven Jackson/Senior Business Reporter

Third-generation coffee farmer Lloyd Tomlinson is involved in a regional deal that sees his new marijuana company Marigold Limited being partially acquired by Aphria Limited of Canada, according to stock market filings.

Marigold will set up five herb houses across Jamaica, the first of which will open at the Pulse Centre at Trafalgar Road, New Kingston.

Tomlinson, who is managing director of Marigold Limited, corroborated statements disclosed in the filings by Aphria Limited but said he would reserve full comment about the retail ganja venture until all his licences are issued by the Cannabis Licensing Authority.

Marigold already has conditional approval for several licences, according to Aphria, covering the processing of ganja, growing ganja on more than five acres of land, herb house retail, therapeutic retail; and research and development.

The operation will be fed by a 20-acre farm at Bernard Lodge but could potentially source raw material from a farm operated as a separate business by the Tomlinson family within the Blue Mountains. That farm awaits approval to grow marijuana.

Tomlinson said the movement from coffee to ganja maintained his interest in agriculture but was necessitated by financial realities, while noting that coffee is experiencing a decline and that alternative products and services offer increased revenue opportunities.

The family-owned coffee company, Blue Mahoe Estate, operates separately from Marigold, but in the future, there is the potential for synergies, Tomlinson indicated.

The Marigold cafÈs will be financed in part by Aphria. The Canadian firm holds CND$1.3 billion in assets and made CND$29.4 million in net profit for its year ending May 2018.

In September, Aphria announced plans to acquire the Latin American and Caribbean assets held by another entity called Scythian Biosciences Corporation. That company, also based in Canada, held a 49 per cent stake in Marigold, along with Latin American assets in Colombia, Argentina and a company in Brazil.

The regional deal was valued at CND$193 million, plus CND$1 million in debt, according to market filings, but the price for Marigold itself was not disclosed.

"We have spent a considerable amount of time and resources evaluating opportunities in Latin America and the Caribbean, and we are confident in the long-term strategic opportunity and the value it will bring to our shareholders," Aphria's CEO Vic Neufeld said of the investment.

Aphria said Tomlinson would continue as Marigold's managing director and would be appointed director of the Jamaica operations at Aphria International, citing his more than 20 years' experience in the pharmaceutical industry and as the CEO of Blue Mahoe Estate.

The Tomlinson family restarted production on the Blue Mahoe coffee estate more than 25 years ago. Over the last two years, demand for coffee from Jamaica's main market in Japan has waned and prices have fallen on the world market and, consequently, for farm gate prices paid to farmers who supply beans to processors, with some describing the industry as being in crisis. Farmers are now receiving half of what they paid two years ago.

Over the same period, the legal marijuana industry has opened up, locally and overseas, providing new commercial opportunities. Tomlinson is the second known owner of a coffee brand which has adopted ganja as a separate business. Bali Vaswani, who founded and owns a stake in Marley Coffee Jamaica, was one of the early movers and was the first to set up a ganja cafÈ under his company Kaya Inc.

The transaction with Scythian Biosciences awaits regulatory approval but once completed, Aphria said it would "firmly" hold a place at the centre of the medical cannabis industry in the region.

Aphria operates in 10 countries across five continents.

steven.jackson@gleanerjm.com