On
Aug. 20, the United Nations International Narcotics Control Board
(“INCB”) announced that Colombia would be awarded a quota of 1.2 tons of
cannabis oil for internal medicinal and scientific use.
This
substantially reduced number compares to the 2018 quota of 47 tons,
which caused euphoria and champagne corks to fly from bottles throughout
the LATAM Andes, all the way to Canadian stock exchanges.
Colombian
and international media (not surprisingly) announced that this new
limited quota represented a “fatal blow” to its cannabis industry. Water
cooler concerns are being discussed internally, daily, by Colombian
company representatives, and their public statements have been both
defensive and dismissive.
Confusion and uncertainty have permeated conversations since with little historical or factual analysis.
It’s essential to read between the lines and examine this situation objectively for all stakeholders concerned.
This
won’t be the first time in “Canna-Land” where statements and numbers
lead to miscalculations, misjudgements, misunderstandings and
precipitously falling stock prices. The most material of these are the
role of the INCB and the dangers of misusing international agency
statistics in commercial promotional and investment materials.
The INCB’s Role And Reality
Colombia
Cannabis Investor is a leading consultancy, which produces
on-the-ground business intelligence about the Colombia medicinal
cannabis industry.
Its April edition addressed overuse
of the INCB’s 2018 quota figures as follows, “the INCB’s allocation of
44% of its marijuana quota to Colombia was “certainly a juicy
figure...the reality, however, is more prosaic.”
Readers
consisting of global investors and professionals read that while the
INCB does implement a global cap on the quantity of opiates produced
globally for medicinal purposes, for cannabis the quotas apply only for
internal consumption and scientific use of psychoactive cannabis.
It’s
important to examine the scope of Colombia producer objectives. A very
large proportion of Colombia’s licensed producers are focused on
high-CBD, low THC-products (thus bypassing the need to apply for THC
production quotas from the local government) so they will not be
affected. Companies that are focused on growing high THC plants are
doing so primarily with an export market in mind. Late last month, a
private Colombian company, Medcann, became the very first company to
receive a THC production quota of any kind from the Ministry of Justice to export its product.
Despite
the fact that most companies are pitching and promoting their
capabilities and projections to investors on the world stage, only a
handful of these companies at this demonstrably nascent period of
development are prepared to export even a handful of cannabis in any
form. Based upon analysis of empirical and NOT anecdotal data, even a
1.2m tonne quota is unlikely to be filled by Colombia. In short, the new
INCB quota does not then appear even remotely unfair for 2019.
In
addition, in the unlikely occurrence that Colombia’s producers are able
to achieve their government-awarded THC production quotas and decide
NOT to export substantially all of their product INCB quotas should
still not be considered onerous or detrimental. As with any element of
any division of the United Nations, while national government members
are technically required to comply with rules, limits and guidelines,
the INCB has absolutely no enforcement capability. It is not an
international “parent” that can punish and take privileges away.
The
INCB may make rules, but it is not a global police force. In fact,
Canada, one of the world’s largest producers of medicinal marijuana, has
absolutely no INCB quota. However, its companies continue to grow, sell
and export cannabis, completely ignoring U.N. Conventions.
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