NEW ALTERNATIVES

Colombia 2019 | HEALTH | FOCUS: MEDICAL CANNABIS

Colombia is moving from a conservative and prohibitive culture on cannabis to a cautious but exciting legalization of the plant that offers huge medical and business opportunities.

There is no doubt that the world is changing at a faster pace than ever, and that applies also to the cannabis business. Once demonized as a gateway drug, marijuana's acceptance as having legitimate medicinal properties has taken the world by storm in the past decade. A legal industry already worth billions and easing the mental and physical pain of millions more, Colombian policymakers have been quick to take note of the plant's many social and economic uses. Under former president Santos, Colombia passed a law in 2015 allowing the growth, processing, import, and export of medical cannabis and cannabis derivatives under a federally issued license by the National Narcotics Council and the Health Ministry.

The effects were quickly felt. While Colombia remains years behind Canada's fast-growing industry, its cheaper labor and weather conditions give it the competitive advantage to seek great rewards in the international market. Its unique position also offers it unique access to the US and Canada, while its access to both the Atlantic and Pacific oceans give it unparalleled scope for eventually shipping to Europe and Asia. Though the US authorities have so far forbidden the import of cannabis products, even for medical use, it is not clear this will always be the case. As such, Colombia is now targeting exports to its South and Central American neighbors, many of which have also legalized the consumption of marijuana in recent years. Colombian leaders expect production to quickly ramp up as they aim to take on a fifth of the world's market, which is expected to be worth as much as USD146.5 billion by 2025. Growers suggest the country could easily reach the capacity to produce enough cannabis to treat as many as 4.5 million patients nationally and 60 million across South America.

While Colombia is not late to the game, it still is working overtime to maintain its position. Today, at least 214 companies, including world-beating firms such as Clever Leaves, PharmaCielo, Khiron, and Pideka now hold licenses to produce medicinal cannabis and byproducts. Licenses are divided in four types, including the use of seeds for sowing, the cultivation of psychoactive cannabis, the cultivation of non-psychoactive cannabis (less than 1% THC), and the production of cannabis byproducts. With a stable political environment, a clear and well defined legal framework, optimal soil and weather conditions, an export-prone geography and economy, and relatively cheap labor, it is no surprise that the activity in the sector is at record highs, with mergers and acquisitions, solo entries, new licenses, and facilities coming online on a regular basis. In late January 2018, for example, Organto Global Cannabis Group, through its subsidiary, Medicannabis S.A.S., was granted a license to cultivate non-psychoactive cannabis (CBD) at its cultivation and breeding facility in Guasca, Cundinamarca. The license also allows for the production of byproducts including oils, tinctures, beverages, topicals, and other products.
In the meantime, Organto is waiting for approval of three other licenses and intends to start production as early as late-2019. Just days before Organto's announcement, Cannabis producer FoliuMed also completed the construction of its first greenhouses in Colombia, a 16-hectare grow site close to Bogotá. The company expects to grow 70 tons of medicinal hemp and cannabis plants per year at the facility. By mid-January, International Cannabis announced the acquisition of a 49.9% interest in Gardina Pharmaceutical SAS, which owns four licences for cultivation and processing on a 125-hectare estate in Ibague, Colombia. Almost simultaneously, Canadian company Chemesis International announced the acquisition of 100% of La Finca Interacviva-Arachna Med SAS. La Finca has been legally producing cannabis in Colombia since 2017 and, according to the press release, has USD2.3 million in working capital to invest and continue operations.
These examples are telling of just how active this sector is in Colombia. The aforementioned PharmaCielo, one of the country's largest producers, has just been listed on the Toronto Stock Exchange, a path already followed by Khiron Life Sciences, another very important Colombian cannabis producer, in the weeks prior. Canopy Growth has also recently announced that its farm started production on 42ha of land in late 2018, and that it has since been licensed to produce on 126ha, one of the largest such sites in the world.