Why hasn’t cannabis cultivation been profitable in Latin America?

The cultivation of cannabis has become unprofitable Latin America in recent years, claims a BBC report. This activity has become a less attractive business as the dope for medicinal purposes began to become legal.

Currently, cannabis for medicinal use is legal in Argentina, Chile, Colombia, Mexico and Peru. According to estimates by the Euromonitor consultancy, this industry manages to move US$ 170 million annually in the region, however, it has not generated the profits that were expected.

The head of the Colombian Association of the Cannabis Industry (Asocolcanna), michael samperpointed out that the industry in his country is currently in “intensive care”

Colombia was one of the great clandestine producers of marijuana in the 20th century during a period called the “marimbera bonanza” and that preceded the birth of the large cocaine cartels. Currently, that country has 57,000 hectares authorized by the government, more than any other nation in the region. Nevertheless, Samper explained that of all these, only 520 hectares or close to 1%, are under cultivation..

Likewise, in 2022 alone, nearly one in three of the 1,300 companies officially licensed to farm effectively went out of business. “Colombia has been relegated to the back wagon” in the development of the activity, he added.

The former Colombian vice minister considered that one of the main problems in the sector is that local production does not find a market in the pharmaceutical industry, since the government has not authorized the industrial manufacture in Colombia of any medicine made from the cannabis of this country.

For his part, Erwin Henriquez, a senior analyst at the consultancy Euromonitor, commented to the BBC that in Latin America per capita consumption of cannabis barely reaches US$1 a year, compared to US$88 for the United States. In addition, he noted that the American giant not a big export market of cannabis for Latin America, the most attractive, however, could be the export markets to the Middle East and Asia.

Likewise, the report maintains that observers have indicated that the future of cannabis in the region could change in five years – thanks to its competitive advantages in production. but its development will depend on the debate in Latin American countries on the future regulation of the industry and the opportuneness of recreational use.

With information from BBC.com