Happy 420! Special 2019 Edition: Latin America




…and stay on top of the latest buzz on medicinal cannabis legalization in Latin America.

April 20 is an international cultural day when the pro-cannabis community traditionally gets together to express its thoughts on the legalization of cannabis in all its forms.

The term 420 has been used since about 1971, both referring to the date (April 20) and the time of day (4:20pm), as code for cannabis. It has been since adopted by the pro cannabis community, and is now used to bring attention to the issues of legalization and medicinal use.

A new dawn…

The end of the decade is bringing with it a new dawn for cannabis as a medicine. It is slowly but steadily transforming into a scientifically recognized medicinal substance and leaving its social stigma behind.

Currently, a lot of countries around the world are debating the possibility of legalizing cannabis for medicinal or recreational use, while some have already moved past the issue.

This new, worldwide debate has opened the doors for a new market full of possibilities since, until recently, cannabis was solely monopolized by the illegal market and violent criminal groups, which caused the quality of the products to be unsupervised and poor. However, legal cannabis would bring with it regulation and standards which would prevent quality issues that can cause negative health consequences (such as mold or chemicals in the plant making consumers sick).

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Cannabis and CBD in Latin America

Latin America has become an important player in the recent journey of worldwide cannabis legalization. Several Latam countries have taken steps, in recent years, to legalize and produce hemp and different cannabis strains for medicinal purposes, and they are expected to soon become extremely competitive in the international market of processed derivatives, like oils, creams, sprays, and all the different presentations currently available.

It is predicted that by 2028, medicinal cannabis will account for two thirds of the regional total value of the cannabis market, because production is about 80% cheaper than in the US, Canada or Europe.

There are currently more than 40 licensed cannabis producers in Latin America. Some countries, however, seem to be more ahead than others. For example, up until December of 2018, Colombia accounted for 44% of the world production quota.

The estimated total market value of cannabis in Latin America is 9.8 billion USD, and legal sales within the region are expected to rise to 12.7 billion by 2028.

Canada is currently the strongest market for cannabis, since it has fully legalized cannabis use for both medicinal and recreational purposes, and Canadian companies have invested more than 100 million dollars in Colombia for growing purposes. This means Colombia is positioning itself to become one of the largest cannabis exporters in the world.

Legalization

In Latin America, legalization has vast differences from country to country, which comes to show how culture varies from one to another, even if they are thought to be very similar.

The Latin American countries where medicinal cannabis is legal are:

Some insight into the most cannabis-relevant Latin American Countries

Uruguay

In 2013, Uruguay became the first, and so far only, Latin American nation to legalize adult cannabis consumption. Only registered Uruguayans are allowed to purchase cannabis, and it can only be sold by authorized pharmacies.

In 2014 it was made legal to grow up to 6 plants at home.

Brazil

Brazil has the highest cannabis consumption in Latin America.

In 2015, CBD was transferred from the list of prohibited substances to the list of controlled substances, and is now fully covered by the health care system. However, authorizations for the import of cannabis oils are individually evaluated for compassionate use, which means it’s only for patients whose condition is resistant to all other treatments available.

Mexico

Mexico has a history of conservative policies regarding cannabis; but in 2015, special access to CBD Oil was granted to a little girl, and in 2018, the country finally made it legal to grow for private personal use, and declared the prohibition unconstitutional, which suggests that legalization of non medical use will come in 2019.

Chile

Chile has the highest consumption rates per capita in Latin America. And, interestingly, out of all Latin American countries, it has the longest history with successful hemp cultivation for fiber, so the have a lot of experience on good growing practices and know the plant well.

Panama

In Panama, cannabis is still illegal, even medicinal. In 2016 a “legalization” bill passed, but regulation is pending. Only personal dose is allowed, and there are exceptional sanitary permits.

This year, the national assembly is due to vote on bill 595, which legalizes medicinal consumption, but prohibits domestic cultivation.

