Colombia’s Cannabis industry in crisis over regulatory, political hurdles

Colombia’s Cannabis industry in crisis over regulatory, political hurdles

Colombian Cannabis Industry Faces Closure Due to Regulatory Demands and Legislative Setbacks.

More than 17 acres of land owned by a Colombian-Canadian company near Bogota were once meant to grow 25 varieties of cannabis, but over the past year weeds have overtaken greenhouses and 200 of its 218 employees have been fired.

The company is a victim of long-running problems for Colombia’s legal marijuana industry, which attracted huge investment after cannabis was legalized for medicinal use in 2017. At the time, Colombia was one of the first countries in Latin America to pass such legislation and held out the promise of legalizing marijuana sales for recreational use next.

Six years later, a number of local cannabis producers are facing closure because of regulatory demands for expensive and years-long studies on medicine composition before products can be sold domestically, say industry players, analysts and the sector’s industry association.

In addition, a law to legalize recreational use of cannabis failed for the fifth time in Congress last week, and a measure coming into force in February will oblige companies to destroy inventories which are over two years old.

“We’re going from bad to worse, it’s slow agony and the clock is going against us with pressure from partners and without cash flow,” said the owner of the Colombian-Canadian company, who asked for anonymity because he is seeking new investment to save his $20 million business set up in 2018.

Since cannabis for medical use became legal, the sector has attracted an estimated $500 million in foreign investment, but much of that has not been recouped, according to industry group Asocolcanna.

Many investors are from Canada, which was itself in the process of legalizing recreational use of marijuana and was considered a potential destination for Colombian exports.

The industry overcame regulatory bottlenecks on exports in 2021, but its fortunes have slumped sharply this year.

Some 200 companies shuttered this year, bringing the number of closures to 600 – or nearly 50% of the companies founded since the law legalizing medicinal use passed, according to Asocolcanna.

All this comes despite leftist President Gustavo Petro’s stated ambition to relax the policy on marijuana, whose domestic consumption is higher than that of Colombia’s more infamous drug crop cocaine. Colombian law allows people to grow up to 20 plants and carry up to 20 grams for personal use, though selling marijuana is illegal.

Unless the sale of cannabis for recreational use is made legal, the local market will remain in the hands of criminals rather than licensed companies, said Asocolcanna president Camilo de Guzman.


Khiron Life Science, a company with operations in Colombia that is listed in Toronto, has already shuttered a $15 million medical marijuana plantation and a cosmetics line made with cannabis.

It still serves about 5,000 patients in four clinics in Colombia, where it is allowed to distribute personalized cannabis-based medications, but has closed similar clinics in the United Kingdom, Brazil and Peru.

Marijuana is not covered by Colombian insurance providers, a huge brake on sales, said Khiron president Alvaro Torres.

Several industry executives said they expected more industry-friendly rules – including those needed for insurers to cover marijuana for medicinal use – would follow the 2017 law, but progress has been slow.

“If the regulation is achieved, the industry could grow again, the problem is how to hold on until then,” Torres said.

Khiron’s stock was trading at $4.05 Canadian dollars in 2019, but slumped to $0.04 Canadian dollars in May, the last time it was traded.

Without a legal domestic market for cannabis, companies operating out of Colombia are limited to pursuing exports, sales from which average $5 million a year, according to government trade organization Procolombia.

“It was a mistake not developing a local market before,” said Mauricio Krausz, director of Plena Global, which exports to the U.K., Germany, Israel and Australia. “We don’t have a local market where we can support cash flow.”

In response to Reuters’ questions, Colombia’s food and medicine regulator INVIMA said in most cases, those seeking authorization for medical marijuana products present incomplete documentation.

“It is necessary to comply with established legal and technical requirements,” it said.

The ministries of health, justice and agriculture, which also have a hand in marijuana regulation, did not respond to requests for comment.

The Petro government has not detailed why regulation on the marijuana front has been slow, but the troubles echo those of two previous administrations who faced similar issues.


In the absence of legal cannabis sellers, some in Colombia are making their own cannabis medicines.

“We started growing with my grandma to use the flowers for salves,” said 28-year-old Camila Sierra, who grows 18 plants to treat her grandmother’s chronic pain and sometimes to smoke.

Lawmaker Juan Carlos Losada said a bill he sponsored to regulate recreational use was meant to resolve the contradiction between legal personal use and restricted legal sales, but it was rejected this month.

Petro, who does not have a majority in Congress, bemoaned the bill’s rejection, saying it would only benefit drug traffickers. But some in the industry say the government is not following through on its pledges.

Cancelling the inventory destruction requirement would be a start, companies say.

“The industry was in intensive care and this government has a very high probability of being its grave digger,” said Miguel Samper, a former deputy minister of justice who headed Asocolcanna until recently.

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Region: Colombia

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