Countries like Australia, Canada, Germany, and Israel have been dominating headlines as major game players in the cannabis industry as of late, but South America’s emerging market is beginning to capture the attention of investors.

In fact, South America is being touted as one of the most interesting regions for cannabis investments. Although larger investment opportunities may be on offer elsewhere, Uruguay, Peru, Chile, and Colombia are quickly catching up.

So, why are investors so captivated by South America’s cannabis market? Let’s find out.

South America’s cannabis market is expected to be very lucrative

“Key South American markets” are anticipated to bring in $125 million this year. That’s not the most exciting part, however.

Legal cannabis sales throughout the region are forecast to hit $776 million by 2027, based on recent data published by ArcView Market Research. Arcview is one of the most informed analyses and projections groups for the cannabis industry and their most recent report was released in partnership with BDS Analytics.

Uruguay is piquing investor interest as the world’s first country to fully legalize cannabis, despite the fact the country’s market is firmly managed by the government.

Medical cannabis legalization laws have been passed in many other South American countries, including Peru, Chile, and Colombia, where Canadian investors are flocking towards in the hopes of getting a slice of the pot pie. PharmaCielo is one of a handful of Canadian cannabis companies keen to invest in Colombia.

South America’s cannabis market has developed very recently

Evolution in South America’s cannabis market has been noticeable in recent times.

Investors are captivated by Uruguay’s and Colombia’s markets, in particular, with these countries embracing legislation that permits the creation of cannabis-focused businesses.

The CEO of MedroPharm partner Greenfields Health Care and co-founder of Symbiosis, Gastón Lepera, describes Uruguay’s major advantage down to the country being “secular” and “liberal.”

Greenfields Health Care has started taking steps towards Brazil’s medical cannabis market.

With Colombia’s hot climate and sun-drenched landscape, the country boasts the ideal environment for cannabis cultivation.

“Meanwhile, Uruguay’s land is rich and fertile and wind conditions are also great. It is also one of the most secure countries in the region,” said Lepera.

South America’s cannabis market has a cost advantage

Cannabis industry investors are also attracted to the low labor costs and affordable land acquisition costs in South America, as opposed to the labor and land costs in the U.S., Canada, and Europe.

Developments in South America’s cannabis market are pretty recent, according to Eduardo Blasina. Blasina is the director of Uruguay’s place of exhibition for the plant – the Cannabis Museum of Montevideo (MCM).

“Until the system was really rolled out and cannabis [was] being sold at pharmacies, foreign capital was hesitant. Only now that the system is in place and working [are] investors manifesting a real, tangible interest,” Blasina said.

The slow progression of Argentina, Brazil and Chile’s medical cannabis markets mean that Uruguay looks set to become the primary cannabis export hub for southern Latin America.

Although Canada is poised to fully legalize cannabis on July 1, 2018, the cost advantage is far more obvious in South America, putting the continent on the map as the next up-and-coming player in the global cannabis space.