On August 1, 2019, Colombian cannabis producer Clever Leaves announced that its hemp oil brand, Esenia, had become the first hemp-based wellness product manufactured in Colombia to be imported into the United Kingdom for commercial purposes.  Several days later, on August 19, 2019, PharmaCielo Ltd. (the Canadian parent of Colombia’s licensed cultivator and producer of medicinal-grade cannabis oil, PharmaCielo Colombia Holdings S.A.S.) confirmed that it successfully completed its first commercial export of CBD isolate to Europe.  So, at long last, we are beginning to see Latin American supply chain cannabis producers actually exporting products to Europe; and the legend of the LatAm-based cannabis supply chain continues (or at least it has actually begun).  Is the LatAm-based supply chain unbroken?  Or are its producers listening for the ‘secret,’ searching for the ‘sound’?

It is no surprise that Colombia (among several other LatAm countries) have gone ‘all-in’ on cannabis production for export.  And it is no surprise that the immediate export target for these producers is the E.U., with its robust consumer population in excess of 450 million people.  The demand in the E.U. mirrors (if not exceeds) the exponential growth that we saw in the CBD (or more properly ‘cannabinoid extract’) market across the U.S. from 2014 to 2018.  And, until recently, retail distribution across numerous European markets has been direct and mainstream, with the likes of Boots, DM, and other national/international retailers agreeing to sell the products online and in thousands of physical store locations; even doing so through mainstream product distribution companies.  And, of course, the documented demand for cannabinoid products from E.U.-based consumers forms the market-based rationale for supply chain ingredient/product suppliers from regions of the world with designated export regulatory structures, such as Colombia. 

However, due to a variety of reasons, it appears that the supply chain is indeed broken, or at least it is not ‘unbroken.’  There are a variety of factors that lead to this conclusion.  

First, in early 2019, the E.U. Commission announced that CBD products would be treated as a ‘novel food.’  Specifically, under European Union law, a food that has not been consumed to a significant degree by humans in the E.U. before May 15, 1997, is considered as “novel food” and is controlled in a stricter manner than regular foods.  Food producers can place a novel food on the E.U. market only after the European Commission has processed an application for the authorization of the novel food, has adopted an implementing act authorizing its placing on the market, and updated the E.U. list of novel foods.  This process can take months and months, if not years. And this designation has caused numerous national government bodies to roll back the distribution of CBD products in mainstream distribution – awaiting this agency process. There are, of course, differing positions as to whether CBD should be treated as a novel food, and many groups, including EIHA, argue that products that contain CBD extracted from industrial hemp plants grown within the European Union are not novel foods for a variety of legitimate fact-based reasons, but that is another topic for another time.  In any event, this has caused retailers across the E.U. to remove CBD products from their shelves en masse.  And this has impacted the cannabinoid supply chain tremendously.  

Another factor to consider is that there are many other regions of the world that have recently enacted cannabis supply (for export) regulations.  These regions are poised to compete dramatically for a piece of the international cannabinoid supply chain (e.g., Africa, Asia, Asia Minor, and even the U.S.).  Thus, there appears to be a tremendous source of supply and a tremendous demand, but fewer and fewer mainstream distribution outlets across the E.U. for the time being.  This breaks the supply chain or at least indefinitely interrupts it.

And the fact that companies are manufacturing isolates, as PharmaCielo notes, is dubious as well.  This is based on the fact that FDA-equivalent approval bodies will clearly view isolated cannabinoids as ‘novel foods’ or the regional equivalent and this will severely limit the marketability of the same.  

And finally, psychoactive cannabis product producers are severely limited in international commerce because there are very few THC-oil purchasers worldwide.  And the standards are ever-evolving as to how these products must be produced from field to factory. So, the THC market is extremely limited. And it will be absent of uniform ‘marijuana’ regulation across the globe. 

All of that said, it is impressive to see the LatAm cannabis supply chain beginning to function.  But the global supply chain needs some work. Stay tuned. Listen to the winds howl.