Like Panama, some Countries around the world have this strange phenomenon, where regulation is pending. Colombia had this issue in 1986, when a law was passed, which allowed regulation, but the regulations took a couple of decades to arrive.

Colombia

Colombia has quickly become one of the strongest countries when it comes to cannabis cultivation. And, at the moment, it’s the only one aggressively promoting cannabis exports.

It has several conditions that favor it in this particular industry, like:

  • A variety of climates.
  • 12 hour day/night cycle, which allows for year round outdoor cultivation.
  • Long culture of exportation.
  • Central location, which is good for commerce.
  • Fertile soil.
  • Existing legislation.
  • The government’s commitment.

In 2018, Colombia was granted a growing quota equivalent to 44% of the world production authorized by the International Narcotics Control Board.

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Legalization

Colombia had an interesting journey. Though legalization technically happened in 1986, the country’s issues with drug trafficking and violence prevented further regulation, which caused cannabis to still be treated as illegal. It took several years before any other legal disposition was made concerning cannabis. The timeline is as follows:

February, 1986: Colombia legalized manufacture, export, sales, medical and scientific use of cannabis. However, due to the lack of regulation, production could not be initiated.

1994: Consumption was decriminalized.

2009: The Constitution is modified, criminalizing possession and consumption, except with medical prescription.

2012: Possession is decriminalized (up to 20gr).

June, 2015: Home cultivation of up to 20 plants is decriminalized.

December, 2015: Cannabis is legalized for medical and scientific purposes.

May, 2016: The Ministry of Health defined licensing requirements for production and manufacture of cannabis derivatives.

June, 2016: The first manufacturing license was issued to a large-scale cannabis corporation.

July, 2016: Law 1797 established a regulatory framework for medical and scientific use of cannabis.

April, 2017: Decree 613 amended law 1787, ensuring government support for small growers, distinguishing between psychoactive and non-psychoactive cannabis, and creating regulations for seeds.

At the moment, Colombia is the only latinamerican country that distinguishes between psychoactive and non psychoactive medical cannabis. Psychoactive cannabis is only permitted in its processed form (oils, pills, and different topical presentations), but not as flowers or dried plants. Cannabis-based medication (like Sativex) is only available with a medical prescription, and can only be distributed in government authorized pharmacies.

Since November 2018, several cannabis licenses have been granted:

  • 19 for use of seeds
  • 62 for psychoactive cannabis cultivation
  • 89 for hemp cultivation
  • 73 entities were granted licenses for psychoactive cannabis derivative manufacturing (68 for export, 64 for domestic use and 28 for scientific research)

Colombia aims to grow as a cannabis derivative exporter, starting with the regional market before expanding to other countries, like Canada.

Foreign operators are welcome in the Colombian cannabis industry, and residency requirements have not been established, though the company must at least have a local branch or independent company within the territory, and is expected to comply with the local tax regulation.

At the moment, several major Canadian cannabis companies are already involved in Colombia. And the government has now granted benefits to small and medium growers, which benefit the country’s growing economy.

According to BBC Mundo, “Colombia has the best conditions in Latin America for investing in the [medical] marijuana industry.” And Canadian analyst, Michael McCune, a member of the Canadian lobbying group called iTrust Cannabis, said, “We see Colombia as a global leader in the cannabis industry, with enormous production and export capacity.”

This is an important view, since Colombia and Canada are currently the two main leaders of the cannabis market.

Colombia’s economy is slowly being reborn from the ashes of the conflict that has plagued it for decades. And it’s interesting to see how cannabis is one of the industries that has begun to take shape after the illegal drug-fueled conflict. Not to mention that the economic development brought by it is reaching some of the most conflict-affected areas of the country, like Valle del Cauca and Magdalena.

