With export restrictions easing, Colombia’s medical cannabis business is ready for liftoff

At the time, it was illegal to grow marijuana, and security forces targeted the plantations with forced eradication campaigns aimed at curbing illegal trafficking.

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

With more than 130,000 medical cannabis plants, Cleaver Leaves Farm, a former cattle ranch a few hours north of Bogota, is the legal weed powerhouse of Colombia’s turnaround on marijuana and one of the world’s largest ecosystems for illicit drugs. represents his desire to change.

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

In July, Colombian President Ivan Duque relaxed rules to allow the export of dried hemp flowers, which account for more than 50% of demand in markets such as the US.

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

favorable conditions

The Andean nation enjoys perfect conditions for marijuana cultivation: 12 hours of sunlight gives way to 12 hours of darkness almost every day of the year, with minimal seasonal change.

The higher altitude – the Clever Leaves Farm in Boyaca, sits at 9,377 feet above sea level – means fewer pesticides are needed to reduce bacteria and disease at lower altitudes, making it easier to grow organic products Is.

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

The government has raised investment in Colombian medical marijuana, with the sector reporting more than $250 million in foreign funding. The vast majority of those dollars come from international cannabis companies, mostly Canadians, who are partnering with Colombian growers to cultivate them there.

Flora Growth, a Toronto-based firm listed on the NASDAQ, has purchased 100 hectares of land — about 247 acres — in central Colombia. “I expect that in the next three to five years we’re going to get off the ground,” said Colombian businessman Luis Merchan, who left his job as VP at Macy’s last year to become CEO of Flora.

Flora estimates its production cost at about $.06 per gram of dried hemp flowers, a fraction of the go-to price that ranges from $.50 cents and $2 in the US.

“The licenses here are much cheaper than abroad, we are talking $15,000 to $20,000 per license,” said Juliana Salazar, a private consultant involved in the Bogota cannabis industry. “And an initial investment of about $100,000 to start production here, which is a lot of money in Colombia, but a small investment compared to looking at Germany, Spain or the United States.”

Since 2017, about 2,000 licenses have been issued by the Colombian Ministry of Justice to cultivate, sow and trade marijuana products, with most of the growers operating near the industrial centers of Bogota and Medellin.

According to Salazar, an initial wave of cannabis investment began in 2017, when farming was first legalized, but the market stagnated for a few years before rising again this year.

Fajardo thinks the future will be more about steady growth than a rapidly growing industry. “I agree there was some hype, a lot of people had some land from their aunts and thought they would use it and produce CBD products and get rich,” said Flora’s CEO. Looks like more companies that are here now are focusing on product quality.”

export market

Limited local demand and high manufacturing costs for pharmaceutical products mean that the market is focusing on exporting raw materials, such as APIs and now dried flowers, for expansion.

Flora Growth is trying to increase this by partnering with Colombian retailers to sell edibles, fashion and cosmetic products in Bogotá and other main cities, but it remains an exception.

Recreational use is still restricted and thousands of small-scale farmers continue to grow illegally for drug cartels and narco-traffickers, but early proponents believe there is opportunity for further change.

“I think the world has come a long way in terms of understanding what should be legal and what shouldn’t be legal,” said Marchan of Flora Growth. “The cannabis plant has tremendous benefits.”

Merchan points to the US opioid crisis as the final peg for selling Colombian medical products. “Cannabis is set to ease some of the pressure coming from patients who are being treated by opioids in a more natural and safe way,” he said. “The opportunity is not only to rectify some mistakes, but to add jobs, blue collar jobs to Colombia’s farms, and it’s very rewarding.”