In a coverage launch on Friday, GMP Securities analyst Robert Fagan calls Colombian cannabis company PharmaCielo (PharmaCielo Stock Quote, Chart: TSXV:PCLO) the best pure play on the global CBD market.

PharmaCielo, which cultivates, processes and manufactures cannabis extracts in Rionegro, Columbia, has production assets including approx. 1.7 million square feet of open-air greenhouses and can access another roughly 13 million square feet of production through a network of existing contract flower farmers.

Fagan says he considers PharmaCielo to be the most advanced Columbian licensed producer with about a six- to 18-month first-mover advantage over nearly all Colombian competitors. Internationally, Columbia’s climate gives PharmaCielo a leg up on the competition, says Fagan, who expects the company to initially focus on the global CBD market, which could hit $9 to $11 billion by 2023.

“PCLO has an unfair global cost advantage due to its equatorial location providing 12 hours of sunlight year-round, and permitting up to five outdoor growing cycles/year, conditions not found anywhere else cannabis cultivation is permitted. With favourable Colombian regulations, we estimate PCLO could have CBD yields ~250x–300x higher than those available to global peers. Given the above, we believe PCLO could achieve CBD extract production costs as low as ~$0.15–0.25/gram, potentially the lowest globally,” Fagan says.

The analyst is forecasting PCLO to capture just under two per cent of the global market share by 2023, which translates into $175 million in revenues. For fiscal 2019, Fagan is estimating revenue and EBITDA of $3.1 million and negative $14.3 million, respectively, and revenue and EBITDA in 2020 of $61.3 million and $23.9 million, respectively. (All figures in US dollars unless noted otherwise.)

Fagan has initiated coverage with a “Buy” rating and C$12.00 target price, which represented a 12-month return of 58.9 per cent at the time of publication.