A new report from Bloomberg shows that Canada is facing a significant loss of cannabis exports to Colombia. Smaller companies are having more success in the South American country, which has emerged as an unlikely player in the global market.
The “cbd stocks to watch” is a cannabis company that has seen a significant increase in its stock price. The company is looking to challenge the Canadian dominance of the cannabis market.
Canada became the world’s biggest exporter of dried cannabis flower in 2020. Today, Canada is looking over its shoulder at a strong rival in Colombia, which has just implemented legal reforms that position it to become the world’s cannabis leader. Colombia was already well-known for its well-developed infrastructure, distribution, and exports of some cannabis products such as medical oils and extracts, but it had a gaping hole in its exports by prohibiting the export of dried cannabis flower. On July 23, 2021, Colombian President Ivan Duque issued a legislative order lifting the ban on the export of dried cannabis flower, creating a major worldwide market and a possible windfall for Flora Growth Corp. (NASDAQ: FLGC) (Profile) and its global operations. Most significant companies, including Canopy Growth Corporation (NASDAQ: CGC), Tilray Inc. (NASDAQ: TLRY), Cronos Group Inc. (NASDAQ: CRON), and Sundial Growers Inc. (NASDAQ: SNDL), support the mainstream global expansion of legal cannabis.
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Colombia made history when it changed its cannabis regulations to allow for the export of dried cannabis flower.
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Flora’s Cosechemos cannabis production facility in Bucaramanga, Colombia, has a 247-acre land package and an excellent cannabis-growing environment.
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Strong yields per cannabis plant come from free sunshine and water from natural onsite springs, as well as optimal growing methods; costs just $0.06/gram compared to $1.89 in North America.
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Flora takes use of Colombia’s low-cost cannabis farming to sell cannabis and its derivatives to a diverse range of luxury brands and goods.
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Flora has over 280 items, cosmetic and pharmaceutical production licenses, and over 2,500 distribution locations across Latin America and the United States.
Colombia: A Rising Star in the Cannabis Industry
Colombia’s rise in the legal cannabis sector has been highlighted by near-perfect growing conditions, skilled labor, and favorable laws since the nation initially authorized the cultivation of medicinal cannabis little over five years ago. However, dried cannabis flower, or buds, could only be processed for export as a medical oil or extract until recently, because to concerns that flowers might end up on the illicit market. According to President Duque, the new legislation puts Colombia “in the forefront in terms of regulatory competitiveness,” allowing the nation to enter new sectors such as food, beverages, cosmetics, and textiles, in addition to pharmaceuticals.
Duque cited experts while signing the decree, claiming that legal cannabis would constitute a $64 billion worldwide market by 2024, and that it will serve as a vehicle for “economic reactivation” in Colombia after the COVID-19 epidemic. Colombia’s Minister of Justice Wilson Ruiz stated, “According to a 2019 research, the cannabis industry created 17.3 agricultural employment per acre in Colombia.” Colombia’s government seems intent on propelling the nation into global leadership as a legal cannabis exporter in order to improve the economy and generate a large number of employment at home.
Flora Growth Corp. (NASDAQ: FLGC), which is focused on cannabis growing and processing activities in Colombia to serve international markets, may benefit from these conditions. The new order may be a gold mine for existing licensed producers, particularly given the cheap production costs and the fact that dried cannabis flower accounts for the vast bulk of sales in developed nations like the United States, Germany, the United Kingdom, and Australia.
Flora is a global cannabis consumer packaged goods (CPG) company with a vast international distribution platform, with headquarters in Miami and already a globally recognized house of brands. Flora is positioned to be one of the world’s lowest-cost cannabis producers and has strategically positioned itself as a global cannabis consumer packaged goods (CPG) company with a vast international distribution platform. Flora has over 280 items, cosmetic and pharmaceutical production licenses, and over 2,500 distribution locations across Latin America and the United States.
Flora has also signed two different Letters of Intent (LOIs) for major acquisitions and is establishing partnerships to broaden its distribution area by utilizing the networks of others. Flora has positioned itself to be agile and asset light, enabling it to collaborate with the best of the best in their respective channels to bring product to market and generate additional revenue while reducing the risk of entering new jurisdictions and channel segments. In this context, Colombia’s regulation change is expected to be a revenue booster and growth accelerator. The holy grail of Wall Street is soaring sales with a high-margin product.
A Twenty-Five-Fold Advantage
Outdoor growth is much less costly than greenhouse production, which is no secret in the business, but Flora has taken it to a new level in Colombia. Free sunshine and water in three pilot plantings on 4.94 acres at Flora’s Cosechemos farm allowed for the testing and optimization of 30 non-psychoactive (high-cannabidiol or CBD) cannabis cultivars, resulting in a cost basis of only $0.06 per gram. This compares to $1.89 per gram in North America, based on an average of four large licensed producers in the region.
Flora is 60 percent less expensive than its Colombian counterpart. Flora quickly signed a statement of intent with an international distributor to provide dried flower and derivatives after the first commercial harvest and acquiring the necessary import permits in response to the revised Colombian regulations. Flora hopes to begin selling medical cannabis and over-the-counter CBD products to Australian markets with that crop, thanks to a collaboration with Evergreen Pharmacare.
