Latin America is the world’s largest producer of cannabis, with some countries able to export more than raw material. But what are the opportunities for other industries?
Latin America exports more than raw material. The product that is exported from the region is a derivative of cannabis.
Businesses and governments in Latin America are recognizing the marketing and export possibilities of the region’s nascent marijuana legalization. However, if you want to make a genuine profit, you’ll need to invest in more than just commodity crops.
Following his time at Stanford University’s business school in California, Uruguayan entrepreneur Andrés Israel started researching the fledgling global cannabis sector in order to determine which nations had the most advantageous laws for large-scale production and usage. Canada and Uruguay were the two countries, with the latter allowing recreational usage in 2013.
Israel went home and established the Cannabis Company Builder (CCB) to assist new businesses in taking advantage of Uruguay’s new legal environment. He describes cannabis as a “blue ocean” business with a large development potential and little existing restrictions, with Uruguay at the forefront.
“When I got back from Stanford, I realized that [given the potential magnitude] it’s extremely impossible to predict precisely where it’ll go,” Israel said. He points out that the business world is split on whether the future lies in THC (the psychoactive component of cannabis), CBD (a cannabinoid produced from the plant for therapeutic reasons), or other derivatives or production. “That’s why I devised a flexible and dynamic company strategy or vehicle,” he adds.
His firm seeks to assist businesses in all of these fields by offering services, as well as assisting with licenses, regulations, and certifications. “Sometimes the cannabis business entrepreneur doesn’t know the fundamental basics of the startup sector,” Israel says.
Latin America is well aware of the dangers of a commodity-based economy.
CCB was the first cannabis business advisor in Latin America, forming in 2020 and taking a fee of five to ten percent of the new firm’s stock. Israel and his colleagues have aided 23 companies in the area so far, with the goal of reaching 50 by the end of 2021.
This startup incubator aims to create synergies among its portfolio companies. It has businesses specializing in cannabis growing, drying, creating high-CBD flowers, and sleeping aids. Following the rise in cannabis cultivation and progress in legalizing its usage, particularly in medical, in many Latin American nations, the task today for a fledgling business is to establish an efficient production and supply chain, as well as ensure high-quality harvests.
It must also create new goods, which may include anything from pharmaceuticals to pet products to fabrics. This current cannabis ecosystem is critical to achieving these objectives. “”Cultivation offers a huge potential,” Israel adds, “and many businesses are devoting their attention to it… but only in the near term.” CCB is focused on the medium to long term. We’re aiming for the true total worth.”
Planting cannabis, he said, would imply that in the long run, it would be legal “You must look for the differences in a product. Otherwise, we’ll find ourselves in the same predicament as many Latin American nations that export raw resources while importing completed goods.”
According to New Frontier Data’s Global Cannabis Report: 2020 Industry Outlook, Latin American legal cannabis sales would reach $44.8 billion by 2025, up from $7.3 billion in 2020.
Colombia has attracted investments from Canada for cannabis-based pharmaceuticals and cosmetics, as it follows Uruguay’s legal procedures. President Iván Duque issued Decree 811 in July 2021, allowing the export of cannabis leaves as well as certain commercial and industrial uses for hemp.
Within two months following the order, Tarkus Pharma Lab, a Colombian company, established its first laboratory in the Tocancipá Free Zone in the Cundinamarca department, with a monthly capacity of six tons of cannabis flower for export.
The goal is to create cannabis seeds that are “tailor-made.”
Another local company, Medical Extractos, will establish up shop in the zone to package CBD and THC for export. Colombian businesses, on the other hand, are planning to do more than just export cannabis as a raw material. Henry Muoz, the CEO and creator of Medical Extractos, claims that companies are already working on “excellent” medical goods that are both cheap and exportable.
Muoz claims that his company is investigating the effects of cannabis on Alzheimer’s disease in collaboration with scientists and other businesses. The study is taking conducted in Yarumal, Antioquia, where 8 percent of the population has Alzheimer’s disease owing to a genetic mutation.
His company is also collaborating with the University of Antioquia to enhance cannabis genetics via a spin-off company called Fasplan. According to Muoz, the goal is to create “tailor-made” cannabis seeds to meet the requirements of international clients. His company is also considering combining traditional Colombian cannabis seeds with “typical European plants that are very therapeutic.”