It’s perfect timing, since the government is questioning itself on how it can generate rural development without relying on hydrocarbons, which are now an unstable market. And by 2025, Colombia’s cannabis exports are predicted to exceed those of coal, while Procolombia also believes that the country is capable of quickly capturing one fifth of the cannabis market in the next few years.

The Change….

The punitive approach to cannabis in Latin America and the rest of the world is changing steadily due to the increasing number of patients who have been successfully treated with it; and that change will only be accelerated by the fact that the World Health Organization has recommended its rescheduling as a controlled substance. This encourages a debate between the medical and scientific world and those who still feel that it is necessary to maintain the punitive approach towards cannabis.

Each Latin American country has its own regulations, which vary depending on their individual culture and history. These regulations have different implications for companies that wish to enter the country’s economy or expand in it.

The two most commonly used business models for this industry in Latin America are:

  • Vertically integrated operations (a license-holder is allowed to produce, process, sell, and export their product).
  • Corporate model for agriculture (small and medium-sized producers sell their harvest to a company that processes, packages, and distributes the product).

This is something the region needs. An estimated 4.5 million Colombians and 60 million Latin Americans suffer from cancer, MS, or epilepsy. The region is in need of better, less harmful treatments that can help people have a better quality of life.

What will legalization bring to the table?

Legalization is a game changer. It brings with it regulations that keep products in check and set a standard for quality and good practices. It stops being a business lead by criminal organizations that take advantage of the low standards and becomes a market pushed forward by doctors, scientists and serious entrepreneurs who know how to provide good service and quality products.

It also opens the doors wider for medical and scientific studies, trials and research that will allow us to look into new treatments and even cures for devastating illnesses.  

Vicente Fox, board member of Khiron Life Sciences Corp. and former president of Mexico, believes that moving from prohibition to legalization is a good thing. It takes money and power away from violent, illegal organizations and gives it to entrepreneurs, farmers, the legal side of economy; it generates jobs, medical and scientific research, and accelerates development.

Though public opinion is quickly shifting and people are now less fearful than they have ever been about cannabis, this particular industry needs to be more careful than others. Every company needs to be on its best behaviour because one mistake can ruin everything. The cannabis industry hasn’t yet established credibility, so it is up to the new companies to do so.

If everything goes well, people will understand that there’s a big difference between an industry run by criminals and an industry run by doctors, experts, and farmers.

There seems to be a misconception about cannabis being an extremely harmful drug, but this is nothing more than a misconception, which will, in time, hopefully change.

“I have never heard of anyone dying from cannabis; on the other hand, billions have perished from alcohol, sugar excess, and cigarettes.” Vicente Fox

For it to work…

For this industry to succeed, different factors need to come into play.

  • The collaboration between different countries will surely bring the best of two worlds together, and result in a product that has outstanding quality and good manufacturing practices.
  • Operational costs must be maintained low for Latam countries to become competitive and maintain that competitiveness when others begin exporting.
  • Brands need to stand out globally and have exceptional quality and good practices.
  • It is important for companies to understand and adapt to the individual regulations in the countries they have chosen to work in, in order to avoid unnecessary legal issues.
  • t’s important to maintain supply, since demand can jump unexpectedly.
  • It is also necessary to stimulate home grown market and inform people on good home growing practices in order to avoid widespread health issues.
  • Cannaturism is also a broad opportunity for Latin Amercan countries while legalization moves forward.

2020s?

There’s a lot of hope for the 2020s! It’s the beginning of a new era for medicine, science, and society. A new era for less prohibition and more regulation in order to ensure quality and good practices in the marketing of cannabis products.

If regulations continue to advance, the next decade will possibly bring with it better medical treatments for painful, debilitating illnesses and a significant improvement in mood disorders, anxiety and depression.

Having a legal cannabis market will also serve as a strong blow to violent organizations that take advantage of circumstances and are not interested in the community’s well-being. They have caused a lot of harm to individuals and entire counties. So taking away some of their power, is bound to be a positive change…

Happy 420!

And here’s to a new era.   

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