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Cannabis Country Report Colombia – How to get a license? How to export products abroad?

January 10, 2022 | Category : Analysis and opinion | Posted By : Deon Maas

This information serves as an introduction to potential cannabis growers in Colombia. This information is relevant to all big growers. The information was correct at the time of publication

Cannabis Licences in Colombia

The Colombian government allowed the growing of medicinal cannabis in 2016 with the 1787 bill/ 613 decree. The first licenses were issued in 2017. Subsequently there has been some amendments to the laws, some improving conditions for the growers and some not improving conditions for the growers, but none affecting the legality of growing.

After a disastrous 2020 where the three leading cannabis companies in the country all showed losses of more than USD$20 million each, in 2021 the government lifted the ban on the export of cannabis flowers. The changes in the law made local growers more competitive in the European and North American markets. This stimulated the industry and put it’s laws on par with several other countries. It also lead to an influx of new monetary investment in a market that regressed because of restrictions. The decree allowed for the domestic commercialisation and industrial use of CBD into additional nonmedical industrial product categories, such as wellness, cosmetics, functional foods and beverages and the expansion of medical cannabis distribution across most pharmacies in the country.

The government declared the industry a Project of Strategic National Interest, which means that it is prioritised when it comes to legislation, licenses, and regulations, proving that they are serious about future growth.

  • The country enjoys 12 hours of sunlight almost all year round and the height above sea level means fewer pesticides are required to stem disease.
  • Costs to produce are estimated between US$0.06 and $0.40 per gram of dry cannabis flower.
  • Licenses vary from US$15 000 – $20 000
  • Initial investment to start growing is estimated at US$100 000
  • Extensive growth knowledge is available thanks to decades of illegal cannabis and coca growing as well as a huge flower export market.
  • Local farmers who have supplied the black market are eager to become legitimate businesses,
  • Companies that receive cannabis cultivation licences in Colombia must allocate at least 10 per cent of their production to small farmers, Indigenous people and other groups who have been affected by the country’s drug violence.
  • Almost 700 licenses were issued by the end of 2020
  • Due to government bureaucracy in Colombia, it can take months or years for start–ups to secure the proper permits and licenses.
  • Due to the extended drugs war in Colombia, there is a lot of resistance in certain quarters to medicinal cannabis growing. Some of these sceptics serve in the government and in the departments that issue the licenses 
  • The following departments play a role in granting licenses: Ministry of Health, National Narcotics Fund, Ministry of Justice, Ministry of Agriculture, INVIMA and the Technical Quota Group 
  • The industry presents a multitude of challenges, especially banking. Cannabis is labelled as a schedule one substance under American Federal law and it makes international wire transfers nearly impossible, since most SWIFT transactions go through an American bank. Local banks in Colombia are wary of this new industry and the reputational hazards it may bring with it 
  • The Colombian cannabis industry association is called Asocolcanna 
  • Colombia does not make distinctions between “cannabis” and “hemp”, but uses the term “psychoactive” at the 1% THC content threshold 
  • There is a significant backlog of applicants and a shortage of growing quotas

The licensing process: There are four different licenses to apply for: 

  • The Manufacture of Cannabis Derivatives. This is for the manufacturing of by-products for use within Colombia, manufacture of by-products for scientific research, manufacture of psychoactive cannabis by-products and manufacture of by-products for export. Practically it means the manufacture, acquisition in any form, import, export, storage, transport, sale and distribution of psychoactive and non-psychoactive by-products that contain cannabis for medicinal and scientific purposes. This application is done by the Ministry of Health and Social Protection. 
  • Sourcing and Planting Cannabis Seeds. This is for sale, supply or scientific purposes. It is used for acquisition in any form, import, storage, sale, distribution, possession and final disposal as well as export and use for scientific purposes. The issuing authority is the Ministry of Justice and the Law.
  • The Cultivation of Psychoactive Cannabis Plants. To produce seeds for planting, to produce buds, to manufacture by-products, scientific purposes, storage and final disposal. Practically it means: planting and acquisition of seeds, storage, sale, distribution and final disposal as well as export and use for scientific purposes. The licensing authority is the Ministry of Justice and the Law  
  • The Cultivation of Non-Psychoactive Cannabis Plants. Activities involved in growing cannabis plants whose THC content is lower than 1% in dry weight. The authority is the Ministry of Justice and the Law. 

