How Hemp is Changing the Landscape of Latin America

How Hemp is Changing the Landscape of Latin America

January 31, 2019

If you’ve been following cannabis or hemp industry investments, you know that American CBD companies and Canadian hemp companies have been scurrying to invest overseas. Find out how hemp and cannabis are changing the global marketplace, especially in Latin America with

How Hemp Industry Investments are Changing Latin America

While hemp can grow practically anywhere in the world, hemp investors aren’t just keeping their eyes on countries like Germany, Israel or Australia. Emerging markets like Jamaica are also piquing investment interests, as are countries in Africa, Southeast Asia, and of course, CBD in Latin America.

What makes these regions so interesting to investors? And what kind of growth are cannabis and hemp investors hoping to see through investing abroad?

According to industry analysts and investors, legal sales of cannabis, hemp, and CBD in Latin America are expected to grow from $125 million in 2018 to more than $776 million by 2027. According to a report published by Arcview Market Research with BDS Analytics, “While Brazil and Argentina will far outweigh other countries in terms of spending, Uruguay is the clear leader in early liberalization of its cannabis regulations.” Further, “Any adult citizen/legal resident of Uruguay can now legally purchase cannabis from pharmacies at government-controlled prices intended to undercut illicit market rates and starve out cartel operations there.”

Already recognized as a leader in the Latin American space when it comes to recreational cannabis legalization, its no surprise that Uruguay is one of the most appealing markets to invest. Colombia, stands as a close second and together, both countries are considered two of the top players driving investor interest towards South America according to Vice President of Viridian Capital Advisors, Harrison Phillips. “We have also seen some interest in Brazil,” he told industry experts and reporters.

Shedding a Light on the Blooming Hemp Business in Uruguay

In 2018, Uruguay, a small Latin American country with just 3.5 million people, became the first country in the world to federally legalize recreational cannabis. “Being the first country to nationally legalize adult use, Uruguay has generated significant interest,” said Phillips.

The opportunity presented by Uruguay’s cannabis market isn’t only being recognized by foreign investors. Local regulators and politicians see the benefit of hemp, too. According to the general secretary of Uruguay’s national drug board, Diego Olivera, “beyond the human health aspect, cannabis cultivation and processing involves large economic investments and intensive use of human labor,” he said. “Cultivation not only creates opportunities in the domestic market, but also an opportunity to diversify Uruguay’s exports.”

At the public meeting, Olivera also noted that regulators plan to be thorough in their evaluation of the funding origins of Uruguay’s hemp and cannabis industry, he said. “What we’re seeing is a mix of local entrepreneurs, with diverse amounts of capital, finding a supplement in foreign capital,” Olivera said. “[Investors] understand there are certain favorable conditions in Uruguay, including the general conditions the country offers for foreign investments, the educational level, the legal certainty, the macroeconomic stability and other dimensions that combine with the country’s robust and complete cannabis-related regulations.”

Cultivating Success in Colombia Through Hemp and Cannabis

The other big hemp and cannabis player emerging in South America, is Colombia. While the legal landscape of Colombia differs significantly than that of Uruguay, Colombia has been the recipient of sustained interest by both American and Canadian companies.

While Uruguay’s law focuses on allowing people to use cannabis freely without fear of prosecution as well as reducing illegal activities, Colombia’s laws are geared toward generating economic activity.

According to Lucas Nosiglia, executive vice president and president of Latin American operations for Avicanna, a Canadian CBD biotech firm, “The law [in Colombia] is very responsive, [and the same is true of the] authorities. Everyone wants to make this work; people have faith in the cannabis industry as a large economic driver.”

According to Nosiglia, the government and people of Colombia understand they have a vested interest in the helping grow the cannabis and hemp industries. According to Harrison Phillips with Viridian, “They are looking at the cannabis industry’s development as a way to further bolster themselves as a meaningful player in the South American economy.”

Why are Hemp and CBD Companies Investing in South America?

With so much economic activity overseas, many consumers have been left wondering why their favorite European or American CBD companies are opting to invest in Latin America. The answer, according to Gastón Lepera, co-founder of Symbiosis and CEO of MedroPharm partner Greenfields Health Care, is diversity.

Because of their status as emerging markets and each country’s legislation allows for the development of diverse cannabis businesses, establishing operations in Latin America also makes it easier to develop new and better products. According to Lepera, “In the case of Uruguay, there’s another advantage: it’s a secular, liberal country.”

Other factors catching investor interest, are the lower operations costs in South America versus the US, Europe, or Canada, where the costs of labor and land acquisition have skyrocketed in recent years. Colombia, in particular, also naturally provides the “ideal” climate and sunlight conditions for hemp and cannabis farming.

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