In 2015, Colombian president Juan Manuel Santos revised national drug laws by legalizing the commercial processing and exportation of medical marijuana. The hope was that these laws would puncture the Colombian black market for marijuana. In theory, these laws would give drug traffickers the option to compete in the economic market and reap benefits that come with being a legally sanctioned industry. They reflect a country's attempt to meet the growing push worldwide for a legal marijuana market.
Historically, the North American and South American suppliers of marijuana have been competitors. Both have sought to supply the Western hemisphere's demand for the drug. Colombia's recent legal developments have garnered its domestic marijuana industry a significant legal advantage over the US, where marijuana is trapped in regional and federal legal battles. Three Colombian marijuana companies (the Colombian arm of Pharma-Cielo, Cannavida, and Labforve-Ecomedics) have received government-issued marijuana production licenses. Cultivation licenses are also required and currently pending.
Colombia's environmental advantages over North America are also increasingly apparent. Colombian soil provides a richer environment that is better suited for cannabis plants than North American soil. North American growers hoping to achieve the same richness must apply a lot of fertilizer, which is a source of waste that is unnecessary in Colombian operations.
North American climate conditions also prohibit growers from reaping more than one harvest per year. Growers are faced with two options: grow outdoors and reap one annual harvest, or grow indoors in man-powered warehouses and reap multiple annual harvests. The second option is costlier but allows the plant to undergo its natural flowering cycle. Colombia's natural daylight patterns align perfectly with marijuana's biological requirements, allowing Colombian growers four annual harvests.
These two situational advantages translate to a huge production advantage. In practice, it means that Colombian growers can afford to sell at 5 cents per gram of marijuana flowers, while North American growers must ask for 50 cents per gram of flowers, minimum.
The new Colombian drug policy has implications for marijuana industries worldwide. In 2015, the US saw 5.4 billion dollars' worth of legal marijuana sales. Additionally, recreational adult use brought in 998 million dollars. Legal market sales for 2020 are forecasted at 21.8 billion dollars. There is also a surge predicted for the next few years, to continue the pattern of a rising trend of strong demand.
2015 predictions for the US have marked 2016 as a tipping point for cannabis prohibition. Commentators expect a sweeping shift towards regulated legal markets after 2016. Marijuana investors are currently brainstorming different angles that are viable for entering the market, under present regulatory conditions. Furthermore, worldwide public opinion is strongly in favor of marijuana reform. However, many politicians do not embrace legalization. In many such countries, there is a clash between national policy on marijuana, and the global attitude shift. In context, Colombia's relaxed policies are unique.
If new US marijuana policies are eventually instilled, a new form of inter-state competition will appear. Furthermore, existing marijuana business conditions will have to change. Marijuana businesses currently face high taxes, and federal laws bar them from using banks, which forces them to double-up on company security. These repressive regulations may have contributed to marijuana stocks underperforming in 2015. Four notable stocks to watch include AbbVie
All of these events have piqued Wall Street's interest, from which follows the possibility that American marijuana will someday turn corporate and become even more normalized in American culture. There is currently a serious debate on the ethical implications of allowing young people to invest in marijuana stocks. This reflects the stigma still associated with the drug. If marijuana does become more normalized, its image and culture will have to change.
