Is the Colombian Marijuana Industry Really a Threat to Canada?

 

Recent events in Colombia have piqued the interest of investors throughout Canada and the United States. This led to sensational headlines and opinions, all painting Colombia as the magic bullet that could kill Canada’s place at the top.

If anything, the U.S. is most likely to usurp Canada, but this does not mean Colombia will not bring some advantages to the table.

The question we need to ask is just how much of an impact could Colombia have? Judging by developments so far, Canada could benefit from the South American nation’s cannabis reforms. But at the same time, its competitive advantages are not accessible to everyone.

 

A Word of Caution

 

First, we need to look at the history of Canada’s cannabis rollout – specifically the months preceding it.

In early October of 2018 – less than two weeks before full legalization – we published an article about the “cannabis bubble.” In it, we pointed out similarities between economic trends in the cannabis space to the 1995-2000 dot-com bubble.

In most cases, investors and the general public were overly enthusiastic, falling for the grandiose promises of licensed producers and the government. Naysayers were present as well, but their concerns were typically brushed off by experts and laypeople alike. They did not anticipate the horrible complications that we are just now starting to overcome.

If we look at the situation with Colombia, we see some eerie similarities. For example, 420 Intel states:

 

“Every Colombian cannabis company attempts to impress investors and journalists with bombastic rhetoric…The reality is most Colombian-based cannabis companies are still struggling to find their footing while being built out and many are making misleading claims in the cannabis space.”

 

If Canada’s situation has taught us anything, it is that generating hype creates high expectations – ones that even the most optimistic estimates are unlikely to meet.

 

Who Benefits?

 

At this time, only CBD is at play between Canadian marijuana giants and their subsidiaries in Colombia (and elsewhere).

There are plenty of great licensed producers in Canada who could reap the rewards of a theoretically successful Colombian medical cannabis market. The problem is that, when it comes to Canada and Colombian marijuana investments, the old cliché of “you have to spend money to make money” applies – in the hundreds of millions.

Consequently, the mega-corporations are able to invest, while smaller “mom and pop” licensed producers either get left out in the cold, or bought out by “Big Cannabis” (or some variant of that term that will soon become a negative buzzword).

420 Intel explains:

 

“According to Latin American expert journalist Javier Hasse, other large, publicly traded companies including Aphria (NYSE:APHA), Wayland Group Corp (OTCMKTS: MRRCF), Chemesis International Inc (OTCMKTS: CADMF), Cronos Group (NASDAQ:CRON), and Aurora Cannabis (NYSE:ACB) have also made multi-million dollar investments in the country. Colombian cannabis company Spectrum sold to Canopy Growth.”

 

Of course, these are all great companies who produce quality cannabis and – to our knowledge – adhere to government regulations. But they are all big players in the industry.

 

Does Colombia Really Threaten Canada?

 

Based on the observations thus far, Colombia’s alleged threat to Canada’s marijuana industry remains largely theoretical.

420 Intel points out that most of these boisterous Colombian companies are barely using any of the land they selected for cultivation and are nowhere near the grandiose expectations that large investors want.

If and when Colombia’s production meets its rhetoric, its marijuana industry could be a threat – but not to everyone. Smaller producers will not be able to compete against the financial onslaught of large corporations reaping the benefits of cheap labour and lower overhead cost in South America.

If anything, it will cause a shift in Canada’s marijuana industry, with smaller licensed producers going extinct, being swallowed up by big names like Aphria and Cronos Group who reap the rewards of international commerce.

Of course, a lot needs to be settled before such a theoretical scenario takes place. Colombia, for all its hype, will not rise against its North American competitors anytime soon.

 

WeedAdvisor’s Role in a Balanced Cannabis Industry

 

While we are happy to help organizations of all shapes and sizes, the last thing anyone wants is to see international commerce erode our own economy. With cannabis being such a new commodity after a long period of prohibition, we have a chance to ensure a diverse industry.

But if investors continue to focus on the “next big thing,” not only are they threatening our own economy, but – if history taught us anything – they are also setting themselves up for disappointment.

 

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