Colombia: An Exciting New Landscape for the Cannabis Industry
Article by Adrianna Alfidi
The process of cannabis regulation in Latin America has placed the continent as the potential next hotspot for the cannabis industry. The latest report from the Collective of Studies on Drug Laws in Latin America outlines the impact of drug legislation on users, growers and sellers for various reasons, like the stigmatization from society and harassment under the authorities. Moreover, it shows the electoral advantages that have been achieved in some countries with legalization, paving a way forward for the industry in the region. Today, the medical use of cannabis is legal in Argentina, Brazil, Chile, Colombia, Mexico, Paraguay, Peru, and Uruguay, while Ecuador has decriminalized cannabis to develop access for ‘’therapeutic or medicinal’’ use.
In 2012, Colombia decriminalized cannabis –a visionary move within the continent–, and legalized its medicinal use in 2016. This February, the Colombian government announced it’s working on a bill to legalize the export of marijuana flowers to international markets, which was one of the initial promises for foreign investors and that will benefit existing companies by allowing them to further expand globally.
A Sustainable Cannabis Cultivation Powerhouse
Colombia offers ideal geographic and climatic conditions for the cultivation of cannabis. Its privileged geographic location offers 12 hours of sunlight throughout the year, plus it’s internationally recognized for the fertility and richness of its soil. Cannabis open field and greenhouse growers can get up to 4 crops a year; an outrageous amount compared to the 1 crop per year of its northern rivals, and with some of the lowest costs in fertility products in the world.
Colombia globally ranks as the following:
- #1 access to financial resources for agriculture-related businesses.
- #3 water resource management and crop irrigation.
- #5 biggest agricultural exporters.
- #10 transportation services for agricultural products.
Furthermore, there are 40 million hectares available for agricultural activities in Colombia, of which only 19% are currently in use. The Ministry of Agriculture works to attract diversified investment to the agricultural sector, which represents a big advantage for cannabis companies and investors if you add the ever growing legalization efforts.
The rapid growth of this industry in Colombia doesn’t just imply an opportunity for economic expansion, but it represents a sustainable work alternative for rural communities, who for years have struggled with illegal armed groups in the production of coca and very little legal income alternatives. It is mandatory by law for cannabis firms to source at least 10% of their inventories from small growers, meaning that the Colombian government is considering sustainability when drafting legislation around cannabis, and will most likely continue to do so.
The Main Players in Colombian Cannabis
As of 2021, the cannabis industry in Colombia is composed of over 400 companies with 600 million USD of direct foreign investment, and over 100,000 medical cannabis patients, a number growing every day. The leaders in the market are mostly Canada-based companies that have decided to establish cultivation hubs in Colombia and South America in order to grow their presence in international markets and cut production costs.
Among the most prominent firms is Khiron, who have been authorized to produce THC pharmaceutical grade products and now have a clinical facility in Bogota called Zerenia, where they not only produce distillates but treat thousands of patients. Clever Leaves and other companies are also growing steady and in agreements for exports of oil distillates and other products to Germany.
Smaller companies have followed suit, like Medcolcanna– a pharma-focused Canadian/Colombian company who has had an impressive growth and management of resources, with the lowest spending cap of any publicly traded cannabis company, and the lowest production cost in the country. It’s also been authorized to prepare THC magistral formulations domestically, and its formulations lab is the fourth in the country with a license to produce pharmaceutical-grade cannabis. MCCN has quickly become an underdog to watch out for and a seemingly promising investment opportunity to keep on the radar.
Investing in Cannabis: Why Colombia?
There’s been a rush of investment in cannabis stock in the recent years as legalization spreads globally. Marijuana is allegedly the hottest investment opportunity of 2021, and the global size of the legal cannabis, CBD, and hemp sector is estimated to rise from $7.7 billion in 2017 to $31.4 billion in 2021.
There is an undeniable trend of top North American firms turning to Colombia as their favorite grower of choice due to the factors listed above, like climate, production costs and progressive legislation. It would be wise for investors to keep an eye on the Colombian cannabis industry as a business opportunity, as it is likely that Colombia will continue to be the expansion country of choice by major cannabis players, therefore receiving a flood of foreign investment.
Nonetheless, a lot about the global cannabis industry is unclear and pending on legislation. After U.S marijuana stocks went down after their February highs, we know that the road is still uncertain in some ways, but it doesn’t mean there’s no light at the end of the tunnel. There is a lot of hope on the Latin American market, specifically in Colombia, and investors seem to believe in it. Tom Adams, managing director of BDS’ industry intelligence, said that ‘’Colombia could produce more cannabis than the world could consume’’ in an interview. The interest of foreign companies to thrive in Colombia is strongly shared by the government, giving hope for the country to become an unrivaled leader in the region in terms of production and export.