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From Coffee To Cannabis: Colombia's Choice Between Economic Development And 'CannaMercantilism'

July 19, 2019 11:30 am
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From Coffee To Cannabis: Colombia's Choice Between Economic Development And 'CannaMercantilism'

This is the second of a two-part series on the history of Colombia’s troubled past and how it has informed its route to cannabis legalization.

It is a hypothetical “Shark Tank” and a well-dressed former Wall Street professional takes the stage to pitch.

Sharks, I have the business plan of the century. I’m going to grow an intellectual property-free, agricultural commodity on a massive scale. The commodity will go down in value every day, and it will be grown indoors, in one of the coldest places on earth.

I’m going to spend millions of dollars to construct buildings to create the perfect artificial growing environment. I’m going to spend millions more on air conditioning, electricity, de-humidification, clean rooms, water and capital equipment. I’m going to employ people at high hourly rates. My cost to grow will be thirty times greater than equatorial producing countries.

The country is a pioneer in authorizing adults to consume, but strict regulations prevent the creation of branded consumer products.There will be an excess supply, but we will export and compete with lower cost countries better positioned geographically.

I’m offering you 20% of my company for $50 million, which values my company post-money at only $450 million. Sharks, are you ready to grow with me?

Commenting on the irony of this hypothetical pitch, Benzinga Cannabis’ Managing Director Javier Hasse said, “there is a reason Canadians don’t grow mangoes and bananas in warehouses. The same rules should apply to cannabis.”

Reality can be stranger than fiction.

Canadian cultivators have implicitly acknowledged their bloom’s fall from the rose. Water cooler discussions now include “Pot Com’s” eventual timing.

The Canadian, “if you can’t beat em, join em,” Plan B approach has resulted in large investments by cash-rich Canadian cultivators including Aphria Inc (NYSE:APHA), Aurora Cannabis Inc (NYSE:ACB), Cronos Group Inc. (NASDAQ:CRON) and Canopy Growth Corp (NYSE:CGC) into low-cost countries such as Colombia.

That path is different from companies whose cultivation assets are primarily in these countries, and have used Canada as a source of capital such as Avicanna Inc (TSX:AVCN), CannaVida, Clever Leaves, Khiron Life Sciences Corp (OTC:KHRNF) and Pharmacielo Ltd (OTC:PHCEF).

“There's a 'Green Rush' going on, and Latin America is the greenest place on Earth. This certainly bodes well for the region's future," added Mr. Hasse.

Santa Marta Gold

I am nearly equidistant between white sandy beaches and majestic mountain peaks.

I could be in Santa Monica, California but instead, I am in Santa Marta, Colombia.

I was in not in search of another “grow”, “master” grower, or empty lot with site plans.

Instead, I sought empirical evidence of potential, even if in nascent stages: the beginnings of a large scale, multi-dimensional company involving genetics and cloning, growing, research and development, processing, manufacturing, laboratory testing and systematic processes to determine whether Colombia was ‘hype’ invented by Canadian reverse merger specialists or justifiable fact.

Benzinga's Cannabis Capital Conference heads to Detroit on Aug. 15 — Click here to learn more!

After interviewing multiple C-level executives and visiting some facilities, I accepted the invitation of Canadian businessman Aras Azadian, the founder of Avicanna.

“Why Colombia?” I asked.

Mr. Azadian replied, “We were frustrated with many things in the marketplace including product inconsistency, quality control standards, inefficiencies, high costs of products and environmentally unsustainable operations. We conducted a global search and concluded that Colombia had the prerequisites to build a world-class cannabinoid operation.”

I was impressed that the focus was not on growing based on cheap inputs.

Mr. Azadian continued: “I strongly believed that Colombia had the opportunity to follow in the footsteps of Israeli and Canadian research facilities and become a global, not just a regional leader so I initiated partnerships with the University of Antioquia and the University of Toronto.”

Already intrigued after hearing science, research, clinical studies, and Israel instead of high stock prices, Mr. Azadian’s response regarding core values piqued my interest.

“Our corporate social responsibility is focused on three areas: the planet: environmental sustainability and organic cultivation; the community: social, family and philanthropic projects including hiring locally, single-mother training, employment and micro-loans; and, education: for employees and medical professionals.” 

Avicanna was originally formed for cannabinoid research as a means to expedite consensus within the medical community for a seismic paradigm shift to cannabinoid-derived medicines.

