The medical marijuana industry in Colombia is growing fast and now is the time to set up your medical marijuana business. Three essential steps to follow when setting up a medical marijuana business in Colombia, are as follows:
1. Business creation and setting up the legal structure
2. Trademark registration
3. Obtain a license for medical marijuana in Colombia
Setting Up the Legal Structure for Your Medical Marijuana Business in Colombia
When forming a medical marijuana company in Colombia, there are a number of legal structures to be considered:
- Limited Liability Company (LLC)
- Corporation (Corp.)
- Simplified Stock Company (SAS)
The correct one for your business would depend on your needs, but the majority of medical marijuana companies registered in Colombia are SAS companies.
Quick FAQs when Forming a Company in Colombia
Is foreign ownership allowed? YES
Can the company sponsor foreign employees? YES
How much capital is needed to set up a company in Colombia? ZERO
Does Colombia impose any foreign exchange controls on trade? NO but some exchange regulations are required through intermediaries
What is the timeframe for setting up a company (including registration, and bank account)? 2-3 WEEKS
Are a fiscal address and legal representation required? YES
What is the minimum number of shareholders required? ONE
What is the currency? COLOMBIAN PESOS
Draft a document granting full faculties to an attorney in order to take appropriate action to incorporate a company in Colombia, such as official presentations before national authorities, drafting and filing.
Do a search for your company name before registering to ensure there is no copyright or trademark infringement and then have it officially approved.
Companies in Colombia are created by bylaws, and documents are required to be drafted and collated before registering the company with the local Chamber of Commerce (Cámara de Comercio). Define what your company will do.
Some of the particulars are as follows:
- Corporate name
- Address in Colombia
- List of company activities
- Legal representation
- Assigned equity
- Division of equity shares
- Powers and limitations
- Board of Directors information
- And more
Registration of the company takes place at the local Chamber of Commerce. A standard fee of between US$17-873 is charged by the Chamber for the registration depending on the size of the company equity investment, as well as a contribution of 0.7% of the company’s equity. The Chamber takes a minimum of 24 hours to exam all the documentation.
After this, it will be necessary for the company to open an account in a local Colombian bank, following which the Tax Registration Number (RUT) must be obtained from the National Tax Authority (DIAN). The last step to be taken will be the payment of the company’s equity and the registration of this investment made at the Colombian Central Bank (Banco de la República).
Trademark Registration for Your Medical Marijuana Business in Colombia
Trademarks identify goods and services in the market as coming from a particular source or what is referred to as the “trade origin” of these products. They are used to claim exclusive rights of use and property rights over goods and services. Any third party use of a registered trademark without the owner’s consent will be considered an “infringement” of these exclusive rights of use, which is a powerful weapon against unauthorised use. For a trademark to be registered, it must have distinctiveness either initially or through repeated use by its owner.
A company should register its company name and trading name (if different), and any distinct images, such as logos as part of its trademarks profile. You are required to register specific products or services under the trademark in order to avoid the registration of open-ended monopolistic trademark. That said, whatever is not covered by the trademark could be covered by other forms of intellectual property rights such as patents for inventions or copyright for manuals and softwares.
Securing a registered trademark protects your business and brand. It provides you with the tools to prevent others using the company or trading name, logos and images, and benefiting from your business. This could even jeopardise the expansion of your business if you do not register your trademarks. As your product or service becomes successful, the trademark itself starts to develop an intrinsic value, which is why it is recommended to protect this.
How to Obtain a License for Your Medical Marijuana Business in Colombia
After President Juan Manuel Santos signed the decree to legalise marijuana for medical and scientific purposes in December 2015, and further refinement to the law, Colombia’s legal framework is in place. Within this legal framework, four types of licenses have been established and each contain various sub-types. Licenses covering planting, cultivation, manufacture, storage, transportation, marketing, production, processing, distribution, and export of products derived from the cannabis plant.
A license for medical marijuana in Colombia will provide your business with the legal permission to produce marijuana for medical or scientific purposes. The Ministry of Health and Social Welfare (Ministerio de Salud y Protección Social) and the Ministry of Justice and Law (Ministerio de Justicia y del Derecho) are the two governmental agencies that can issue a license for medical marijuana in Colombia. In general, all licenses have a duration of five years. When applying for a license it is important to know exactly which license or licenses you require for your business.
A subdirectorate of the Ministry of Justice and Law, “Control and Supervision of Chemical Substances and Narcotics” (Control y Fiscalización de Sustancias Químicas y Estupefacientes) is responsible for the administration and maintenance of the licenses, and monitoring of the license holders. The subdirectorate will cover two components established in article 7 of law 1787, 2016:
1. Administrative Component: The sub-directorate, “Control and Supervision of Chemical Substances and Narcotics in collaboration with the Institute of Colombia Agriculture (ACI) are responsible for the technical and legal parameters to grant a license, and those already in possession of one.
2. Operational Component: The sub-directorate with the support of the Ministry of Defence (Ministerio de Defensa Nacional) through the armed forces or the national police, monitors the activities required to verify the technical and legal parameters set out in the administrative component.
Types of Medical Marijuana Licenses in Colombia
Outlined in our article “How to Obtain a License for Medical Marijuana in Colombia?“:
1. License for the Manufacture of Cannabis Derivatives (Licencia de Fabricación de derivados de cannabis): this license allows you to produce products derived from cannabis for domestic use, for exportation and for scientific research domestically.
2. License for the use of Cannabis Seeds (Licencia de uso de semilla): this license allows you to sell and distribute cannabis seeds and use them for scientific purposes.
3. License for the Cultivation of Psychoactive Cannabis (Licencia de cultivo de plantas de cannabis psicoactivo): this license allows you to produce cannabis as a crop, to produce cannabis for the manufacture of cannabis derivatives (for this you also need the License for the Manufacture of Cannabis Derivatives or to prove that the application for this license is in process), to produce cannabis for scientific purposes, to store cannabis and for its final disposal. It also allows you to produce cannabis seeds for sowing.
4. License for Non-Psychoactive Cannabis Cultivation (Licencia de cultivos de planta de cannabis no psicoactivo): this license allows you to produce cannabis grain and seeds for planting, for manufacturing derivatives, for industrial purposes, for scientific purposes, for storage and for final disposal.
Do You Want to Set Up a Medical Marijuana Business in Colombia?
If you have any questions or enquiries about how to responsibly build a business in the medical marijuana industry, don’t hesitate to contact Craig Dempsey at [email protected]. Our Biz Latin Hub team in Colombia includes local and expat professionals who have the knowledge and expertise to support you throughout the process.
Watch our video if you want to know more about how to set up a business in Colombia!