Is Colombia Poised to Become the Saudi Arabia of Cannabis?

The Motley Fool, by Matt Smith, May 8, 2019

The strife-torn South American nation of Colombia has embarked on an ambitious undertaking to reinvigorate its weak economy and reduce its dependence on oil by becoming a leading global producer of medical marijuana products. For a wide variety of reasons, this may not be as daunting as it seems. Colombia, by virtue of its equatorial climate and natural diversity, possesses a significant comparative advantage over Canada and other jurisdictions where cultivation is legal.

Outstanding competitive advantage

These include a wide range of climate zones with consistent, steady sunlight over 12-hour periods, stable rainfall, and a temperate climate. That means there is no need for high-cost climate-controlled greenhouses, because open-air cultivation is practicable. This — along with significantly lower start-up, labour costs and other operating expenses coupled with a long-established, deep multi-generational history of marijuana and cut flower cultivation — further enhances Colombia’s comparative advantage. …

Putting it together for investors

A company that stands out is PharmaCielo (TSXV:PCLO), which was among Colombia’s first licensed producers. Its headquarters and principal cultivating facility is in the secure surrounds of Rionegro, a town to the north of Colombia’s second-largest city Medellin. This is a 27-hectare property with 12 hectares of open-air greenhouses, which can produce 12 million cuttings weekly to supply the planned 600 hectares of contract cultivation.

PharmaCielo plans to use a unique operating model where its facility at Rio Negro will produce high-quality, stable plants to be utilized by its contracted growers. It is also building a research and processing facility, which is expected to cost around $5 million. It recently received its ISO 9001 Quality Assurance Certification for its medical marijuana cultivation and processing operations. PharmaCielo has a first-mover advantage in Colombia and once its full potential, including its business to contractor operational model, is recognized, its market value should soar. …

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