It became the first cannabis-based company accepted into Johnson & Johnson’s JLABS incubator in Toronto.

Mr. Azadian then partnered with Colombian cannabis license holder Santa Marta Golden Hemp, controlled by one of Colombia’s multi-generational landholding, infrastructure and agricultural families who contributed valuable ranch holdings. The partnership enabled Mr. Azadian to expand his original vision and initiate the steps to build a vertically integrated company possessing world-class quality standards in the production of pharmaceuticals, phyto-therapeutics, derma-cosmetics and extracts. 

Some History Amidst A Bulletproof Car

Santa Marta is one of the oldest colonized cities in the Americas.

From the UNESCO walled city of Cartagena, it is a five-hour bumpy, late night bus journey north through the Valley of the Andes towards the world’s largest coastal mountain range. A traditional agricultural community, Santa Marta is best known as the final resting place of Simon Bolivar, the Venezuelan hero and conqueror of the Spanish Empire who created the independent Republic of Gran Colombia (with Ecuador, Panama, and Venezuela) in 1819. It is also the gateway to the sixty square mile Tayrona National Park, famed for its ecological and biodiversity stretching from the sea to the Sierra Nevada de Santa Marta mountain range and homeland to a number of indigenous tribes.

While it is Simon Bolivar that nourishes Santa Marta’s cultural roots and national parkland its tourist revenue, it may be cannabis that drives its economic future. After all, Santa Marta possesses over four hundred years of growing history.

The door opened to what appeared to be a standard SUV. We drove for about 10 minutes when my eyes started tearing in the suddenly smoke-filled interior.

My guide saw my perplexed look, smiled amidst other passenger laughter and said, “Michael, mi amigo, you can’t roll down windows in a bulletproof car.”

Fortunately, the sunroof did open and we drove another fifteen minutes through the dusty roads of what could have been a 1950’s western movie set. We then turned into a street with walls running its length, broken up intermittently by towering steel gates. The driver maneuvered into a driveway protected by its own imposing gates, which slowly opened inward, as grey uniformed security walked outward to escort us in and ensure that nothing living followed behind.

Forty foot, old-growth fruit trees beckoned as we entered the lush botanical garden-like grounds. A low-rise building to the right was previously the building the pigs called home. While still undergoing additional renovation, it had been converted into an office, research, extraction, manufacturing and administration area. An eclectic mix of well dressed, college educated young professionals (most with engineering, chemistry or agronomy degrees) who make up a portion of Avicanna’s one hundred and fifty Colombian employees, conversed casually at picnic tables during their morning break. I noted that women made up nearly one half of the group.

I picked a ripe, bright orange mango among the hundreds scattered in the dirt, admired its color and raised it to my nose.

Related Story: Medicine Man's Andy Williams On M&A, Colombia: 'We Can Become A Dominant Supplier Of Cannabis To The World'

Before my first bite, a young cherubic man with an ear-to-ear smile approached: “I’m Carlos. Before you taste it, you must smell an unripe one.”

Carlos grabbed a six-foot metal pole and knocked a green mango from the tree. Carlos Vives, Jr. is Avicanna’s Genetics Coordinator, and has over a decade of genetics experience and 20 years of cultivation experience (anecdotally, he also happens to be the son of Latin American music icon Carlos Vives).

My morning botany lesson began.

“Terpenes and flavonoids are found in all fruits and flowers," he said. "While forming the basis for smell and taste, they are part of nature’s defensive and offensive systems that either attract or repel pests and insects. Like bees are attracted to flowers, sweet and fruity genetics attract (which is worse for crops) and spicy and noxious genetics repel (which is better for crops). If unripe, terpenes are under-developed and it results in a green, vegetable-like fragrance. When ripe, mature terpenes provide a flower’s essence. With a green mango, its sour apple and vegetable; with orange, you find the unctuously sweet smell of apricots and marmalade."

I smelled both, enthusiastic about my new botanical knowledge. Carlos finally offered me the opportunity to taste the ripe mango revealing the smile of one who knows a reaction in advance. As the juice dripped down my chin, flavors exploded in my mouth with an intensity and complexity never experienced eating a mango purchased from my local west Los Angeles’ Ralphs.

Sergio Puerta, Avicanna’s Chief Grower, with over thirty years of cultivation experience joins us.

