By / October 19, 2020

What does the cannabis sector in Colombia lack to thrive?

It has been 4 years since the decrees that gave the regulatory framework for the medical cannabis industry were issued, and although Colombia was among the pioneers in Latin America, there are already several countries that are advancing by leaps and bounds and could mean a threat to Colombian producers.

Ecuador, Mexico, Brazil and Peru are just some of Colombia’s neighbors that used Colombia’s legal framework as a base for drafting their own. Only they took it a step further and implemented improvements that give their companies comparative advantages. Therefore they have greater dynamism and versatility to respond to market needs.

Read more about the cannabis industry and what Colombia has to change in order to remain a leader in the sector, and find the most important cannabis news with the mobile app.

Small and medium cannabis companies in Colombia suffer from lack of resources

More than 500 cannabis licenses have been issued in Colombia and yet there are still the same 5 companies that are leading the sector. These are the companies that have made investments of several tens of millions of dollars thanks to the injection of foreign capital. But what about the remaining 99% of the companies? How can Colombia make the sector in general more dynamic?

There are many small and medium cannabis companies that are suffering from a lack of resources, as the foreign investment remain highly concentrated among a few. These fortunate handful of companies thus managed to integrate themselves vertically from the agronomic stage to the chemical-pharmaceutical stage; but the rest of the producers have to look for where to make the flower extractions to be able to arrive at an exportable product with added value.

Although it is true that there are work teams in Procolombia that are constantly looking for investors for cannabis growers, this work falls short for two main reasons: The number of companies that are looking for capital, and the quality and readiness of these companies. There are many companies looking for money, but few of them have the conditions desired by sophisticated investors.

How can the Colombian Government help cannabis companies 

So there remains a significant task ahead of the government. Which for the sake of the national economy should look at how to create a much more robust program to help companies prepare for investment and then connect them with investors. Colombia could be a center of cannabis for the entire Latin America region.

On the other hand, many companies are facing difficult situations due to lack of technical knowledge in the agricultural part. Because of the novelty of the sector, it is very difficult to find people with advanced technical knowledge in the production of cannabis on a large scale, which has translated into many mistakes and, therefore, much wasted working capital.

It is true that several universities like the National University, the Rosario University, the Andes University or the Jorge Tadeo University have continuous education programs, but it is urgent to structure more formal careers and postgraduate courses. These could have international recognition, direct relationships with the industry and a focus on covering the gaps in knowledge that are slowing down the market.

Finally, the biggest headache for most companies is the commercial side of the equation. We know that the market of cannabis has expectations to grow above $166 billion in 2025 (Report Fedesarrollo 2019), and we know that there is exceptional demand, but there no public entity to focus only on energizing and connecting the different actors of this industry. The sector needs an organization that has the capacity and position to identify synergies and generate joint projects between companies.

There is still a long way to go for the cannabis industry to reach its potential and we know that in the future many other countries will enter the market. So the challenge now for the government and domestic cannabis cultivators is to create an environment that promotes knowledge generation, technology implementation, and innovation in such a way that we generate competitive advantages sustainable over time. The eventual goal is to leave behind the mentality that the country’s greatest advantage is its equatorial geographical location and comparative costs of labor. The opportunity is there to use the industry to pull the whole country forward; it is our decision if we let it go.


(Featured image by bergslay via Pixabay)

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