Global Cannabis: Why All Eyes Should be on Latin America

 

“The Latin American cannabis industry is developing at a rapid pace emerging as a key region in the global cannabis marketplace…the market is expected to exceed US $12b by 2028 offering serious growth potential to global cannabis companies and investors.”

 

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SourceLATAM Cannabis Report

 

As shown in the chart above, most countries in Latin America have some level of legalization and regulation when it comes to cannabis. Looking to the rest of the world, arguably, at this point in time Canada is the leader when it comes to cannabis regulation and commercialization. Its recent federal legalization for adult-use puts it ahead of the US and all other countries who are still developing their legislation and regulation regarding the product.  There is a small window of opportunity for Canada and other fast movers while the rest of the global community catches up. When that happens we believe that cannabis prices will be a race to the bottom while Latin America production races to the top, having the ability to provide low cost cultivation, low cost labor, more harvests, and the ability to thrive with the lower prices of cannabis.  Evidence points to this global shift in the leading producers and sellers is only a matter of time.

Latin America will be able to export these low cost products (biomass, raw oil, final product) to the world, effectively pushing out countries such as Canada who will not be able to compete with the low costs. When the regulations catch up in Latin America, the whole cannabis game will change and anyone involved in the cannabis industry should be keeping an eye on this region. Canadian investors have been flooding into Colombia and with the trajectory of how the market is moving, this appears to be a good strategic move.

Once the regulations and legal rhetoric is mature, cannabis should look like any other agricultural product in the world, making Latin America hugely competitive in the respective marketplace. Regulators in countries like Mexico and Colombia have taken care to include verbiage about exportation and importation in forming regulations so there is no doubt that the commercial eye is on export and as these Latin America countries come online there will likely be substantial re-positioning in the market.

From Latin America’s Southern country of Uruguay (the first country in the world to fully legalize cannabis) – to the most Northern of Mexico, (the most recent country to release its guidelines and position on cannabis showing significant promise in opening up a recreational market in the short term of 1-3 years), and all the nations in between, the opportunities are widespread. Entrepreneurs and investors who are looking to this region recognize that the marketplace is global and that zeroing in on domestic production without keeping on eye on Latin America will likely be a fatal business move.

 

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