Colombian President Ivan Duque Marquez has signed a new law that would allow a much larger amount of dry flower to be exported from the country, after a high-profile meeting of Colombian cannabis business leaders with US-listed public companies. The new law, a change to Colombian Decree 613, greatly increases the amount of dry cannabis flower (the flower, stems, and roots) that can be exported from the country, and also allows for cannabis to be put into industrial products like food and beverages and for much more extensive marketing of cannabis products in Colombia.
“The passage of this legislation greatly immediately accelerates our strategic vision of bringing our cannabis products to international markets as noted by our first international supply agreement out of Cosechemos while we focus expanding our global distribution platform of traditional consumer packaged goods. Now having the ability to export our high-margin, high-quality cannabis flower being produced at Cosechemos, together with a healthy portfolio of premium brands, and a robust pipeline of deals, we will continue to look towards international markets to drive growth and revenue generation,” said Jason Warnock, Chief Revenue Officer of Flora (NASDAQ: FLGC). “Another added benefit of the new regulations is that we can now process the entire plant whereas before Colombian processors had to destroy upwards of 60% of the biomass which we anticipate will further improve on our margins out of Cosechemos.”
Some of the new language is as follows:
- To encourage the pharmaceutical industry, Colombia will allow the entry of dried flower, seeds, grain, plants, plant components, and derivatives to free zones, so that companies can carry out processing, packaging, and repackaging activities at lower prices, taking into account the tax benefits of these zones.
- Licenses have been extended from five years to 10 years.
- The advertising prohibition has been lifted.
- The activities that can be developed in the food market are specified, under the strict standards of Invima and other competent entities. This economic sector is yielding great returns worldwide and the economy of our country needs that boost.
- The prohibition on the export of dried cannabis flower is eliminated, so that in the subsequent regulation a scientific debate is made to identify under what requirements and for what purposes this activity should be carried out, always having as its north the medical and scientific purposes.
- The dispensing of master preparations based on cannabis in drugstores is allowed, which will facilitate the access of these medicines to the patient since these establishments are the most numerous and closest way to reach the patient.
Flora Growth Ready For Expansion
Flora Growth said these new regulations will allow for the opportunity to increase near-term revenue and optimize its global diversified supply chain of premium brands and products. The company said that through this legislative update, Colombian cultivators like Flora Growth, have immediately gained access to this massive segment of the market that was previously inaccessible. “The allowance of cannabinoid containing ingestible products creates a near-term opportunity to amplify revenue growth through its food and beverage division, Kasa Wholefoods. Kasa intends on leveraging existing relationships to distribute CBD versions of its portfolio, including the recently announced $10M distribution agreement with Tropi, Colombia’s largest food and beverage distributor with 130,000 points of distribution across the country.” Additionally, by removing marketing restrictions on cannabis products locally, Flora Growth will be able to drive increased awareness across its portfolio of products and driving additional sales through its 1,500+ points of distribution within Colombia.
Khiron Applauds News
Alvaro Torres, CEO of Khiron Khiron Life Sciences Corp. (TSXV: KHRN)(OTCQX: KHRNF) said, “Colombia has been a regional leader in medical cannabis laws since 2015 and this new Decree strengthens the Government´s commitment to creating a robust and competitive industry. After naming the industry a National Strategic Priority and extending universal health coverage for THC and CBD medical cannabis products in late 2020, the new regulation expands the country’s growth potential across various product categories in Colombia and through the export of dried flower.” Since April 2020, Khiron has been dispensing medical cannabis to patients through its Zerenia pharmacy in Bogota, to more than 350 cities and municipalities across the country. With Decree 811 of 2021, the Government has significantly expanded the number of pharmacies eligible to carry and dispense medical cannabis products, from only a handful today to a network of more than 14,000 pharmacies nationwide.