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Cannabis Industry in Latin America: From Illegality To Opportunity

The cannabis industry in Latin America has become a business opportunity for countries that for years have been stigmatized for the production of this plant.

Cannabis leaves

Many are setting their sights on this multi-million dollar industry, which is already publicly traded, and threatens extraordinary growth for years to come. Photo: Unsplash

LatinAmerican Post | María Fernanda Ramirez Ramos

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Leer en español:  Industria del Cannabis en Latinoamérica: de la ilegalidad a la oportunidad

The global market for legal marijuana was valued at $ 9.1 billion by 2020 and is estimated to have a growth rate of about 26.7% annually from 2021 to 2028, according to data from Grand View Research. This is how many are setting their eyes on this million-dollar industry, which is already listed on the stock market, and threatens extraordinary growth in the coming years.

The global demand for marijuana is increasing rapidly as more regions and countries are legalizing it for medicinal and recreational uses. Latin American countries have a business opportunity in the production of cannabis that they must rush to adopt and create regulations that allow them to market and export with a competitive advantage.

In addition, it is essential that scientific development is also promoted around the components of cannabis, which would allow the creation of patents and scientific development because if only crops were promoted, Latin American countries would again be at a disadvantage compared to the northern markets. Canada has become an example in the sector because, in addition to being the second country to allow its recreational use, it has prepared its industry to be the leader in the international market. Likewise, it has established clear taxes and regulations for its companies.

The cannabis industry has 3 main sectors: medicinal, industrial, and recreational. Therefore, hundreds of products can be derived from cannabis and this generates an entire industry around the value chain: raw material, research, logistics, transformation, and trade. In order to promote the strengthening of the industry and its growth, the American Network of Cannabis Associations (RedCann) was created in August of this year, in which Argentina, Brazil, Colombia, Chile, Ecuador, Mexico, Paraguay, Peru and Uruguay are participating. 

What role will Colombia have in this industry?

Due to the conditions of the country, it is estimated that Colombia could be the leader in the region in the production and commercialization of cannabis. In fact, in addition to Australia, Europe, the United Kingdom and the United States, countries such as Ecuador, Brazil and Peru have been identified by Procolombia as the places with the greatest sales potential for the country.

In fact, this entity, together with the Ministry of Commerce, Industry and Tourism and the Colombian Association of Cannabis Industries Asocolcanna, held on November 2 the first virtual business conference on medicinal cannabis in Colombia, which left a balance of $ 7.7 million, of which 1.2 represent immediate purchases and 6.5 business expectations. This figure is expected to be higher by 2022, as it will be the sector's first time in a ProColombia Business Macro Round, which will take place from March 28 to April 1.

After the approval of Law 1787 of 2016 that created the regulatory framework for access to this plant for medicinal and scientific purposes, and the regulations that have been created afterwards, the cannabis industry has been growing in the country. However, this growth has not been as fast or easy for entrepreneurs, who in fact have shown gaps in regulation and few financing opportunities, due to the stigmatization of the sector.

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On July 23, 2021, President Ivan Duque signed Decree 811 of 2021 that endorsed the export of the dried flower of cannabis for medicinal purposes as well as the seeds, the grain, the plant component, derivatives of cannabis and products obtained from these derivatives. Likewise, it extended the validity of cannabis licenses and opened the possibilities for pharmaceutical companies to manufacture products such as medicines, phytotherapeutics or magisterial preparations for national use.

However, there is also a great challenge at the social level, since this industry must be used to generate new jobs and opportunities for the communities that inhabit the areas of the country that have historically lived in situations of violence and exclusion due to illicit crops.