Colombia is recognized across the world for its amazing coffee, geographical diversity, and rich mineral resources. However, Colombia will soon also be known as major medical cannabis producer in the very near future.
Thanks to its clear medical cannabis legal framework, and its geostrategic location, its ambitions of producing a 40-ton quota for cannabis, granted by the International Narcotics Control Board (INCB), makes it particularly attractive to foreign investors. Businesses and investors have taken the opportunity to get ahead of the curve and move quickly into the burgeoning cannabis industry. Interestingly, though, hemp is still a largely unknown element of this market.
We explore Colombia’s emerging cannabis industry and the yet-undiscovered potential for businesses in producing hemp.
Cannabis law reform
In 2017, President Juan Manual Santos signed the decree 613 of 2017, permitting individuals and businesses to engage with the cannabis industry. To support this, 4 types of licenses were established for producing cannabis:
- Cultivation of psychoactive cannabis plants
- Cultivation of non-psychoactive cannabis plants
- Use of cannabis seeds to sow
- Manufacture of cannabis derivatives.
What is Hemp?
To be able to understand the hemp industry in a local or global level, it is necessary to comprehend the difference between marijuana and hemp.
Cannabis is a genus of flowering plants in the Cannabaceae family. Within this family, you can find three species: Cannabis sativa, Cannabis indica, Cannabis ruderalis.
Normally people refer to marijuana and to hemp as two different species or two different strains, though, they technically do not meet the requirements of either classification. Hemp and marijuana are broad classifications of cannabis that were adopted into our culture.
Hemp or ‘cañamo’ in Spanish, is a term to classify varieties of cannabis with a component of Tetrahydrocannabinol (THC) less than 0.3% – 1%. Cannabidiol (CBD) concentration is frequently higher than the concentration of THC.
Industrial hemp is a very strong and competitive plant that will outgrow weeds. In most cases, this makes production possible without the use of herbicides or pesticide, which make an environmentally friendly crop.
Hemp provides many different uses that can help promote a more sustainable world. Hemp products can be recycled, reused and are 100% biodegradable.
Uses for hemp
There is evidence suggesting that hemp has been cultivated for over 10,000 years. It has been an outstanding source of food and fiber, with references placing the plant in ancient Chinese and Mesopotamian consumption.
Hemp is considered the strongest natural fiber in the world, and it is known to have over than 50,000 different uses. This includes textiles (clothing, diapers, denim, shoes), industrial textiles (rope, canvas, tarps), building materials (oil paints, solvents, coating, insulation), body care (soaps, shampoos, lotions), paper (printing, cardboard, packaging), foods (hemp seed oil, hemp protein powder).
CBD is the trending cannabinoid of the moment, which comes from hemp and can be found in different therapeutic products, personal care products, and veterinary products. Its application can help with pain relief, reduce anxiety and fight depression. Some studies are suggesting CBD products could even alleviate certain cancer-related symptoms.
Get the right permits
Thanks to decree 613 of 2017, farmers in Colombia are able to grow hemp. The industry is however still in its infancy. Before 2017, Colombia had limited engagement with hemp production. Probably the only contact that Colombia has had with hemp products was around the Colonial period 1550-1810, thanks to boats traveling from Europe.
To cultivate hemp in Colombia you will need one license: cultivation non-psychoactive cannabis plants, which is granted by the Ministry of Justice.
If the goal of the project is to manufacture CBD and other cannabinoids, you’ll also need to apply for the license to manufacture cannabis derivatives. This license is granted by the Ministry of Health.
According to figures provided by the Ministry of Justice, it has granted 129 licenses for the cultivation of non-psychoactive cannabis plants, and 83 licenses for the cultivation of psychoactive cannabis plants. The difference in these numbers of licenses is probably due to the requirements set by the government and the difference in cost of these licenses. Obtaining a license for the cultivation of psychoactive cannabis is more regulated and more expensive.
The governmental fee for the license to cultivate non-psychoactive plants is US$3,700, and for the license to manufacture cannabis derivates, US$7,500.
Find your niche in the market
We are living an era of changes, where climate change, pollution, global warming, are driving the way we live. For these reasons, products from hemp, such as textiles, building materials, industrial textiles, will play a major role in substituting old-fashioned and environmentally unfriendly products.
Due to its recent appearance in the market, CBD-based products have a lot of room for growth in the national and international sphere. There are a few CBD-based products in the Colombia market, such as CBD-based supplements, drops, and others for human use, and even for pet use.
Cosmeceutics could be a strategic sector where CBD can play an important role. Cosmeceutics are cosmetic products with bioactive ingredients that could have medical benefits.
Currently, there’s only one company dedicated to the cosmeceutical sector in Colombia so far. Kuida, the personal care brand from Khiron, a Colombia-Canadian company that in 2018 began trading on Toronto’s TSX Venture Exchange, now has a market value of US$185.778 million.
Kuida is stepping up in the race to secure a piece of the cannabis market, through its line of cosmeceutical skin care products like; lotions, facial creams and moisturizers.
The CBD market could reach US$20 billion by 2020. Given CBD is only one product of the 50,000 possible products or uses for hemp, the industry has myriad opportunities for offering consumers new and innovative uses for hemp.
Now is the right moment to enter the Colombia hemp market, to support both the local and international growing demand for diverse and environmentally sustainable products.
Getting started? Contact us for help
Colombia’s cannabis sector is open for international investors on the lookout for new opportunities. With stable legal regulations and more comprehensive information available about the industry, Colombia is forecasted to become a key exporter of cannabis extracts and derivatives into the foreseeable future.
If you’re looking to enter the cannabis market in Colombia and need some guidance, speak with us. At Biz Latin Hub, we ensure commercial success for those entering Latin American markets.
Our teams of local and expatriate experts offer customized legal, financial and commercial back-office services that address the specific needs of our clients.
Contact us today via email at [email protected] for personalized support.