Cannabis Industry Finds Hospitable Terrain in Colombia
As noted in our last blog posting, the U.S. is witnessing tremendous momentum toward the legalization of medical and recreational cannabis. Thirty-three U.S. states have legalized some type of cannabis use. We are expanding our observations beyond the U.S. In our prior blog, we reported on developments in Israel. In this our second of the series, we will focus on Colombia situated in the northwest of South America.
The green wave has arrived in Colombia. Many of the country’s politicians are responding favorably, going out of their way to welcome foreign direct investment. There is so much about Colombia that is attracting foreign investors:
- The country sits on the equator ─ this means the country generally receives 12 hours of light and 12 hours of night. These conditions are ideal for growing cannabis and are what other indoor operations try to mimic within greenhouses with artificial lighting, etc.
- The country has a strong agricultural sector. Its major export is flowers. Seven out of 10 flowers in NYC come from Colombia. So, the country’s experienced and low cost work force makes it an attractive place to operate.
- Low cost of production. At a recent CannaGather event in NYC, an investor stated that his company’s Colombia operations produce cannabis at a price of 20 cents per gram. This is in comparison to the Canadian public companies whose costs average 6 to 10 times higher. Canadian producers with higher cost structures are regularly valued between $1 and $10 billion, but Colombia-based producers have been able to achieve comparable production capacities with capital investments as low as $15 million.
Based on the above factors, Colombia appears to offer a favorable environment for cannabis business entrepreneurs.
Noam Hirschberger, CFA, CVA
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