The big pot stocks in Canada, such as Tilray Inc., Canopy Growth Corp. and Aurora Cannabis may soon have to contend with an emerging threat as marijuana growers in North America start moving their farms across the border to Columbia.
This migration is eerily similar to what happened to the growers of rose flowers who all moved south to low-cost Columbia.
Paul Henderson, the owner of Grupo Flor (a cannabis cultivation company based in Monterey) is the trailblazer of this migration. He predicts that North American marijuana growers in Canada will suffer the same fate that rose growers experienced. Practically no rose grower was left in Monerey once cultivation starting moving south.
Henderson adds that within the next decade, the cannabis industry will transition into a phase of commoditization. As that happens, it will become increasingly untenable to keep growing marijuana in Canada when Columbia is just a short distance away.
Henderson’s company is currently getting a 1,000,000 square-foot cultivation facility ready on the outskirts of Cali, a city found close to the Equator in Columbia. He boasts that when the facility starts operations, his company would be able to cut the price of its produce by 90 percent and still make a profit, something that growers who are still based in Canada cannot do and stay afloat.
Columbia enjoys several advantages which are only a dream to Canadian cannabis growers. First, the climate in Columbia is so good that the cultivation facilities there don’t require elaborate climate-control systems. Secondly, the labor in Columbia is highly skilled yet more affordable than what is available in Canada.
These reduced production costs put Columbia firmly on course to attain the target of producing a gram of cannabis at just 50 Canadian cents ($0.38) and yet the long-term goal of cannabis production in Canada is to bring the cost of a gram down to CAD $2 ($1.51) . That is a whole world of difference in production costs!
Columbia legalized medical cannabis for domestic use as well as export. This policy shift is responsible for the interest of Canadian cannabis growers in shifting their operations to Columbia.
The emergence of Columbia as a destination for Canadian cannabis cultivators has come at a time when the cannabis industry in Canada has just been dealt a blow by the U.S. FDA. The regulators are reluctant to legalize CBD and it appears to be headed for regulatory oversight by the FDA. This has dampened the hopes of Canadian firms that were gearing up to enter the U.S. CBD market.
Cannabis industry watchers are wondering what major players like Wildflower Brands Inc. (CSE: SUN) (OTCQB: WLDFF) and Youngevity International Inc. (NASDAQ: YGYI) can do to respond to developments like transferring marijuana cultivation facilities to another country different from the country where the company has its major operations.
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