Editor’s Note: Today’s post comes from Dr. Stefano Tijerina, a lecturer in management and the Chris Kobrack Research Fellow in Canandian Business History at the University’s of Maine’s Business School.
In January 1968 the Winnipeg Free Press reported that marijuana was “the biggest mass floating of the law since prohibition.” Back then the urban myth said Lebanese cannabis was the most potent, but Canada, like the U.S. market, was limited to Mexican cannabis; “Acapulco Gold” was the common preference among “local users.” This new generation of consumers was juxtaposed against the anti-marijuana initiatives on both sides of the border that had, by that point, constructed the idea among sectors of civil society and policy makers that the drug led to mental disorders, violence, degeneration, addiction, and that it served as a gateway to other more dangerous narcotics. It was from the late 1960s onward that a pro-marijuana movement across both sides of the border was spearheaded by young rebellious Baby Boomers in order to clarify the facts and debunk the old myths. Fifty years later the construct of the “thin, sunken-eyed individual slowly starving himself to death” has been replaced by the image of the radiant millennial stoner. Within that transformation of the constructs of marijuana, Canada’s Federal and Provincial governments were able to build a government-business partnership that positioned the nation and its private sector as the pioneers of a new global business that might even surpass the global market for coffee. A half century ago possession in Canada could cost you seven years in prison; today it represents an entrepreneurial opportunity.
The transition of marijuana from the informal to the free market is perhaps one of humanity’s cornerstones in the twenty-first century, considering that hundreds of thousands of people around the planet lost their lives or their freedom throughout the twentieth century as a direct result of the social taboo and the criminalization policies that were constructed around the plant, not to mention the social disenfranchisement suffered by Boomers and Gen X people, as they balanced the thin line of social use.
At the end it was impossible to stop the incremental social acceptance of marijuana consumption, at least in the Western world. I grew up in this transition process and can attest that my experiences in Colombia were completely different than my experiences in Texas or my Montreal references, through my stepsister. I saw the taboo slowly die out in North America and by the time I got to Maine, in the early 2000s, it was gone. Meanwhile, every time I go back to Colombia I come face to face with the residual taboo from fifty years ago. There, the taboo is prevalent, but it did not stop Colombian policy makers from integrating medical marijuana into the global economy.
Colombia, the South American country whose entrepreneurs pioneered the sale of marijuana into the North American markets in the 1970s before transitioning to cocaine exports, has now become an important stakeholder within Canada’s legalization of medical and recreational marijuana. The transition from illegality to free market enterprise is not just a domestic initiative but a transnational one. The vision of the Canadian government-business partnership is not local but global.
For those following the legalization of marijuana in Canada, the issue seems to be a local one. Read any Canadian paper and a similar pattern of questions surface: How is legalization going to contribute to economic development at the national, provincial, and local levels? Will the medical and recreational marijuana industry revitalize local urban economies and serve as a catalyst for new economic growth? Will it rejuvenate decaying local economies? Will it solve social and health problems?
But the real question is, how can Canada and its business sectors capitalize on its first-mover strategy within the global market system?
The case of Canadian marijuana oil production in Colombia, which is tailored for the Canadian medical marijuana consumer, illustrates the global outreach of Canada’s marijuana policy. By integrating medical marijuana within the parameters of the Canadian-Colombian Free Trade Agreement, the Canadian government was able to secure a supply market for its businesses back home.
The secrecy of international business, so characteristic of the dynamics of the globalization of the market, kept this hidden from the public eye. Very few know that Canada’s PharmaCielo is the biggest producer of marijuana oil in Colombia and the first company to obtain a production license overseas.
By looking at the legalization of medical and recreational marijuana from a transnational perspective, one is able see a more holistic picture of the Canadian government’s strategy, as well as the dynamics of the government-business partnership. Canada’s strategy in Colombia debunks the idea that the legalization of marijuana is purely a local economic development initiative that favors the Canadian economy. PharmaCielo’s global strategy puts into question the essence of the policy as well as the long-term sustainability of the nascent industry.
Canada’s federal legalization of medical and recreational marijuana opens the door for opportunities not only for those entrepreneurs willing to capitalize on the development of an internal market, but also for those willing to capitalize on Canada’s bilateral and transnational relationships across the world. By allowing its businesses to trade marijuana products with other nations that have also federally legalized marijuana, the government secured the internationalization of the marijuana business, something that was considered illegal not even a decade ago. PharmaCielo’s operations in Colombia not only illustrate how Canadian companies may challenge the “local” marijuana miracle that is being praised back in Canada, but also how free trade and global business legitimizes what was previously considered a violation of narcotics trafficking laws.
