The Business Year: Medical Cannabis Colombia Special Report – PharmaCielo
The Business Year Medical Cannabis Colombia Special Report, Published 1Q19
The Business Year has been covering Colombia for seven years, sitting with its top business and political leaders to produce some of the most comprehensive English-language publications available on the country’s economy. We have had the opportunity to see various sectors emerge as growth engines as governments have sought to diversify revenue streams away from oil and gas. And never has Colombia had such a golden opportunity to reshape its future than now, with the horrors of conflict now behind it as a result of the 2016 treaty ending conflict with the FARC rebel group.
It is interesting, then, that one sector flourishing in the post-conflict era is medical cannabis, a natural healer that ironically emerges at the end of a fight fueled by illegal drugs.
Colombia’s medical cannabis industry is rising at a time when questions have arisen about how the state will drive rural development without relying on hydrocarbons, a now price-unstable commodity that helped the country double its GDP per capita between 2005 and 2014. Praise can somewhat be given to former president Juan Manuel Santos, who legalized the cultivation, manufacture, and export of medical cannabis in 2015. His successor, Iván Duque, has taken a tough stance on drugs that, fortunately for the many firms already operating within the medical cannabis space in Colombia, no longer appears to threaten the nascent sector.
Indeed, assistance at the government level is forthcoming, with ProColombia, the executive branch’s export promotion agency, believing that the country can capture one-fifth of the global market for medical cannabis before long. The sector is expected to be worth USD58 billion by 2025. … (continued)
No Place But Up
Interview with Federico Cock-Correa, President & CEO, PharmaCielo Colombia Holdings SAS.
“If the government plays its cards right, it can help major firms propel a nascent industry into one of Colombia’s top-five exports.”
What major achievements did you have in 2018?
2018 was one of the most important years for PharmaCielo to date because we received all the licenses required to start the planting, evaluation, and research of cannabis. It was a great year, and our activities in 2018 laid the groundwork for some significant achievements in 2019, including PharmaCielo Ltd., our parent, becoming a publicly traded company on the Toronto Venture Exchange (TSXV:PCLO) and one of only two companies to receive approval for licensed strains from the Colombian Institute of Agriculture (ICA), which we will be able to commercially produce for oil extraction to meet the needs of domestic and international markets alike. PharmaCielo also announced new business initiatives in Mexico and Italy to establish global operations in partnership with our highly skilled Colombian operation.
How does your channel distributor model for B2C sales work?
It is a new business, and we plan to have different models for different countries, depending on the licenses and requirements of each country. We have no plans for direct retail sales; our focus is to sell through authorized medical and health and wellness channels. In Colombia we are piloting medical and pharmaceutical-grade products , including phytotherapeutic and cosmetic lines. At the same time, we are working directly with pharmacies and medicinal clinics to better understand and meet the health and wellness needs of the public. We have committed to begin sales in 2019, including international and domestic markets, assuming regulatory structures will allow. We have already announced our intentions with international markets such as Mexico and Italy, the gateway to Europe as a whole, and we fully expect that it will also be possible to start domestic sales in Colombia in 2019. Of significance for all markets is the differentiation between cannabidiol (CBD) and tetrahydrocannabinol (THC). The World Health Organization (WHO) recently confirmed that CBD should not be considered a regulated international substance, and as its medicinal value continues to be demonstrated on a daily basis, it is a key opportunity for industry growth throughout the world.
What is the potential for the industry as a driver of economic growth in Colombia?
The potential is immeasurable, and cannabis has an opportunity to become one of Colombia’s top five exports, along with coffee and cut flowers. This is largely because of the commitment of the Colombian government to developing the industry in a manner that benefits the country as a whole, as opposed to individual players. Similarly, everyone at PharmaCielo is equally committed to building economies within Colombia even as we build our business. On a macroeconomic level, the combination of global product demand coupled with the cultivation expertise of the Colombian labor force (built largely in support of the cut-flower industry) and the natural, ideally suited equatorial environment all combine to create a substantial opportunity for Colombia. As such, it should be a huge driver of growth, especially as the estimated value of the global market for medicinal products continually increases.
What is the importance of first-mover advantage in the medicinal cannabis market in Colombia?
Many companies now hold a license, but to develop a business both in Colombia and globally, one needs to focus on the agricultural and scientific aspects, both of which include genetics as a necessity of product development. We recently received license approval for 10 strains of cannabis, becoming one of only two companies with that publicly acknowledged authorization. Based on this approval, we can now request permission to commercially produce those strains. Without that registration, a licensed producer cannot begin commercial cultivation. This is a perfect demonstration of the first-mover advantage, an approval process that took years to achieve, beginning with genetic strain identification and later including several months of regulated field trials and rigorous data collection and analysis as part of the approval process. All these are a precursor to the equally rigorous scientific challenge of ensuring product purity in the oil extraction process. At the same time, reinforcing the first-mover advantage, we work closely with the research community and universities, ensuring our medicinal efforts are appropriately focused and provide credibility within the medical community. Combined, these relationships allow us to develop different formulas for different illnesses and medical specializations. All these require a significant commitment of time to build an industry as opposed to a mere business.