Colombia's medical cannabis business is poised for lift off

In July, Colombian president Ivan Duque loosened rules to permit the export of dry cannabis flowers, which accounts for greater than 50% of the demand in markets just like the US.

Thanks to that coverage change, Colombian corporations at the moment are assured they will compete within the pharmaceutical markets in Europe and North America.

Favorable circumstances

The Andean nation enjoys good circumstances for the cultivation of marijuana: 12 hours of daylight give technique to 12 nighttimes nearly each day of the 12 months, with minimal seasonal change.

High altitude — Clever Leaves' farm, in Boyacá, sits at 9,377 toes above sea stage — means fewer pesticides are required to stem micro organism and illness than at decrease altitudes, making it simpler to develop natural merchandise.

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

Investment in Colombian medical marijuana has picked up, with the federal government reporting greater than $250 million in overseas funding within the sector. The majority of these {dollars} come from worldwide cannabis corporations, principally Canadian, which are partnering with Colombian producers to farm there.

Flora Growth, a Toronto-based agency listed on NASDAQ, has bought 100 hectares of land — about 247 acres — in central Colombia. "I hope that over the next three-to-five years we are going to run out of land," mentioned Luis Merchán, a Colombian businessman who give up his job as a VP at Macy's to turn into Flora's CEO final 12 months.

Flora estimates its manufacturing prices to be round $.06 per gram of dry cannabis flower, a fraction of the go-to value that ranges from $.50 cents and $2 within the US.

"Licenses here are also much cheaper than abroad, we are talking of $15,000 to $20,000 per license," mentioned Juliana Salazar, a personal marketing consultant concerned within the Bogota cannabis trade. "And an initial investment of roughly $100,000 to start producing here, which is a lot of money in Colombia, but a smaller investment than if you look at Germany, Spain or the United States."

Since 2017, virtually 2,000 licenses for cultivation, seeding and commerce of marijuana merchandise have been issued by the Colombian justice ministry, with the vast majority of producers working close to the economic hubs of Bogotá and Medellin.

An preliminary wave of cannabis funding was spurred in 2017 when cultivation was first legalized, however the market stagnated for a pair years earlier than rising once more this 12 months, in response to Salazar.

Fajardo thinks the long run might be more about regular progress than a booming trade. "I agree there was a bit of a hype, 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," the Flora CEO mentioned, "but I think that's over now and the companies that are here are focusing on the quality of the product."

Export market

Limited native demand and excessive manufacturing prices for pharmaceutical merchandise imply the market is specializing in exporting uncooked supplies, resembling APIs and now dry flowers, to increase.

Flora Growth is making an attempt to enhance that by partnering with Colombian retailers to promote edibles, vogue and beauty merchandise in Bogota and different predominant cities, however it stays an exception.

Recreational use is nonetheless banned and hundreds of small-scale farmers proceed to develop illegally for drug cartels and narco-traffickers, however early backers imagine the chance is there for additional change.

"I think the world has come a long way in terms of understanding what should be legal and what shouldn't be legal," Flora Growth's Merchán mentioned. "The cannabis plant has a tremendous amount of benefits."

Merchán factors to the US opioid disaster as the final word peg to promote Colombian medical merchandise. "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 mentioned. "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."