At Cosechemos, production of high-CBD cannabis strains is already well underway, with preparations being made now to grow strains rich in THC, the psychoactive component of cannabis. Furthermore, an extraction lab built to EU-GMP standards within the plant is anticipated to be finished this quarter, for which Flora will apply for EU-GMP certification. Flora will be positioned to quickly profit on the huge global dry cannabis flower market sector that was previously inaccessible as soon as it obtains the necessary documentation to export its cannabis goods.
Climate is ideal, and there is plenty of land available.
The climate in Colombia is perfect for cannabis production all year, and Flora owns some of the best agricultural land in the nation. Flora’s Cosechemos farm is 247 acres in Bucaramanga, Colombia (10.8 million square feet). Flora also owns 5,268 acres (230 million square feet) in Puerto Boyacá, Santander, about 170 miles southwest of Bucaramanga, which she licensed.
Flora’s approved property in Colombia’s climate is ideal for year-round cannabis production due to its location on the equator. The land gets 12.8 hours of sunlight each day, has very rich soil, and has ideal wind conditions (3 mph average), reducing the danger of contamination from other plants. Flora has no water expenses since the area contains six natural spring water sources.
Colombia is the world’s cut-flower capital, as well as a major producer of coffee, bananas, and other crops, resulting in a highly trained agricultural labor force that earns around one-tenth of its American counterparts. These characteristics combine to allow for a minimum of three harvests each year, which is up to three times more than its North American counterparts.
New Product Marketing Opportunity
Colombia is eliminating marketing limitations on its domestic cannabis goods, unlike Canada and the United States, where businesses must depend on word of mouth for exposure and branding. Flora will use advertising across its whole product range to boost sales at its more than 1,500 distribution locations throughout Colombia. It may also help Flora bring Avaria’s KaLaya, an award-winning pain cream sold throughout Canada, to Colombia and the Americas, as part of a LOI with Avaria.
The new Colombian laws permitting cannabinoid-infused food and beverage open the way for the Flora’s Kasa Wholefoods food and beverage business to create new products and introduce existing ones. The new laws coincide with Kasa’s recent signing of a distribution agreement with Importaciones y Asesorias Tropi S.A.S., Colombia’s largest CPG distributor, which is expected to bring in $10 million in annual revenue for Flora by delivering premium and sustainable canned products to Colombians, with the possibility of expanding the product line in the future.
Follow the Money: Investing in Cannabis
Duque’s prediction of a $64 billion market in 2024 seems to be in line with other analysts’ predictions. According to Fortune Business Insights, the worldwide cannabis industry will reach $97.35 billion by 2026, with a 32.9 percent compound annual growth rate. It’s safe to say that the legal cannabis industry is still expanding at a breakneck pace, fueling optimism among big companies across the globe.
Canopy Growth Corporation (NASDAQ: CGC) is a once-in-a-lifetime opportunity for long-term investors who have seen it develop from a small business called Tweed Marijuana to the industry’s 700-pound gorilla, which just acquired Supreme Cannabis. Supreme was purchased for $435 million by Canopy, with the 7ACRES brand and a production site in Kincardine, Ontario, with a reputation of producing quality flower as the primary rewards.
Tilray Inc. (NASDAQ: TLRY), a global cannabis lifestyle and consumer packaged goods company, has completed a “business combination” with Aphria Inc., combining two highly complementary businesses to form the industry’s leading cannabis-focused CPG company with the largest global geographic footprint. With a strong, flexible balance sheet, healthy cash position, and access to financing, the merged business will operate as Tilray, with the strategic presence and operational scale required to compete more effectively in today’s consolidating cannabis industry.
Another major, Cronos Group Inc. (NASDAQ: CRON), is seeking to expand by investing in others. In June, a Cronos affiliate decided to exercise an option to purchase a 10.5 percent interest in PharmaCann, one of the country’s biggest vertically integrated cannabis businesses. Under the VerilifeTM brand, PharmaCann runs six manufacturing facilities and 23 dispensaries throughout six states. This is in addition to its organic growth efforts, such as the recent introduction of SOURZ by SpinachTM, a new line of dual-flavor cannabis candies.
Sundial Growers Inc. (NASDAQ: SNDL) is also participating in the merger and acquisition (M&A) game as a direct part of its two-prong strategy. M&A on one hand, Sundial’s other business is as a licensed producer of small-batch cannabis using state-of-the-art indoor facilities. Sundial completed its latest acquisition in June, finalizing its buyout of cannabis retailer Inner Spirit Holdings Ltd. for about $131 million. The acquisition gave Sundial the well-established Spiritleaf franchised and corporate-owned stores, representing Canada’s largest single-brand recreational cannabis retailer with 100-plus stores across six provinces.
The global cannabis industry is transitioning from pure speculation to solid fundamentals and viable investment possibilities. In virtually every industry, soaring sales and huge margins are significant predictors of future success. When you combine these characteristics with the growing cannabis industry, you might be in for some eye-popping returns.