For the license, Manufacture of Cannabis Derivatives, the following paperwork is required: 

  • Proof that you have paid the processing fee 
  • A personal declaration of your income signed by the legal representative and the accountant or auditor as well as a copy of your professional accreditation 
  • The Company’s statement of purpose, signed by its Technical Director 
  • The Technical Director’s degree or diploma as an accredited chemist or chemical engineer 
  • Proof of the Technical Director and the Deputy Technical Director’s professional accreditation 
  • The property registration number or cadastral certificate. If you are not the owner of the property, you must include a document proving you are using it legally 
  • A plan of action of the company’s operations 
  • A description of the location where the operations will take place and equipment that will be used 
  • A security protocol 
  • An accreditation guaranteeing that the end product meets the required standards 
  • A plan of action for exportation 
  • A plan of action for the completion of the operations after the license expires. 

Therefore:

  • Ministry of Health and Social Protection’s Medicines and Health Technologies Division issues the licence to manufacture cannabis by-products, conduct supervision and assessment visits. 
  • The Ministry of Health’s National Narcotics Fund oversees administrative and operational control of activities related to the use of cannabis and its by-products, conduct supervision and assessment visits. 
  • The National Food and Drug Surveillance Institute and Colombian Agricultural Institute controls the finished products made from psychoactive cannabis once the licence is issued.  
  • The Ministry of Justice and the Law’s Subdivision for the Control and Supervision of Chemical Substances and Narcotic Drugs, issues licences to use seeds for planting and to grow cannabis plants. They exercise administrative and operational control of activities related to the use of seeds for planting and the growing of cannabis plants 
  • This all happens under the watchful eye of the National Police 

Licenses are non-transferable and valid for five years. Companies obtaining licenses to grow non-psychoactive hemp will secure licenses for 10 years with the potential to renew them. 

Colombia has a quota system that allows a certain amount of cannabis to be grown and processed. Companies need to apply for a quota. Commercial quotas are only granted on legitimate demand. 

The regulation system is very strict. They require the use of seed-to-sale software such as Cannavigia. Producers must keep records of every step of cultivation and manufacturing. Testing for purity and potency must be conducted through accredited laboratories. 

How it works: 

We interviewed an investor who is a role player. She wishes to remain anonymous.

“When we first decided to enter the market, we decided to do everything ourselves. Keep it in-house so to speak, save money and use the whole experience as a way to learn more. What a joke of an idea. There must have been five or six different departments or organisations that needed to give the okay. It’s South American bureaucracy, so everything involved piles of paperwork and no-one is in a hurry to get anything done. We went in with money, so we were okay. But if you kick off with no money and want to get credit lines and stuff like that, you will find little to no support. There were also a lot of chancers, people who pretended to know what’s going on but didn’t or pretended to be connected but weren’t. We eventually settled on hiring a lawyer. They tell you that the license is cheap, and it is compared to most other countries, but the cost to get the license just kept on piling up. We also learnt that lawyers know the law, but not necessarily how to do business. Eventually we faced two possible ways of entering the market, having run out of patience with getting our own license. We could invest in another company, which isn’t the way we do business – with us it’s all or nothing. Alternatively we could buy a shelf company that already owned a license. We ended up doing that. It was expensive, but we jumped the queue and skipped the bureaucracy.” 

