Cannabis companies operating in Colombia can finally apply for a licence to send their dried cannabis flower and extract products abroad.
On Friday, the Colombian government signed Resolution 539 which outlines the regulations and the technical guidelines for commercializing dried flower and medicinal-grade cannabis extracts.
The resolution was signed by Ministry of Justice Wilson Ruiz; Ministry of Health Fernando Ruiz Gomez; Ministry of Commerce, Industry and Tourism Maria Ximena Lombana; and Minister of Agriculture Martha Lucia Rodriguez.
The guidelines come after a February announcement by President Ivan Duque presenting Regulation 227 designed to increase Colombia’s competitiveness in the cannabis industry and allow the commercialization of psychoactive derivatives and dried flower, from seed to export.
In July last year, Duque signed Decree 811 which lifted the prohibition on the exportation of dried flower from Colombia but no regulations nor guidelines had been published until now.
Companies that want to sell their cannabis abroad need to apply at the foreign trade office (VUCE) to get an export licence, but before it is issued, applicants must first get authorization from the regulatory authorities which can take up to 12 months.
Applicants must get approval from the Colombian Agricultural Institute (ICA), the Ministry of Justice and Law, the National Institute for Food and Drug Surveillance (INVIMA) and the National Narcotics Fund.
Despite many companies being able to export CBD distillate and isolates, the export of dried flower was prohibited until now.
According to Fortune Business Insights, dried flower is the fastest growing product segment in the cannabis industry.
Many multinational companies operating in Colombia have commended and welcomed the regulations including multinational cannabis operator PharmaCielo Ltd. (TSXV: PCLO) (OTCQX: PCLOF) which is headquartered in Canada but has its main operations in Colombia via its subsidiary Colombia Holdings S.A.S.
The company said they are expected to begin shipping dried flower during its second quarter this year and increase its import volumes throughout the fourth quarter of this year and 2023.
PharmaCielo also said it is well-positioned to capture market share in Germany, Israel and Australia which are currently supplied by producers in Canada.
“PharmaCielo’s structural cost advantage, sophisticated approach to genetics and processing and ability to scale efficiently give the company a significant competitive advantage,” CEO Bill Petron said.
“Over the past several months, we have strengthened our international sales team, resulting in wins in key markets such as Germany and Eastern Europe and setting the foundation for growth as dried flower is added to our export portfolio,” he added.
In a statement Monday, Kelowna-based producer Allied Corp. (OTCQB: ALID) also commended the Colombian government for describing the technical guidelines around exports.
The company is one of the few with operations in Colombia that have been able to successfully export CBD distillates and is now submitting multiple export requests for dried flower. Allied was asked to provide comments on the regulations in October and November last year.
“Unlike processed products such as isolate, high-quality cannabis flower must come to market with the aesthetics and terpene/cannabinoid profile that the customer wants,” Allied CEO Calum Hughes said.
Other multinational companies, such as Clever Leaves Holdings Inc. (NASDAQ: CLVR, CLVRW) say they are ready to begin taking advantage of this regulatory framework.
The company has already signed commercial agreements to sell flower and expects to start exporting products by the third quarter of 2022.
Clever Leaves is expected to launch its Colombian flower in the German market through its subsidiary Clever Leaves Germany GmbH which has successfully been commercializing the company’s IQANNA brand.
CEO Andrés Fajardo said the company has been preparing for the change in regulations. “Cannabis flower accounts for over 50 per cent of the medical cannabis market in its target geographies and thus represents a significant growth avenue for Clever Leaves in the near future as it will leverage its cost, scale, quality certifications, commercial relationships, and experience selling and exporting flower,” Fajardo said.