PharmaCielo’s leadership understood that the Canadian-Colombian Free Trade Agreement allowed them to not only become a trendsetter and a first-mover in the market of medical marijuana oils, but a short-term monopoly in a market that remains relatively unexplored. Canada’s own domestic experience with the administration of the medical marijuana market provided PharmaCielo and others with the “know how” necessary to capitalize on this emerging commodity market. The company executives focused their efforts on a global medical marijuana market that could potentially reach $55.8 billion USD by 2025, instead of a more limited Canadian domestic market. They were also well aware that the Canadian recreational marijuana market may surpass the domestic “combined sales of beer, wine, and spirits,” reaching close to $23 billion USD. Knowing that their comparative advantage is their access to foreign resources that reduce their production and commercialization costs, which could potentially give them an advantage over the Canadian domestic producer, PharmaCielo opted to establish a subsidiary in Colombia in order to capitalize on its advantageous position.
Its subsidiary, PharmaCielo Holdings S.A.S., was recently granted the first Colombian license for the cultivation of cannabis for medical sales, becoming the world’s largest licensed producer. Not only does this allow the company to control the Colombian market, but it also allows it to become an important supplier for the Canadian market and the future global market. PharmaCielo could potentially become a key supplier in markets such as the Netherlands, Spain, Portugal, North Korea, Uruguay, Peru, Jamaica, Australia, Switzerland, Argentina, Cambodia, Costa Rica, the Czech Republic, Ecuador, Italy, Estonia, Mexico, Israel, and Germany– all places where medical marijuana has been federally legalized. 
Capitalizing on Colombia’s warm climate, abundant rainfall, cheap labor, four growing seasons, and 12 hours of daylight all year long, the company says that it will be able to produce “enormous quantities, at a very low cost.” They project to yield at least “two million kilograms of dried marijuana flower per year, and as much as 250,000 kilograms of oil.” With this comparative advantage they could easily outpace any domestic Canadian producer, eventually competing against local entrepreneurs, and city and provincial governments that are planning on federally regulated recreational and medical marijuana for long-term economic growth.
PharmaCielo’s global business strategy will eventually decrease the price of the commodity in the Canadian market, negatively impacting local business competitors and other directly- or indirectly-connected secondary businesses. In the long run it will be the transnational businesses that will benefit from Canada’s federal legalization of marijuana.
The implementation of Canada’s Cannabis Act has already resulted in shortages of supply, environmental impacts, and market inefficiencies. Canada’s growing capacity is limited because of the country’s climate, forcing Canadian production to indoor systems that are energy inefficient and that result in higher market prices. The carbon footprint is high and the dependency on electricity, water diversion, pesticides, and water contamination will eventually be unsustainable. Therefore the option of producing overseas is more economically sound, even if it comes at a high human and environmental cost for countries like Colombia. This is the nature of globalization.
In the 1960s when young Boomers advocated in favor of the legalization of marijuana, they never imagined that the decriminalization process would be led by private corporations that would integrate the commodity into the global dynamics of transnational business. Nobody imagined that the commercialization of marijuana would become a policy of economic development. In Colombia, those who suffered the violence of the American led War on Drugs, would have imagined that the country would become an exporter of medical marijuana via a Canadian multinational corporation with American investors.
Ultimately, nobody imagined that Uruguay would be the first nation to legalize medical and recreational marijuana, that Canada would then turn it into a lucrative capitalist endeavor, or that Colombia would become a legal extractive market for the global economy. The taboo of 50 year ago is now a thing of the past. It has been replaced by new constructs dominated by the free market stakeholders, and the inventors of the new capitalist realities of marijuana.
- Wade Rowland. “Prolific Weed ‘Pot’ Source.” Winnipeg Free Press, January 13, 1969, p. 10.
- Wade Rowland. “‘Grass’ No More Harmful Than Alcohol: Psychiatrist.” Winnipeg Free Press, January 13, 1969, p. 10.
- See for example; Executive Council Office. “Economic Growth Plan to Incorporate Marijuana Sector.” Government of New Brunswick, March 24, 2017. Accessed December 30, 2017. http://www2.gnb.ca/content/gnb/en/news/news_release.2017.03.0364.html
- “Medical Marijuana Market Size to Reach USD 55.8 Billion by 2025.” Grandview Research, January 2017. Accessed November 1, 2017. http://www.grandviewresearch.com/press-release/global-medical-marijuana-market
- Robert Benzie, “Recreational Weed Could be a $22.6 B Industry,” Toronto Star, October 27, 2016. Accessed November 10, 2017, https://www.thestar.com/news/queenspark/2016/10/27/recreational-weed-could-be-a-226b-industry-study.html
- PharmaCielo. “PharmaCielo Becomes Colombia’s First Fully Licensed, Fully Operational Cultivator and Processor of Cannabis Oil Extracts,” Cision, October 24, 2017. Accessed November 14, 2017. http://www.newswire.ca/news-releases/pharmacielo-becomes-colombias-first-fully-licensed-fully-operational-cultivator-and-processor-of-cannabis-oil-extracts-652731973.html
- Lauren Torres. “All of the Places in the World where Pot is Legal,” Kindland, June 2, 2017. Accessed November 7, 2017. http://www.thekindland.com/policy/all-of-the-places-in-the-world-where-pot-is-2871
- PharmaCielo. “PharmaCielo Becomes Colombia’s First Fully Licensed, Fully Operational Cultivator and Processor of Cannabis Oil Extracts.”