The property is so extensive that it takes another fifteen minutes inside its gates to drive to the cultivation area. Nine towering pilot shade houses, each up to three thousand square meters in size, rise in the distance framed by the Andes’ peaks in the background.

We first walk through the research and development zone consisting of two houses, the first of which consists of a vegetative characterization and cloning facility, which grows over sixty clones.

I walk the small bucket-filled rows noting the picture and name of each.

The other house is a flowering and botanical research facility, which consists of multiple strains of mature plants.

The six large-scale cultivation houses hold up to four thousand plants, with an anticipated division of 80% high THC varieties to be tracked by individual plant and 20% high CBD varieties tracked by lot.  An additional “smart” greenhouse is being prepared for the future cultivation of medicinal stable cannabis for pharmaceutical clients.

We then enter the grow houses. Despite being relatively close to one another, I notice dramatic temperature and air flow differences: from intense heat and stagnant air to cool with a slight breeze. I inquire, as the change seems peculiar.  Carlos explains that further proprietary research is underway, using in-house architects and engineers on both greenhouse design (height, length, shape) and geographical positioning to determine the optimal temperature, airflow and light based on collected biological data to optimize yield and quality. No stone seems to have been left unturned.

I’m awed by the agricultural magnificence and marvel at the flowering buds the height of two of my fists; against the backdrop of the undulating peaks of the Andes, with the light of the Santa Marta sun, the sky seems bluer, and plants greener.

It is the perfect time to visit in the growth cycle with only a few weeks remaining before harvest. The aroma envelops me. The plants, each about five feet tall, stretch as far as the eye can see, and are lined up symmetrically in identical even rows.  A mix of focused male and female workers labor intently.

The ‘Legend’ Of Colombia Gold

We take a badly needed shade break, and I inquire jokingly of both Carlos and Sergio if they know anything about the legend of ‘Colombia Gold’, not prepared for the depth and scope of the responses (which are edited, translated and combined).

The term ‘Colombia Gold’ is synonymous with the best genetic landrace cannabis in the world and was popularized by generations of American users and western media.” I thought, just as facial tissues became ‘Kleenex”, cannabis became ‘Colombia Gold’.

Colombia Gold, however, is not a unique landrace genetic as was once believed. Landrace sativas are naturally born close to the equatorial line, which runs through Colombia, Panama, Chile, Bolivia, Brazil, Central America, Puerto Rico and the islands of the Caribbean. The other most common name for this believed landrace genetic is “Punto Rojo”, more commonly known as ‘Panama Red,' as Panama was originally part of the first independent Colombia. Colombia in fact, invented two names for the very same genetic.

I pause to appreciate the experience of being taught at the source by hands-on experts in my personal National Geographic special instead of from a book in a classroom.

“The original equatorial landrace is a resistant sativa that withstands rain, mold and insects but has a long flowering time between four to five months making it difficult to grow. Europeans brought cannabis seeds from Afghanistan and Africa, cross-breeding these strains with indigenous landrace strains. An original strain, ‘Santa Marta Gold,' has such a powerful ‘holy-grail’ legend, that many strain hunters across the globe continue to search, despite a consensus that the search is Quixodian.”

Rather than an actual strain, I learn the name is broadly given to a range of local genetics for simpler reasons.

“Early American ‘exporters’, arrived at Colombian plantations pre-sunrise to load bundled kilos of dried cannabis. An early drying technique developed to save both time and labor which consisted of depriving plants still in the ground of water, which allowed the flower nugs to dry directly on the stem. Pilots reported seeing expansive valleys full of dried cannabis flower on the vine. When the first rays of daylight touched the valley floor, the dried flowers were showered in a radiant golden color produced by early sunlight."

Carlos concluded with a wink and a, “it’s known to have a mango-like terpene profile, you know what I mean Michael."

Related Story:  Barron's: Colombia A Growing Threat To North American Cannabis

We then visited a pilot, out-door cultivation area which will consist of two thousand plants divided between two high cbd genetics. The drying areas followed which demonstrated that even drying involved research to determine optimal methodology, temperature, light levels and humidity. Area 1 with loose buds piled high on multi-tiered, mobile carts in a temperature controlled setting; area 2 with nearly full plants hanging to the thirty foot high rafters subject to heat and humidity; and area 3, with endless branches hanging in series of rows front to back in dark, refrigerated mobile trailers.

The trimming area was a temperature-controlled clean room where a crew of previously unemployed single mothers worked.

