Marijuana Inc.: 21 companies licensed to cultivate in Colombia

These companies, with capital from Canada, the United States, Israel and Mexico, are also licensed to produce medicinal cannabis. They plan to make very large investments to develop the business. These are the bets so far.

California lived a real day of madness on January 3 when it began the legal sale of marijuana for recreational purposes. Although it has been legal for medicinal purposes since 1996, long lines and a massive influx of consumers to dispensaries created euphoria in the market.

Experts such as Arcview and the market analyst BDS Analytics claim that by 2021 this business will sell 40 billion dollars and employ more than 100,000 people. All within the law.

The interest that this product arouses is not limited to the American market. In Colombia the fever for the business of medical marijuana began three years ago, after the government and the legislature decided to create the stable legal framework that entrepreneurs recognize today. According to American consultant Ackrell Capital, this industry could move 1.5 billion dollars in the country by 2025.

By January 10, 21 companies with national and foreign capital already had licenses to cultivate and transform medicinal cannabis. All of them have already passed rigorous requirements, including presenting their development projects which outline the land for crops, industrial equipment and research labs.

These initiatives anticipate the surge of promising businesses in the country. In addition, these companies have pledged to support small-scale growers and farmers in conflict zones that will now participate from within the law. In other words, the medical marijuana business could be the new development pole in the country.

The business in Colombia has fairly sophisticated legislation, investors admit. On the one hand, it allows only the handling of the transformed product, i.e., serums, oils, resins or by-products of hemp. All under the control of the Ministries of Justice, Health and the National Office of Narcotics, responsible for granting licenses to participate in this business. Other entities such as the ICA and the Invima also intervene.

For investors, in addition to legal stability, other factors contribute to making Colombia the center of the medicinal cannabis business. On the one hand, there are the light and climate conditions, which favor cultivation and flowering throughout the year. This issue is key because oils result from processing the flowers – not the leaves – of the plant, which take about three months to appear from the time of sowing. Add this to the favorable soil conditions in several regions of the country, which facilitates the cultivation of different varieties of seeds, among them, some local strains which are much appreciated abroad.

Another powerful argument is the lower production costs, which improve the profitability expected by investors. While producing a gram of cannabinol – the extracted oil – costs $3 in Canada and 1.75 dollars in Colorado, United States, in Colombia it only costs 35 cents.

Who's Who

They say that he who strikes first, strikes twice. This was the strategy for six companies that in June 2016 obtained the first licenses to cultivate and transform cannabis in the country: Cannalivio, Pideka, Ecomedics and Econabis, of national investors, as well as Cannavida and PharmaCielo, of Canadian capital. A year later, when Law 1787 passed, which was promoted by Senator Juan Manuel Galán, the companies Med Colombia, Cannabis Medical Group, Medcann Colombia, Colombian Organics, Canmecol and Khiron Colombia obtained licenses.

In Cannavida the investment plan contemplates 20 million dollars for the purchase of land, facilities and production for the domestic and foreign market. It was created last year by Canadian Ron Marzel, a lawyer who for years has been promoting the issue of medical marijuana along with international associations that have seen its therapeutic importance.

Gonzalo Araújo, spokesman for the company, explains that after traveling the country in search of the ideal agronomic conditions, Marzel acquired a land of 17.5 hectares in Barichara, Santander, which already has a construction license and is pending an authorization by the Autonomous Corporation of Santander to make a deep water well.

The facilities for the extractor machines, the packing and sealing area, as well as the offices, are to be built this semester. They will begin to sow by the second semester with the support of the ICA, entity in charge of certifying the seed. In 2019, oil extraction will begin, a process that creates around 60 jobs among crop operators, chemical engineers, pharmacists, agronomists and administrative personnel.

PharmaCielo, for his part, has very ambitious plans. They have about 600 investors, among Canadians, Americans and Colombians, and last December they sowed the first plants in Rionegro, Antioquia, after obtaining the licenses and permits for 35 hectares. The company will also have crops in Corinto, Cauca, in partnership with Caucannavis, a farmers' cooperative from that department.

This company decided to plant Colombian strains and will have its first harvest ready by mid-year, says Patricio Stocker, its president. In a first stage they will execute investments of about 22 million dollars, but then have the goal of having 1,000 hectares with growers under contract, in an operation that requires investments totaling 100 million dollars.

Medcann, a company with Colombian capital, will develop its crops in the municipality of Fuente de Oro, Meta, and will produce for the national and international markets by the end of this year or by the beginning of 2019. The company will invest 22 million dollars and will create some 200 jobs, says its vice president Felipe Harker, who emphasizes that the project includes a center for genetic development and propagation in addition to the processing plant, laboratories and its center for agronomic research and development, with an idea of sustainability.

The medical and pharmaceutical component attracted Canadian Khiron Life Sciences, who created Khiron Colombia and has already reached an agreement with the Colombian Association of Neurology to work in joint research and development starting this year. Spokespersons of the company assured that they have the goal of meeting the needs of 5 million of patients in the country with problems like epilepsy, multiple sclerosis, neuropathic pain and nausea caused by chemotherapy, among other ailments. For the medium term, the parent company aims to reach 68 million patients in Latin America who could benefit from the prescription of medicinal cannabis, the spokespersons said.

During 2018, Khiron Colombia will invest about 6 million dollars in addition to the investments it has already made in 2017. Their crops are located in the Department of Tolima, a traditionally agricultural area with optimal bioclimatic advantages for the proper growth of plants.

The company seeks to develop local industries "by providing scientific expertise, access to capital markets and first-rate medical credibility to physicians and patients," their spokespersons said. Because of this, on their board they have Canadian chemist and financier Sidney Himmel, with extensive experience in capital markets and biotechnology.

Although large international pharmaceutical companies have been absent in this first stage, it is estimated that they will arrive during a second stage when there is a strong commodity industry that allows the development of medications.

For the government, scientific and research development, the transfer of best agricultural practices, as well as the inclusion of small and medium-sized farmers, mainly from areas affected by the conflict, are key issues.

Despite the favorable prospects of this nascent industry, companies with foreign capital have encountered a barrier: the financial sector's obstacles to manage resources for this nascent industry. Although the business is legal and regulated, banks have hindered the income of resources from investors in Canada and the United States, which has caused more than a few setbacks to companies operating locally.

The projections that medicinal cannabis companies in Colombia start with offer good omens for the development of this industry. An auspicious bet, but above all a legal one.