Inside Colombia’s Canadian Cannabis Boom

 

In a 2012 photograph snapped by Reuters’ Jaime Saldarriaga in the city of Cali, two Colombian police officers can be seen loading a package of confiscated cannabis onto a truck. The package is clearly heavy, from way the policemen strain, and behind them are dozens more bundles, lined up and ready to be hauled away.

That was then. Today, the department of Valle del Cauca, where Cali is located, houses one of the satellite operations of PharmaCielo, a cannabis company with headquarters in Toronto. PharmaCielo, in fact, is one of several Canadian businesses that have set up shop in Colombia in the last three years—with the government’s blessing.

The proliferation of foreign cannabis companies in Colombia is due in part to its fertile soil and climate. The country boasts twelve hours of sunlight every day of the year, which allows for outdoor cultivation and an increased number of harvests. Colombia’s skilled labor force is another factor. “The cannabis flower, really, is just another flower,” David Gordon, PharmaCielo’s COO, told Cannabis Wire. Local farmworkers, he added, many of whom have worked in the flower industry for generations, are not only good at growing high-quality cannabis, but are able to do so at an industrial scale.

Investors are also drawn to the country’s comparatively low wages. (Minimum wage in Canada ranges between $8.30 and $11.35 US dollars per hour. Employees in Colombia, in contrast, are paid about $245 per month.) Khiron Life Sciences, which has already invested 15 million dollars in the country, also points to Colombia’s growing middle class and Latin America’s approximately 640 million inhabitants as potential clients. (Several countries, including Argentina, Brazil, and Mexico have legalized some form of cannabis for medical use.)

(Cannabis Wire today published an interview with Khiron Director and Former President of Mexico Vicente Fox. Read it here.)

Still, more than all these factors, it was the former administration’s ability to push through robust medical cannabis laws that compelled companies like Aphria, Aurora, Khiron Life Sciences, CannaVida, Canopy Growth Corporation, and PharmaCielo to take root in the South American nation.

After issuing a law to regulate the cultivation and production of cannabis for medical and scientific purposes in 2015, Colombia passed legislation allowing for the domestic distribution and global exportation of cannabis-based products like oils, creams, and inhalers. This legislation was part of President Juan Manuel Santos’ effort to reinvigorate a country still healing from decades of internal war. Between 1958 to 2018, the conflict between the government, drug cartels, paramilitary groups, and guerrillas resulted in the loss of 262,197 lives, along with the disappearance of 80, 514 people and the displacement of more than seven million. It is also estimated that 37,094 people were kidnapped and that 15,687 were victims of sexual violence.

The regulation of medical cannabis, partnered with other government programs, was meant to undermine the illicit market, which helped finance armed groups. Under Santos—who was awarded the Nobel Prize for negotiating a ceasefire and a peace treaty with the Revolutionary Armed Forces of Colombia (FARC)—the government also offered targeted investment incentives in areas hardest-hit by the war, called Zonas Más Afectadas por el Conflicto (ZOMAC), which are generally rural, impoverished, and lack access to urban centers. In exchange for tax cuts or reductions, companies were required to establish their headquarters and production facilities in the ZOMAC. To protect the environment, companies dedicated to mining and hydrocarbon exploitation were barred from participating. The initiative, designed to last ten years, is part of other post-conflict programs, including the voluntary substitution of illicit crops. To date, at least 407 companies have been created in the ZOMAC, including cannabis businesses.

Moreover, upon regulating medical cannabis, the Santos administration stipulated that companies that receive cultivation licenses must allocate at least 10 percent of their production to small or medium-sized farms. In separate interviews with Cannabis Wire, executives from Khiron Life Sciences and Canopy Growth Corporation expressed support for the requirement.

“This is one of the parts of the legal framework that the government really got right,” said Bibiana Rojas, Director General of Canopy Growth Corporation’s subsidiary, Spectrum Cannabis Colombia, which plans to invest $60 million in the country. Rojas and Álvaro Torres, Khiron Life Sciences co-founder and CEO, also said that their companies are in conversation with small farmers interested in establishing the mandated partnerships.

A Khiron Life Sciences cultivation site in Colombia. (Photo provided by Khiron)

PharmaCielo, whose CEO and co-founder, Anthony Wile, received Colombian citizenship in August by order of a special presidential decree, supplies 10 percent of its 4.9-acre plot in La Ceja, Antioquia to local indigenous communities. The company has also established a partnership with sixty-three families who are members of the Cooperativa Caucannabis in the department of Cauca. On Pharmacielo’s 8.8-acre plot, said COO David Gordon, the farmworkers cultivate cannabis for the production of oil extracts and related products. The company and the co-op share the profits.

“It’s intended to be a win-win situation,” Gordon told Cannabis Wire. “This isn’t charity. It’s good business, good practice to the benefit of all concerned.”

Still, PharmaCielo does engage in charitable giving. The company established a foundation that will receive quarterly contributions equal to 2% of the company’s pre-tax profits. To date, Fundación PharmaCielo has made donations to residents of the department of Antioquia, including victims of flooding in Salgar and students at Patio Bonito, a two-room schoolhouse in rural Tarso. The foundation will also make contributions to non-profit organizations like War-Torn, which addresses child soldier reintegration, among other things, a significant task given that 17,804 minors (under eighteen) were recruited to participate in the armed conflict.

On its website, PharmaCielo, which has invested $40 million in Colombia and employs more than 150 local people, says that its “inclusive” approach, among other things, “ensures that Colombia’s indigenous communities, which have decades and even centuries of experience cultivating ancient Colombian strains of cannabis for spiritual and medicinal use, have their rightful seat at the table of the cannabis industry.”