Some background on Colombia

Longform name: Republic of Colombia/Republica de Colombia
Legislation: Presidential republic
Ruling party:  Partido Liberal Colombiano
Currency: Peso

History

Cannabis has been cultivated in Colombia since the late colonial period, when hemp was grown for its industrial fibres. However even at that early state, cannabis was recognized for its psychoactive uses, but these remained largely confined to the fringes of Colombian society, and discouraged by the Catholic church and national law. By the 1920s, possibly spurred by wider cannabis use in the Caribbean, recreational use of cannabis emerged in the Atlantic ports, particularly Barranquilla, leading the Colombian government to further restrict cannabis in 1939 and 1946. In the 1960s and 1970s, North American cannabis traffickers made inroads into Colombia, leading to booming production in the Sierra Nevada de Santa Marta and the Urabá peninsula, where cannabis was smuggled in the region’s massive northward shipments of bananas.  

Geography

Geographical location:Northern South America 
Borders:Brazil, Ecuador, Panama, Peru and Venezuela 
Coastline:Flat coastal Lowlands, central Highlands, high Andes Mountains, Eastern Lowland plains 
Agricultural land:37.5% 

Weather

Natural hazards:Highlands subject to volcanic eruptions, occasional earthquakes, periodic droughts 
Weather:Tropical along the coast and Eastern plains, cooler in the Highlands
Average annual rainfall is 2,630 mm but there is significant variability across the country. The West Pacific coast and in the Andean interior receive the highest rainfall amounts (approximately 6 mm–7,000 mm per year), while the drier steppe climates in the north and south west receive less than 500 mm per year 

Economy

Natural resources:petroleum, natural gas, coal, iron ore, nickel, gold, copper, emeralds and hydropower 
Median age: 31.2 years 
Major infectious disease: bacterial diarrhea, dengue fever, malaria, yellow fever 
Unemployment aged 15-24:20% 
GDP growth 2017: 1.36% 2018: 2.51% 2019: 3.26% 
Economy contraction:6.8% in 2020 
Cannabis sector jobs per hectare:17.3
Agricultural products: sugar cane, milk, oil palm fruit, potatoes, rice, bananas, cassava leaves, plantains, poultry and maize 
Industries: textiles, food processing, oil, clothing and footwear, beverages, chemicals, cement; gold, coal, emeralds 
Labour force:19.309 million  
Unemployment: 10.5% 
Export partners: United States, China, Panama, Ecuador  
Airports with paved runways: 121 
Airports with unpaved runways: 715 
Waterways:18 000 kilometers of navigable waterways 
Major seaports:Atlantic Ocean: Cartagena, Santa Marta, Turbo 
Pacific Ocean: Buenaventura 

Environmental Issues

Deforestation resulting from timber exploitation in the jungles, illicit drug crops grown by peasants in the national parks, soil erosion, soil and water quality damage from overuse of pesticides and air pollution especially in Bogota from vehicle emissions. 

Security Issues

The National Liberation Army (ELN) and Revolutionary Armed Forces of Colombia (FARC) are two of the major terrorist organisations currently active in Colombia. Colombia is an illicit producer of coca, opium poppy, and cannabis. Production is growing. A significant portion of narcotics proceeds are either laundered or invested in Colombia through the black market peso exchange.  

Links

https://asocolcanna.org/

http://www.cicad.oas.org/Main/Template.asp?File=/fortalecimiento_institucional/planesnacionales/fichas/colombia_eng.asp 

https://www.unodc.org/pdf/andean/Part3_Colombia.pdf

https://sgp.fas.org/crs/row/R44779.pdf

https://www.ica.gov.co/

https://www.emergobyul.com/resources/colombia/invima

https://asocolcanna.org/wp-content/uploads/2021/07/DECRETO-811-DEL-23-DE-JULIO-DE-2021.pdf

https://www.tni.org/files/publication-downloads/policybrief_52_eng_web.pdf

https://www.minsalud.gov.co/English/Paginas/Regulations-For-Medicinal-Cannabis-In-Colombia-Are-Ready.aspx

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