Cannabis Flower Sales In Colombia And The Small Producer Protection Myth: Ex-Official Says Most Companies Qualify

Article via El Planteo

Colombia is on the verge of transforming its medical cannabis market with a new decree that will allow the sale of dry cannabis flower locally, benefiting both companies and patients.

However, while the decree is believed to protect small producers, it actually favors micro, small and medium-sized enterprises (MIPYMES) based on income, not excluding companies with large investments.

The classification of MIPYME in Colombia is determined by income, number of employees or assets, meaning that most cannabis companies will qualify under this criterion. This opens up the possibility for many companies, regardless of size, to participate in the local market. Some publicly traded cannabis companies operating in Colombia include:

• Avicanna Inc AVCNF AVCN
• Clever Leaves Holdings Inc CLVR
• Flora Growth Corp FLGC
• One World Products Inc OWPC
• Pharmacielo Ltd PCLOF

The decree also imposes new regulatory hurdles, such as the requirement for sanitary authorization for dry flower, which could delay the implementation process. Additionally, companies with Good Manufacturing Practices (GMP) certifications will need to make adjustments to comply with this new regulation.

See also: Colombia: When Will Cannabis Flower Sales Begin? There’s No Fixed Date, Says Ex-Official

Colombia's Medical Cannabis Market At A Turning Point

The new decree represents a significant opportunity for patients and a fundamental shift for companies in the sector. For years, Colombian companies have focused primarily on export markets due to the lack of an internal market. But as Efraín López, director of Árpez Company and former Ministry of Justice official, points out, international trade has been more challenging than many expected. "Regulations often didn't address realities, and global demand wasn't as large as anticipated," he says.

Opportunities For MIPYMES: More Than Just Small Producers

The new decree aims to ease some of this burden by allowing the sale of dry cannabis flower in the local market. "The project modifies the export model by adding national use," López clarifies. This opens a new revenue stream for companies struggling to stay afloat in an uncertain global market.

The decree prioritizes micro, small and medium-sized enterprises (MIPYMES) for the first two years. "The project doesn't aim to protect small or medium-sized producers, as was the goal of Law 1787 of 2016, but rather micro, small and medium enterprises," López explains. However, this classification goes beyond company investments, as MIPYME status is determined by annual income from regular activities, assets and number of employees.

Income Limits For MIPYMES

López shares more details about the income thresholds for qualifying as a MIPYME. For example, micro-enterprises have an income cap of approximately COP 1.1 billion (around USD 257,000). "Almost all companies will qualify because the criterion is based on income," López confirms, noting that many companies, even those with significant investments, will meet the threshold.

This is critical because it means many small and medium-sized companies qualify, even those with major infrastructure investments. While the decree favors MIPYMES, not all companies will be able to immediately benefit.

Regulatory Requirements And GMP Certification

The decree also introduces extensive regulatory requirements, such as the need for a "sanitary authorization" for dry flower as a finished product, which could be akin to a Good Manufacturing Practices (GMP) certification. This requirement could cause delays in the regulation’s implementation.

"Although some companies currently in operation have GMP certifications granted by Invima [the local equivalent of the FDA], these are limited to cannabis derivatives. Both the regulation governing the certification and the companies' facilities will need to be adjusted to accommodate dry flower," López adds.

When Will Companies Be Able To Sell Dry Flower?

"Invima, the entity responsible for regulating food and medicines in Colombia, will need to update its regulations to allow the registration of dry flower as a finished product," López continues. Full implementation of these regulations will take time, but the market for compounded formulations could develop more quickly.

"The fastest outcome would be for Invima to adapt its Guide to Good Manufacturing Practices for Cannabis-Derived Compounded Formulations to include dry flower," he suggests, adding that companies that meet these requirements could see results within one or two years.

Opportunities For Pharmacies

The decree also presents a growth opportunity for pharmacies in Colombia. Once the decree is enacted, these establishments will be able to dispense dry flower, which could significantly increase revenue. "I think anyone who sees a business opportunity will jump at it," López predicts.

Ultimately, while the certification and adaptation process will take time, the opening of Colombia's internal medicinal cannabis market represents a fundamental shift for both companies and patients.

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