Still, just how much local populations benefit from the presence of foreign cannabis companies in Colombia is subject to debate. In an interview with Cannabis Wire, Pedro José Arenas García, Director of the Observatory of Crops and Cultivators Declared Illicit, said that while the legislation passed under President Santos is an important step in the global context, the regulations have not generated economic opportunities among the bulk of the populations most affected by the armed conflict.

Arenas García, whose organization advocates on behalf of farmworkers, indigenous groups, and communities of African descent involved in the production of illicit crops —including cannabis, coca, and opium poppy—praised the former administration for encouraging the global community to harness the benefits of plants instead of banning them. However, he said, most of the communities who were cultivating cannabis prior to the legislation have been unable to enter the legal medical market. This, Arenas García said, is due to a host of factors, including high barriers to entry and the lack of access to the internet, where most of the information about the legislation is disseminated.

Cannabis Policy Under a New Administration

On August 7, less than a week after the PharmaCielo CEO was made a Colombian citizen by presidential decree, a new administration took office, led by the neoliberal conservative Iván Duque Márquez. Though his party, the Democratic Center–“Strong Hand, Big Heart,”— is decidedly pro-business, it has a different stance on drug policy, as well as on the country’s peace negotiations. As a result, it is unclear how cannabis companies will fare over the next four years.

On the peace treaty front: While serving as a senator of the Democratic Center party, Duque Márquez campaigned against the plebiscite for peace in 2016. The president also pledged to make “corrections” to the agreement and has claimed to lack the funds to execute the FARC peace process.

Weeks after his inauguration, President Duque Márquez addressed the peace treaty and his administration’s drug policy in a speech at the UN General Assembly. There, the president pledged to work towards the success of disarmament and reintegration and also thanked the UN for its commitment to the process. However, he went on to say that the Colombian “government received a fragile process on several fronts.” According to him, commitments were made without allocating sufficient resources. For this reason, he requested the financial support of the international community.

Then, Duque Márquez turned to drugs. “The incremental trend of the last five years cannot continue,” he said, referring to the estimated 422,550 acres under coca cultivation in Colombia–the highest number ever recorded.  The coca, converted into paste, is primarily smuggled into the United States and Europe. “If we want peace to shine in Colombia,” the president said, “we need to defeat drug trafficking.”

Still, Duque Márquez’s speech at the UN was not strictly prohibitionist, as he made it a point to add that Colombia “must do more in terms of prevention and care for addicts from a public health approach.” And he also spoke of the need to ensure that “all regions of the country, in particular those that have been hit by violence, receive the resources and investments that generate hope.”

Notably absent from his address: Cannabis.

Yet, about three weeks prior to making that speech, the Duque Márquez administration drafted a decree that would enable police officers to confiscate any amount of illicit substances carried in public, including cannabis, even though, in 1994, the Constitutional Court decriminalized the possession of up to twenty grams. The new president’s initiative would also allow the police to search people and their property for drugs. In Bogotá, demonstrators who protested the decree were met with law enforcement and, in some cases, arrests and tear gas.

Notably, Duque Márquez also signed on to a US-led “Global Call to Action on the World Drug Problem,” which calls upon countries to develop plans to cut the supply of illicit drugs by strengthening multinational law enforcement cooperation. In doing so, the president stepped away from his predecessor, who, since at least 2011, spoke in favor of revising the global drug strategy. Santos proposed decriminalizing small growers and consumers to concentrate efforts on large drug traffickers and organizations that facilitate money laundering. Under the former president’s term, Colombia also temporarily abandoned aerial spraying of illicit crops, following the World Health Organization’s warning that the chemical used, sold by Monsanto under the brand name Roundup, could be carcinogenic. Nevertheless, shortly before leaving office, the Santos administration signed off on a return to aerial spraying, albeit with drones. President Duque Márquez also favors forced eradication.

While speaking before the Security Council meeting in New York last month, Jean Arnault, Head of the UN Mission in charge of verifying the application of agreements reached with the FARC in Colombia, underscored that the majority of ex-members in the reintegration phase “have no clear economic prospects beyond the basic monthly income.” The transition of former FARC members to civilian life is a process that involves about 13,000 people. The financial help they receive, on which the stability of the peace process depends, amounts to about $200 per month and is slated to end in August 2019.

In order for the treaty to be successful, Arnault added, Colombia needs “to connect reintegration in a much more direct way with local development, to empower local authorities, and to establish more systematic links with the private sector, universities, and other actors that are willing and able to help the long-term reincorporation.”

Immediately after Duque Márquez’s victory, PharmaCielo issued a statement congratulating the young president on his successful campaign. In it, the company’s CEO — and newly-minted Colombian citizen — underscored his hopes for cooperation: “Our nascent industry relies on the leadership of President-elect Iván Duque to help maintain the momentum that has been established over recent years.”

All in all, the Duque administration has given mixed signals regarding cannabis policy. Indeed, it’s hard to discern whether consumption is being treated as a matter of public health and human rights, or criminal policy.

Still, executives from three of the Canadian companies who’ve made inroads in Colombia told Cannabis Wire recently that they have no concerns about the new administration. “We are in complete alignment,” said Bibian Rojas, of Canopy Growth Corporation. “The new administration wants new jobs, more exports, more taxes, innovation — we provide all of that.”

PharmaCielo’s COO David Gordon echoed her point and added, “Let me put it this way: So far, we haven’t changed any strategies or plans.”

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Cannabis Wire
Cannabis Wire
Cannabis is rich territory for serious journalism. Legalization raises urgent questions about regulation and law, technology and taxation, science and business, criminal justice and individual liberties. It stands at the intersection of a booming billion-dollar industry and promising advances in medicine, all while remaining federally illegal.

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