With export restrictions eased, Colombia's medical cannabis business is poised for liftoff

Back then, rising marijuana was unlawful, and safety forces focused plantations with pressured eradication campaigns aimed toward stemming illicit trafficking.

Five years later, the 29-year previous engineer oversees the cutout course of at Clever Leaves, one in every of Colombia’s largest medical marijuana firms and the primary in South America to obtain the EU certification to commerce pharmaceutical merchandise.

With greater than 130,000 medical hashish vegetation, Clever Leaves’ farm, a former cattle ranch a number of hours north of Bogota, represents Colombia’s turnaround on marijuana and its aspiration to transform one of many world’s largest ecosystems for unlawful medication right into a authorized weed powerhouse.

Although marijuana cultivation has been authorized since late 2016, for the previous 5 years Colombian firms might solely export energetic pharmaceutical substances (APIs) and subsequently have been banned from probably the most profitable components of the enterprise.

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

Thanks to that coverage change, Colombian firms at the moment are assured they’ll 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 option to 12 midnights just about each day of the yr, with minimal seasonal change.

High altitude — Clever Leaves’ farm, in Boyacá, sits at 9,377 ft above sea degree — 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 instructed 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 hashish firms, principally Canadian, which can be 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,” stated Luis Merchán, a Colombian businessman who give up his job as a VP at Macy’s to change into Flora’s CEO final yr.

Flora estimates its manufacturing prices to be round $.06 per gram of dry hashish flower, a fraction of the go-to worth 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,” stated Juliana Salazar, a personal advisor concerned within the Bogota hashish business. “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, nearly 2,000 licenses for cultivation, seeding and commerce of marijuana merchandise have been issued by the Colombian justice ministry, with nearly all of producers working close to the commercial hubs of Bogotá and Medellin.

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

Fajardo thinks the long run will likely be extra about regular development than a booming business. “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 stated, “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, akin to APIs and now dry flowers, to develop.

Flora Growth is attempting to reinforce that by partnering with Colombian retailers to promote edibles, vogue and beauty merchandise in Bogota and different principal cities, nevertheless it stays an exception.

Recreational use remains to be banned and hundreds of small-scale farmers proceed to develop illegally for drug cartels and narco-traffickers, however early backers consider 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 stated. “The cannabis plant has a tremendous amount of benefits.”

Merchán factors to the US opioid disaster as the last 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 stated. “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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