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Colombia’s medical cannabis trade is about to take off

At the time, growing marijuana was illegal, and security forces were targeting the plantations with forced eradication campaigns aimed at stemming the illicit traffic.

Five years later, the 29-year-old engineer oversees the slicing process at Clever Leaves, one of Colombia’s largest medical marijuana companies and the first in South America to receive EU certification for trade. pharmaceutical products.

With over 130,000 medical cannabis plants, Clever Leaves’ farm, a former cattle ranch just hours north of Bogota, represents Colombia’s turn on marijuana and its aspiration to convert one of the world’s largest ecosystems. of the world for illegal drugs into a legal weed powerhouse.

Although marijuana cultivation has been legal since late 2016, for the past five years Colombian companies have only been able to export active pharmaceutical ingredients (APIs) and have therefore been banned from the more lucrative parts of the business.

In July, Colombian President Ivan Duque relaxed regulations to allow the export of dried cannabis flowers, which account for more than 50% of demand in markets like the United States.

With this policy change, Colombian companies are now confident that they can compete in pharmaceutical markets in Europe and North America.

Favorable conditions

The Andean nation enjoys perfect conditions for growing marijuana: 12 hours of sunshine gives way to 12 hours of darkness virtually every day of the year, with minimal seasonal changes.

High altitude – Clever Leaves’ farm in Boyacá sits 9,377 feet above sea level – means less pesticides are needed to contain bacteria and disease than at lower elevations, this which facilitates the cultivation of organic products.

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

Investments in Colombian medical marijuana have increased, with the government reporting more than $ 250 million in foreign funding to the sector. The majority of those dollars come from international, mostly Canadian, cannabis companies who partner with Colombian growers to cultivate there.

Flora Growth, a Toronto-listed NASDAQ company, has purchased 100 hectares of land – about 247 acres – in central Colombia. “I hope that over the next three to five years we will run out of land,” said Luis Merchán, a Colombian businessman who left his post as vice president at Macy’s to become CEO of Flora l ‘last year.

Flora estimates her production costs to be around $ 0.06 per gram of dried cannabis flower, a fraction of the selling price that ranges from $ 0.50 to $ 2 in the United States.

“Licenses here are also much cheaper than overseas, we’re talking about $ 15,000 to $ 20,000 per license,” said Juliana Salazar, a private consultant involved in the cannabis industry in Bogota. “And an initial investment of around $ 100,000 to start producing here, which is a lot of money in Colombia, but less investment than if you look at Germany, Spain or the United States.”

Since 2017, nearly 2,000 licenses for the cultivation, seeding and trade of marijuana-based products have been issued by the Colombian Ministry of Justice, with the majority of producers operating near the industrial hubs of Bogotá and Medellin.

A first wave of investment in cannabis was boosted in 2017 when cultivation was first legalized, but the market stagnated for a few years before growing again this year, according to Salazar.

Fajardo believes the future will be more steady growth than a booming industry. “I agree that there was a bit of the hype, a lot of people had their aunt’s land and thought they were going to use it and produce CBD products and get rich,” said the CEO of Flora, “but I think it’s now and the companies that are here are focusing on the quality of the product.”

Export market

Limited local demand and high manufacturing costs for pharmaceuticals mean that the market is focused on exporting raw materials, such as APIs and now dried flowers, to grow.

Flora Growth is trying to increase this by partnering with Colombian retailers to sell edibles, fashion and cosmetics in Bogota and other major cities, but this remains an exception.

Recreational use is still banned and thousands of small farmers continue to grow illegally for drug cartels and drug traffickers, but early supporters believe the opportunity is there for further changes.

“I think the world has come a long way to understand what should be legal and what should not be,” said Merchán of Flora Growth. “The cannabis plant has a tremendous amount of benefits.”

Merchán says the opioid crisis in the United States is the ultimate backbone for selling Colombian medical products. “Cannabis is about to relieve some of the pressure on opioid patients in a much more natural and safe way,” he said. “The opportunity is there not only to right some of the wrongs, but to add jobs, blue collar jobs to the farms in Colombia, and it is very rewarding.”

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Cnn

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