I admired an organized display of glass bottles full of seeds coded by strain.

Ilonka, the chemical engineer and laboratory director explained manufacturing processes, the new state of the art European equipment, the color-coded architectural renderings of the building’s next phases and samples of oils and distillate

Money in the ground for ranch conversion to date is $10 million U.S. anticipated to double in the next year. That’s a very serious $66 billion Colombian pesos.

Will Black Gold’s Value Be Surpassed By The Value Of Yellow Gold?

It has been less than two years since medical legalization in Colombia, and an approximate $150 million U.S. of external capital has funded substantially all development.

Will a Colombian government stand by passively as red maple leaf flags wave throughout its Andes Valley? Will the government allow a repeat of the economic and political history invented by the British Empire and the mechanisms of the East and West India companies to  exploit ‘weaker’ continents and their abundant natural resources?

Only time will tell whether Colombia’s government and the governments of other newly legal and soon to be legal neighboring countries and continents, in a rush to obtain green riches, will implement a thoughtful and strategic cannabis vision that benefits its own populace or succumbs to a pending new age of “Canna-Mercantilism.”

While the value of Saudi Arabia’s black gold nears $70 a barrel, the same barrel’s value filled with ‘yellow gold’ can exceed seven figures. Colombia could very well become the Saudi Arabia of cannabinoid oil, and if it learns from Israel’s ‘Start-Up Nation’ model of state supported, university-centric research, Colombia could build a broad-based pharmaceutical industry, forever changing the course of its economic future. Instead of merely growing cannabis and its oils as a commodity, it could grow intellectual property instead, and in the process kill the potential for ‘Canna-Mercantilism’ in its tracks.

An Ancestral History Of Natural Medicine

The taxi stops in the heart of downtown Bogota adjacent to the old city. 

A blue sky 20 minutes before has turned grey, typical of Bogota’s 8,500 foot elevations weather patterns. The city bustles in all directions, professionals on cell phones, street vendors clamor for pesos, and uniformed school children walk in packs toward a low-rise nondescript, cement, industrial building. I am at Plaza de la Cultura to visit Colombia’s Gold Museum, the home of over sixteen hundred pieces of pre-Colombian patrimony.

Directed to a staircase, I climb to reach its greatest treasures. A bank vault in the middle of an otherwise blank wall, with thick, open stainless steel doors is framed by guards on each side.

They are protecting Colombia’s version of the Hope Diamond, the “Quimbaya Poporo.” It is a nearly 2000-year-old artifact, made of tumbaga (an alloy of gold and copper) depicted on coins and currency and the symbol of Colombia’s indigenous people.

The ‘poporo’ is a vessel consisting of a vase-like receptacle to hold lime, typically made from sea-shells, and a lid with a long pin used as a utensil to carry the lime to the mouth to activate chewed coca leaves. It is a sacred symbol of ancestry and heritage, believed to have mystical powers and is the final piece of empirical evidence necessary to understand Colombia’s two thousand year history of plant medicine use.

A Final Word On Stigma

I too spoke words of Colombia based upon misperception, judgment, media portrayals and incomplete information. I came to Colombia curious but cautious and with unspoken trepidation.

Screenshot memories include: a street vendor’s reminder of humanity, after his three hour search to return three dollars I overpaid; the sensuality of warm dark chocolate poured over hands rubbed with sugar and coffee grounds for the ultimate in natural cleanliness; hugs and laughter from the children of Comuna 13 while so far away from my own; a policeman’s kindness after a wrong turn at nightfall in Barrio Pablo Escobar causes me to be frightfully alone; an impassioned plea from a Senatorial aide to “please help us” providing a reminder of a father’s lesson to serve; a shaman’s gifts of a tribal bag and indigenous seeds; the surreal beauty and symbol of hope of exploding fireworks over Cartagena’s old city; and Dr. Carrillo’s passion to prevent human suffering notwithstanding her personal cost.

While we only shared a brief time together, I left in awe of a place, a people and a culture.

A plant medicine and agricultural history along with climate, culture and geography, provide Colombia with an unprecedented opportunity. An opportunity for a new history; a history based not upon stigma or “Canna-Mercantilism”, but on self-determination. Will a plant help heal a country’s stigma? Will a country help heal a plant’s? From coffee to cannabis, it’s now time, for Colombia 2.0.

All photos by Michael Miller.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

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