Colombia is piquing the interest of Canadian cannabis investors

Home to some 50 million people, Colombia is expected to become the nucleus for weed cultivation and medical cannabis refinement

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The turf on which Pablo Escobar once used to dominate the drug trade is expected to become the next major location for cannabis production.

Lately, there are numerous Canadian cannabis companies investing in Colombia, where the cost of weed production is significantly lower than it is in the Great White North.

When you compare the five cents it costs to produce a gram of bud in Colombia to the $1.50 it costs in Canada, it’s pretty clear why Canadians are pouring their pot funds into the South American country.

Unlike Escobar’s dodgy drug dealings, the Canadian cannabis companies investing in Colombia are doing it legally.

Seven Canadian cannabis companies investing in Colombia

So far, seven licensed cannabis producers in Canada have kickstarted business operations in Colombia.

In excess of $100 million has been invested by those Canadian cannabis producers, which has garnered a lot of media attention recently due to its emergence as a new pioneer of cannabis business. This information is based on a review of the company reports.

“We understand the pain of the war on drugs. That war was here,” said the managing director of Canopy Growth subsidiary Spectrum Cannabis Colombia, Bibiana Rojas.

Canadian cannabis producers want to dominate the global market

CIBC World Markets, the capital markets division of one of the top banks in the Great White North, says that the country’s hunger for legal weed is on-par with its hunger for wine.

During a phone interview in the capital Bogota, Roja said that CIBC plans to pour $60 million in investment funds into the development of cannabis production facilities and greenhouses, as well as weed-focused research in Colombia.

“For me, cannabis is a piece of hope,” said Rojas, because Canada is “transforming something that caused so much pain in the past” by funding illegal armed groups into “a crop that can bring health and wellness to Colombians.”

Canadian companies investing in Colombia must consider political risks

Canopy Growth’s affiliate company must consider the political risks associated with Canadian cannabis companies investing in Colombia. All cannabis countries in the country are currently producing cannabis oils and medical weed products, such as tinctures and capsules, as opposed to illicit smokeable flower.

Medical cannabis exports have been legal in Colombia since 2015. However, it is still illegal to consume cannabis for recreational purposes in the South American country.  Since Colombia boasts such a perfect climate for cannabis cultivation, skilled agricultural workers and fairly low wages compared to Canada, there’s no wonder why Canadian firms have their sights set on Colombia.  

Home to some 50 million people, Colombia is expected to become the nucleus for weed cultivation and medical cannabis refinement. Eventually, Canadian investors hope that the bud produced in Colombia will be exported to Latin America, where some 630 million people reside.

Weed investors in the Great White North aim to integrate a model similar to the one that has been adopted by mining and energy firms. Those particular models depend on the Toronto Stock Exchange for capital-raising purposes.  

Despite the success potential of Canadian cannabis companies investing in Colombia, political risks are plaguing the minds of some cannabis analysts.

“I would be very cautious,” said Robert Tetrault, who is a portfolio manager specializing in monitoring the legal weed sector for Winnipeg-based Canaccord Genuity Wealth Management. “As a shareholder, do you want to find out your facility in Pablo Escobar’s home turf just got seized or there are now tariffs, added costs or corruption?”

Spokespeople for the Export Development Canada (EDC) and the Canadian Commercial Corporation (CCC) say that they have not offered insurance, credit and other services to cannabis companies in Colombia.