The Colombian government issued a new regulation that establishes the regulatory framework to commercialize master cannabis preparations for Colombian medicinal cannabis, a market estimated to comprise some 5 million patients.
On March 2, the Ministry of Health issued Resolution 315, which not only opens up the Colombian market for medicinal cannabis but also allows the transformation of dry cannabis flower into derivative products for companies that set up industries at free trade zones.
“The resolution benefits the sector because it provides clarity on narcotic drugs, psychotropic substances and precursors that are subjected to be controlled, and differentiates them from those that do not require oversight,” Rodrigo Arcilla, director of the Colombian cannabis association Asocolcanna told Cannabis Business Times.
Master cannabis preparations with 0.2% of THC or higher, including oils, non-psychoactive and psychoactive cannabis, must be registered to the country’s National Narcotics Fund, according to the resolution.
For the magistral formulations derived from cannabis with less than 0.2% of THC, the derivative products will not be audited by the National Narcotics Fund.
The resolution states that all magistral formulations based on cannabis must be sold only with a medical prescription at pharmacies in this South American nation with a population of 50 million residents.
In addition, all magistral formulations must all be certified by the National Food and Drug Surveillance Institute, INVIMA, for meeting Good Elaborating Practices (GEP) standards. Analysts, companies and law firms believe INVIMA could take between four to 12 months to issue the certificates on GEP practices.
Carlos Ernesto Lucio, expert in cannabis regulation, said the magistral prescriptions are medications intended for a specific patient where active ingredients have been incorporated for a particular person.
The resolution allows patients to access cannabis tablets, capsules, gelatinous cubes, gels, oils, creams, suppositories, patches and liquid or gel based on cannabis.
The law also allows doctors who receive training to recommend medical cannabis to patients with several qualifying conditions, mainly chronic or intractable pain, pain related to cancer and terminal illnesses, Parkinson’s disease, multiple sclerosis, epilepsy, tumors and insomnia, among others.
Pideka Ikänik Farms, a Colombian-Canadian company with licenses to cultivate, produce, manufacture and export pharmaceutical-grade finished cannabis extract products to European markets from its state-of-the-art Casa Flores camp said that the opening of the Colombian market is a new alternative for them.
“This is a market that opened up in the last two weeks. We had an export plan almost entirely earmarked for our production, and now through the legalization of the master cannabis, Colombia will be able to prescribe medicinal products through doctors,” Borja Sanz de Madrid, president of Pideka told Cannabis Business Times.
Pideka and the Corporation for Biological Research, CIB, of Antioquia, signed an agreement to advance scientific evidence in the treatment of colon cancer with medicinal cannabis extracts.
“This will be the first study of medicinal cannabis for the treatment of colon cancer in Colombia,” Sanz de Madrid added.
Pideka is an indoor licensed cannabis producer that currently has one warehouse with 1,600 cannabis plants in production, and is in the process of building four additional warehouses that will bring full-production capacity to 165,000 cannabis plants by July 2021. The warehouses are located just outside of Bogotá.
The Colombian-Canadian company PharmaCielo said the medicinal market will take some time to fully develop “as the industry must continue to develop appropriate treatments and the medical community (doctors) must continue to be educated about medicinal cannabis,” David Gordon, chief commercial officer of PharmaCielo said. Gordon noted that the new resolution is a significant step forward in helping patients get improved while broader access to medicinal cannabis treatment. Pharmacielo has 12.1 hectares (1.3 million square feet) in cannabis production to tap the local and foreign market.
Clever Leaves, controlled by Northern Swan Holdings Inc. and Eagle Canada Holding, said the main beneficiaries of the resolution are Colombian patients.
“This was a part of the regulation that was pending. This is a good resolution that comes to serve patients in Colombia,” Julian Wilches, regulatory director at Clever Leaves said.
Clever Leaves is a vertically-integrated licensed producer of pharmaceutical grade medical cannabis and hemp extracts. The company has 15 hectares fully in production in the central province of Boyacá and a sophisticated laboratory in Tocancipá, located north of Bogotá.
Private producer medcann Colombia, the local unit of Canadian medcann Pharma, said all companies will benefit with the opening of the local market “because the export market presents many difficulties due to the lack of global regulation for this industry,” according to medcann CEO Felipe Harker.
In Colombia, only one medicine based on cannabis derivatives is sold presently. The imported product called Sativex, bought from the UK laboratory GW Pharma, is used for muscle spasticity in patients suffering from multiple sclerosis. Sativex is the only medicine that has received import authorization from INVIMA.
Paulo Vega, medical director at laboratory Biopas, which imports Sativex, says they will welcome the arrival of new medicinal products based on cannabis so long as they comply with the rigorous scientific method and as long as the products fulfill with the standardization of prescriptions.
The new resolution moves forward in the uses of cannabis for local consumption. Under the decree 1156 issued in July 2018, Colombia had already allowed the so-called phytotherapeutic products, of what are commonly known as herbal medicines not just based on cannabis but also coca and poppy.
Free Trade Zones
One of the most important aspect of the resolution is that it allows companies that set up their operations in free trade zones to receive tax benefits, a move that will boost the development of the cannabis industry in this Andean nation. The resolution also allows the transformation of dry cannabis flower into sub-products for companies that establishes their industrial process at free trade zones, consultancy and law firms said.
Consultancy firm Araujo Ibarra says companies will be exempted from paying value-added-taxes on machinery equipment and construction materials, compared with the 19% levy they would pay if they are outside a free trade zone.
In addition, companies will be exonerated from paying tariffs on imported cannabis, compared with the 11.5% tariff they pay now.
Cannabis companies within the free trade zones will pay 20% in income taxes to the government, compared with 33% they will pay if they are outside free trade zones.
“Until recently, Colombian banned the arrival of dry flower into Free Trade Zones. Now, dry flower produced in the country can go into the Free Trade Zone for transformation for derived products such as cannabis extracts or oils,” Arcilla said noting that the objective is to inject value-added to dry flowers.
Colombia still bans the export and import of dry flower.
The resolution also allows companies to import cannabis products to be transformed into medicines or sub-products so long as companies are registered with the National Narcotics Fund and only if they are they have an authorized import quota. The company will also have to inform the National Narcotics Funds the amounts of by-products to be produced by dry flower and who is going to buy it. “By doing so, the fund will have a traceability of the total amount of medicines that are under control,” Arcilla said.
Sanz de Madrid believes companies that begin from scratch are those that will set up their indoor-production plants at free trade zones. For companies like Pideka that has invested $3 million in the indoor-warehouses, and has a laboratory already established moving to a free trade zone will not be beneficial. The company is in the process of investing an additional $7 million in the construction of four additional warehouses.