Ask Our Experts 5/26/2019: How Might a Legalized Colombian Market Look?
By J.J. McCoy, Senior Managing Editor, New Frontier Data
Q: I just saw a news report about Colombia legalizing cannabis; what is the outlook for the market there?
A: It was indeed reported last week that – despite opposition from President Ivan Duque’s administration – a coalition of Colombian lawmakers are seeking by July 20 to present a bill to legalize adult use.
Despite a traditional hardline stance as preferred by Duque, the courts and the country’s constitution have defined drug use as a health issue prohibiting its criminalization.
As described in New Frontier Data’s Latin America Regional Cannabis Report: 2019 Industry Outlook, since Colombia is blessed with an ideal climate and geography for cultivation, and is able to offer low production costs, it aims to join the world’s top cannabis producers.
Since the launch of its legal medical cannabis industry, Colombia has positioned itself toward cannabis medical production for export. As of 2019, 68 of 73 manufacturing licensees were authorized to manufacture for export.
Favorable growing conditions feature a variety of climates, and Colombia’s 12-hour, day-and-night light cycle allows for year-round outdoor cultivation. Its geographically central location, too, is advantageous for global business: It sits at the center of the Americas, with access to both the Pacific and Atlantic oceans.
Open-air greenhouses are the preferred method for cultivation, resulting in lower energy costs relative to indoor cultivation techniques. That is true throughout the country’s regions; since the country has various pockets of microclimates, cultivators can diversify strains, taking advantage of either native or imported strains which thrive in such conditions. Colombia offers diverse farming opportunities in high-altitude areas situated on the equator (Medellin) and cultivation sites close to sea level.
Its low production costs (as established through its major exports of coffee and cut flowers), have been estimated as 10x lower than higher-cost producers like Canada.
While its target is the global market, Colombian officials have been quoted mentioning particular focuses on Brazil, Argentina, Mexico, Peru, and Paraguay among Latin American neighbors before tackling Canada. Psychoactive exports must be in the form of derivative products, at least until it ever decides to export non-processed psychoactive cannabis. Meanwhile, Colombia anticipates its main medical export to be cannabis oil. Hemp-based raw materials and medical derivatives are approved for export. The country’s export regulations have not yet been developed, nor has Colombia asserted internal requirements for its exports. The Colombia National Food and Drug Surveillance Institute (INVIMA)’s only current requirement for pharmaceutical raw materials (oils, extracts, resins, or pure cannabinoids) is compliance with the importing country’s sanitary and phytosanitary requirements. The manufacturing framework has not discussed the requirements for Good Manufacturing Practices (GMP or BMP) certification for export.
Despite its advantages, Colombia’s challenge will be to catch up to the countries already established in the cannabis export market. The International Narcotics Control Board (INCB) reported that in the past five years, the UK and the Netherlands were consistently the top two exporters of cannabis (followed by Austria and Denmark). For so long as its market strives to reach maturation, Colombia will face some strong competition ahead.