Artificial intelligence (AI) is being used in Argentina to improve plant quality.
Argentina recently received the country’s first legal and medical cannabis crop, which was jointly managed by a commercial company and Argentina’s National Institute of Farming Technology (INTA). Pampa Hemp is a company that imports seeds from Colorado to grow at the Pergamino Experimental Station in the province of Buenos Aires.
Pama Hemp’s managing partner, Pablo Fazio, claims the company intends to provide “raw material” for a “legal market in Argentina,” which is focused on creating a “national cannabis sector,” according to him.
“It would be ridiculous to have to import the raw material,” he adds, as a major agricultural nation. The company has also partnered with others to create technology to improve plant quality, such as artificial intelligence (AI) to identify illness early.
The Uruguayan administration aims to make medical hemp and cannabis into a lucrative export business, “like beef,” according to Rodrigo Ferrés, the Presidency’s Assistant Secretary. The current government’s order permitting sales overseas was a significant step toward this goal. By the end of 2021, the nation intends to export 60 tons of cannabis.
Mexico is ready for marijuana development.
Cannabis plants that have been dried
But, in addition to Brazil with its 220 million people, there is another participant in the cannabis industry that has the potential to become the largest: Mexico. After a series of tribulations, the country’s Supreme Court decided in June 2021 that the prohibition on marijuana usage for recreational purposes was unconstitutional. It therefore nullified the provisions of Mexico’s General Law on Health prohibiting marijuana’s recreational use, private production, and transit.
If and when the nation passes legislation to legalize recreational marijuana, it will be the “cherry on top of the cake in this business,” according to Henry Muoz. With a population of 130 million people, it outnumbers both Canada (38 million) and Uruguay (3.4 million) in terms of market size.
Legalization draws large sums of money.
Consultants The Mexican marijuana market may be valued up to $2.3 billion by 2021, according to New Frontier Data, and legalizing would bring significant investments to the nation and area.
However, Mariana Sevilla, the founder of the Mexican NGO México Regula and a member of the civic coalition Regulation for Peace (“Regulación por la paz”), believes that the Supreme Court’s decision does not imply that recreational cannabis will be fully legalized. People still require licenses to utilize it, and the Court decision only authorizes personal cultivation. She claims that just a small percentage of Mexicans have the required resources and space to grow cannabis at home.
She claims that “Mexico can be a producer… of this plant, for our location, our history, and our culture,” but that there is still work to be done. She claims that the group is “urging for this effort to go through as quickly as feasible, but also emphasizing the importance of social justice, since possession remains a criminal crime. To provide equal access, we must make adjustments.”
High profit margins
Mexico has “high-quality genes when it comes to growing cannabis,” according to Paco OG, the creator of HEMPresarios, a platform with events connecting cannabis-related companies and investors.
Because of the temperature and soil, he claims that the finest plants originate from Oaxaca, in south-central Mexico. He went on to say that the business now need legislation to lift it out of its “grey zone” and attract investors and entrepreneurs.
Cannabis is not a fad, and despite a slump in 2019-early 2020, some larger companies engaged in the industry have performed well on the New York stock exchange. Some companies that offer recreational or medicinal cannabis products, such as Tilray or Cronos Group, saw their stock prices skyrocket between 2020 and 2021.
During the imprisonment, cannabis was designated a vital medicinal substance in certain areas of the globe. Andrés Israel, aware of investor interest, seeks to float CCB on the Toronto stock exchange.
He says, “If an investor wants to invest in the Latin American cannabis business, they’ll do it with us.” “In the area, we’re going to act as a cannabis index. We offer two value propositions: one for entrepreneurs looking to maximize their potential and guarantee the success of their company, and another for investors looking for diverse vehicles.”
The 10 biggest imports in south america are the top 10 items that are imported into Latin America.
Frequently Asked Questions
What did Latin America export mostly?
Latin America exported mainly natural resources such as petroleum, grains, and metals.
How much does Latin America export?
Latin America exports about $1.2 trillion worth of goods and services each year.
What countries export raw materials?
The United States is the largest exporter of raw materials.
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