Taking a Look Into the Cannabis Future—Colombia

by Jessica BillingsleyFebruary 20, 2019

The air is pleasant and humid with a cool breeze bringing the faintest tang of sticky citrus as we gaze out over a sea of green, healthy cannabis plants extending toward the horizon.  A couple months ago, I predicted 2019 would be the year Latin American cannabis production begins to shift the global market for cannabis, and I’ve come to see for myself what the future holds.  The past two days have shown me that, if anything, I’ve only underestimated the impact of a developed agronomic economy on world production.  I’m standing at the edge of Pharmacielo’s large production facility in the mountains above Medellin, and I’m doing the math in my head, comparing the economics of what I see before me compared to countless other cultivation facilities I’ve visited.  The economics here and anywhere in Latin America, which can recreate similar conditions, are irrefutable. 

I expected to see outdoor, field marijuana, like those I’ve seen in California and Colorado.  But what is being cultivated here isn’t swag weed.  The beds and fields extend as far as the eye can see, but they’re all sheltered within inexpensive, practical greenhouse structures, including evenly spaced lights to be used during the flowering phase, inducing a richer, more potent flower crop.  I asked about the power source to power all those lights and expansion capability, and learned this particular operation has its own power plant on premises.  Not generators, but an actual power plant on premise.  Imagine the highest quality, greenhouse cultivated marijuana being produced at 15% - 25% of what it costs to produce in a high-volume greenhouse facility in Colorado or California.  However, the flower here will not be exported.  100% of the flower is processed into oil or cannabis extract. 

And, as impressive as the production part of the facility is, the processing facility is awe-inspiring.  I would not have guessed as I chatted in my broken Spanish with the taxi driver about the local furniture industry, as we passed rustic roadside pop-ups stores and food stands beyond which all looks like raw jungle, as we wound our way up the mountains above Medellin to the valley in which this facility is located that it would house such sophistication.  I’ve only seen cannabis equipment this sophisticated in two or three other facilities, and all have been constructed in the past couple years. 

There are two regions in Colombia with the perfect growing conditions for cannabis—the mountainous region near Bogota, Colombia’s capital, where Clever Leaves, a Northern Swan backed enterprise, is located, and the mountainous region in which Medellin lays nestled at a mile high, much like my home city of Denver. Also similar to home, Colombia enjoys an abundance of sunshine due to its proximity to the equator. The tropical climate and volcanic soil have long provided the foundation for a rich agricultural industry, which accounts for 9% of the GDP, 21% of exports and 19% of all reported jobs.

When most people think of Medellin, at least in America, you probably think of Pablo Escobar.  At a YPO event following my facility visit, I met the two DEA agents upon whom the television show, “Narcos,” is based and who worked with Colombian national police to ultimately take down Pablo.  It is humbling to consider how one man’s narcissism and greed could disrupt an entire country’s government and economy and cost so many precious lives.  However, it’s been over 20 years since his reign of terror ended, and Medellin has blossomed in the course of a generation.  As my clients and dinner companions informed me, Medellin recently won an award for being “the most innovative city in the world” (“not Nuevo York,” they said proudly).  Medellin today is a thriving, stunning city, interested in doing business and “very friendly to entrepreneurs,” according to the founder of the local tier hospital facility.  All of which is to say, Medellin and Colombia are open for business.   Our consultants are actively engaging with businesses and investors who are interested in doing business in Latin America to bring the right solutions that are effective, scalable, and sustainable.

Gustavo Escobar, CEO and Founder of Clever Leaves, recently expressed, “Cannabis will soon become a very valuable, sizeable addition to Colombia’s legal agricultural exports and local economy.” The Colombian legislation allows for the licensure and regulation of the import, export, and cultivation of medical cannabis, and there are just a few companies like Clever Leaves and PharmaCielo that have dual licenses to cultivate and process cannabis containing THC and CBD. The Washington Post predicted last May that the Colombia cannabis market could be worth $31.6 billion in just three years. That escalation starts today, and it starts with Clever Leaves sending its first shipment to Canada.  Colombia is a country of enterprise clients with global growth plans as evidenced by their choice of business tools, like MJ Platform technology, that are built for global scale.

As the market increases, we only have to look at the states for a possible view of what’s ahead. There are parallels between Colombia’s recent regulation and Colorado’s first medical laws passed in 2009--a decade ago now and when I first invested in one of Colorado’s early licensees.  Colorado wasn’t the first state to legalize medical cannabis.  California beat Colorado by over a decade, but Colorado was the first state to pass working legislation and setup a compliance and regulation structure under which the licensees could operate.  MJ Freeway served on the first Colorado regulatory advisory boards and helped to lay the groundwork for how to track and regulate cannabis safely, from seed-to-sale, a concept and software methodology we invented.  We have clients in other countries like Uruguay and Chile who have passed legalization initiatives prior to Colombia’s 2016 legislation—but like Colorado back in 2009—Colombia is leading the way with a first-of-its-kind cannabis program, including import, export, and research regulation.

Expect to see other agrarian-centered Latin American countries following suit, much like many U.S. states have followed Colorado’s lead. Mexico is not far behind Colombia in establishing a legal cannabis framework under which to operate. While there may be many similarities among emerging markets, each comes with its own compliance and regulatory variations; therefore, if you are engaged in Latin America, you need systems to operate in compliance while adhering to seed-to-sale regulations, while also accounting for the nuances of legislation and the international or domestic market—let alone multiple languages. You need compliance monitoring and reporting systems to meet the nuances of regulations if you are engaged in Latin America, just as you do across the globe in cannabis, a highly regulated industry.  You’ll also need true enterprise systems capabilities, including multi-currency and multi-lingual systems to import and export cannabis internationally.

My earlier prediction was more than a forecast. For MJ Freeway, as a globally focused enterprise business, Latin America is a focal point.  We see vast opportunity and are directing our resources accordingly, applying our technology infrastructure and human capital to aide in advancement. I can’t imagine a more worthwhile pursuit than providing the needed tools for this industry to thrive and grow.  And, I look forward to sharing the journey with you.

 

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