Colombian Weed Industry gets a major investment from Canadian Cannabis Companies

Colombian Weed Industry gets a major investment from Canadian Cannabis Companies

Colombia, a country located on the northwestern region of South America, is known for its coffee, white sandy beaches, the world’s largest coastal mountain range, and of course, Colombian weed and drug lord Pablo Escobar.

However, today this beautiful country has sparked the interest of multiple companies owned by Canadians who are beginning to invest in the Colombian Weed industry. And this time it’s
completely legal.

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These Canadian companies are investing in Colombian weed

With the Canadian government legalizing marijuana, it’s reported that 7 Canadian companies, that have received government licenses to produce cannabis, are establishing marijuana research and production facilities in Colombia, investing over $100 million in the country.

Companies like PharmaCielo, Khiron Life Sciences Corp., and Canopy Growth, as well as other investors, want to follow the mining and energy firms’ model –– where capital is raised by the Toronto Stock Exchange and is then invested into Colombia and other developing economies.

However, that’s not the only thing they see when looking at Colombia; they also see great potential in the country’s socioeconomic future. Bibiana Rojas, managing director of Spectrum Cannabis Colombia, says,

“We understand the pain of the war on drugs. That war was here.”

Yet, despite Colombia’s history of violence, political corruption, and the drug wars, Canadian cannabis producers hope to bring a transformation to the country with their investments.

Colombian mountains
A nation that has been ravaged by the drug war, could see an economic renaissance thanks to cannabis.
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“For me, cannabis is a piece of hope,” Rojas says, as she sees the same potential the investors see in Colombia’s transformation. According to Rojas, Canopy Growth plans to invest $60 million in the next few years, for production facilities, greenhouses, and research in Colombia and Colombian weed.

With a population of 630 million, Canopy Growth believes there is a demand in Latin America for medical cannabis. They hope to, at some point, export across that region. As for Khiron Life Sciences Corp., they’ve already started selling cannabis products in Latin America and they plan on producing over eight tonnes of cannabis yearly. They, too, see a demand in Latin America, especially in the medical use of Colombian weed.

With Colombian medical marijuana patients spending an average of $550 annually on the drug, Khiron sees massive
potential in the tincture market. But it’s not just the demand that has Canadian investors setting up shop in Colombia. It’s also the climate conditions for growing.

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Why Canada wants to produce Colombian weed

Colombian marijuana industry
Price, Climate and Quality are three of the main motivating factors for Canadian cannabis companies’ recent foray into Colombia (image via Financial Post)

President of Khiron Life Sciences Corp., Chris Naprawa was candid on environmental differences between his native Canada and  Colombia.

“There’s a reason why we don’t grow coconuts and bananas in warehouses in Mississauga,”

Unlike Colombia, the cold, grey days and minimal hours of sunshine in Canada make it harder to produce high-quality cannabis. The South American Nation’s tropical climate is perfect for cultivating Colombian weed, which is just one of the
many factors for Canadian companies to invest.

The quality of Colombian weed is another reason. One of the Canadian directors of PharmaCielo, David Gordon says,

“There is a reason Colombia is famous around the world for what has been produced on the black market. It’s because of its quality, and that’s a big part of what Colombia brings to the table.”

Another factor is the cost of production, which is significantly lower in Colombia. Production costs can be as low as one-tenth of the cost in Canada, according to Ryan Douglas, a cannabis
advisor for Colombian weed growers.

Matt Karnes, a managing partner for GreenWave Advisors –– an investment firm in New York –– says that in Colombia, it takes only 5 cents to produce one gram of Colombian weed. Whereas, producing a gram of cannabis in Canada is closer to $1.50. So, with a better climate for harvesting Colombian weed, and lower wages, Karnes agrees there are so many great reasons
to invest.

Ivan duque Colombian president weed
Some have expressed concern over New President Ivan Duque’s stance on cannabis (image via AS/COA)
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Analysts, however, worry that because this venture is so new, and given Colombia’s past, Canadian companies may be taking a big risk when investing in the Colombian weed market.
Portfolio manager for Canaccord Genuity Wealth Management, Robert Tetrault says, “I would be very cautious,” noting that no one knows what the Colombian government is going to do.

Colombia’s President Ivan Duque hasn’t said much, since he’s been in office, about the Colombian weed industry. Contrast him to former President Juan Manuel Santos, who led the legalization effort and spoke of the great potential for economic growth with Colombian weed.

Most don’t expect the Duque to reverse course, however. Karnes says of the new president,

“It would be foolish to turn the other way when the rest of the world is moving forward with an economic boom.”

As of now, the production of medical cannabis and exports are legal in Colombia, while recreational consumption of Colombian weed is not.

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Hope for Colombia and the future of Colombian weed

In 2016, a “peace deal” was signed between Colombia’s government and Revolutionary Armed Forces of Colombia (FARC), the country’s largest group of leftist rebels. But there’s still some violence and drug trafficking in parts of the country.

Nevertheless, the legal investments in the Colombian weed industry give the country a ray of hope. Officials in Colombia believe that by using the now legal Colombian weed industry for medical purposes, new jobs will be generated for locals, thus deterring people from the illegal narcotics business.

PharmaCielo, a private company financed by Canada, operates just outside of Medellin. They have also established a special system, a.ka. “the license system”, to operate by satellite in
Valle del Cauca, an obscure region in the jungle located on Colombia’s Pacific Coast.

The CEO of PharmaCielo, Anthony Wile, agrees that given Colombia’s history, the area used to be a “bad neighborhood” However, with the development of greenhouses and teaching new techniques to the locals, opportunities to make money in this region can help locals gain hope. Wile also adds,

“Everyone, obviously, has watched Narcos on Netflix… the realities of this industry have nothing to do with Pablo Escobar or the drug cartels of the past.”

Currently, $40 million has been invested by PharmaCielo into the Colombian weed industry, providing employment for over 150 locals. In 2019, they expect to reach $70 million in investment dollars, hoping that the Colombian weed market will soon be worth $2 billion annually.

By: Joy Hughes

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