Colombia Poised For Entry Into Lucrative International Cannabis Markets

Colombia Poised For Entry Into Lucrative International Cannabis Markets

Medical marijuana cultivation has been legal in Colombia since late 2016. Initially, though, Colombian companies could export only active pharmaceutical ingredients (APIs), leaving them out of the most lucrative aspects of the business. That changed last July when Colombian President Ivan Duque eased regulations to export dry marijuana flowers, accounting for more than 50% of the demand in international markets. Colombian cannabis companies have renewed confidence they can compete in European and North American pharmaceutical markets. The country’s economic strategy appears to convert its ecosystem for illegal drugs into a legal cannabis powerhouse.

Columbia enjoys near-perfect conditions for marijuana cultivation: 12 hours of sunlight and 12 hours of darkness nearly every day of the year, with mild seasonal change. But that’s not the end of the list of Colombia’s advantages when it comes to cultivating weed.

Clever Leaves, a former cattle ranch in Boyacá, a few hours north of Bogota, sits 9,377 feet above sea level. The high altitude makes it difficult for bacteria and disease to take hold, resulting in fewer pesticides – making it easier to grow organically on the land that has since been converted into a 130,000 plant legal growing operation.

“If you think about it, greenhouses in other countries are trying to emulate the natural conditions we get here for free,” said Clever Leaves’ president, Andres Fajardo. “Your factor costs in terms of labor are significantly cheaper.”

Colombian medical marijuana is driving investment in the country. The government reported over $250 million in foreign funding, overwhelmingly from international cannabis companies. Canadian companies, in particular, are partnering with Colombian cannabis producers. Like Colombia, the Great White North is truly becoming somewhat of a cannabis powerhouse nation itself. Now it seems the two countries are making moves towards working together in the international market.

Toronto-based Flora Growth has purchased 100 hectares of land (approximately 247 acres) in central Colombia. Production costs are estimated to be around $.06 per gram of dry cannabis flower – a fraction of U.S. prices which range from .50 cents to $2.

“Licenses here are also much cheaper than abroad,” said Juliana Salazar, a private consultant in the Bogota cannabis industry. “And an initial investment of roughly $100,000 to start producing here…a smaller investment than if you look at Germany, Spain or the United States.”

There was an investment boom right after cultivation in Colombia was legalized in 2017. The market stagnated for the next few years but since then, the Colombian justice ministry has issued almost 2,000 licenses for the cultivation, seeding, and trade of marijuana products. Fajardo is optimistic that the future will be about steady growth rather than a boom/bust industry.

“A lot of people had some land from their aunt and thought they were going to use it and produce CBD products and going to get rich,” Flora’s CEO, Luis Merchán said. They continued, “But I think that’s over now, and the companies that are here are focusing on the quality of the product.”

Challenges and restrictions remain, however. Recreational use is still banned. Thousands of small-scale farmers are still illegally growing for drug cartels and narco-traffickers. Early backers remain hopeful that there is an opportunity for further change.

“I think the world has come a long way in terms of understanding what should be legal and what shouldn’t be legal,” said the Flora CEO. “The cannabis plant has a tremendous amount of benefits.”

Not long ago, pursuing a (legal) agricultural career might’ve meant growing coffee or other traditional farming staples for export. Colombia has now taken steps to expand not only its agriculture but its economy, too.

Merchán sees the U.S. opioid crisis as a viable “in” to sell Colombian medical products. “Cannabis is poised to alleviate some of the pressure coming from patients that are being treated by opioids in a much more natural and safe way,” he said. “The opportunity is there not only to rectify some of the wrongs, but to add employment, blue-collar jobs in the farms of Colombia, and that is very rewarding.”

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