Europe is about to get a new source for medical cannabis. In late April, Cansativa GmbH, a company based in Frankfurt, Germany, announced that it would be the first European entity to legally import medical cannabis from Latin America. Headlines heralded the pioneering shipments, to be supplied by Clever Leaves in Colombia and Fotmer Life Sciences in Uruguay in May.
The process, which is now expected to begin this month, would start with the shipment of samples of “several different flower and extract products” to independent laboratories in Germany to be tested, according to Cansativa. Once the Latin American products are found to have met German and European standards, Clever Leaves and Fotmer will, according to the announcement, “work to demonstrate their ability to cultivate high quality pharmaceutical grade cannabis for future European commercialization.”
Should all go well, a pathway for cannabis will open between Latin America and Europe, via Germany. Until now, Germany—one of Europe’s top medical cannabis markets—has imported the plant from Canada and the Netherlands.
Neither of the companies in South America, it should be noted, are totally local ventures. Fotmer CEO Jordan Lewis, for example, moved to Uruguay from the United States after the country became the first in the world to legalize. Likewise, Northern Swan Holdings, Inc., a New York firm, is the key investor in Clever Leaves and Cansativa GmbH. On its board sit former New York Representative Joe Crowley, who was defeated by Alexandria Ocasio-Cortez in 2018, as well as former US Senate Majority Leader Tom Daschle of South Dakota.
Still, the arrangement is significant. It stands to benefit medical cannabis patients in Europe, who may get lower prices, as well as workers in Colombia and Uruguay, who stand to get gainful employment.
But while this export-import deal is significant, it’s far from simple. In Uruguay, the exporting of cannabis raises questions regarding the nation’s priorities and domestic supply. And it remains to be seen who will benefit most from these export-import relationships.
What do lower prices in Europe mean for workers in Latin America?
To learn more about how the new relationship between these three countries might shape the lives of locals on the production side of the equation, Cannabis Wire reached out to both companies in Latin America and inquired about wages and working conditions.
Fotmer, which employs 180 people in Uruguay, declined to disclose the average employee’s monthly wages, but the company did say that workers “earn way more than the minimum salary, which is set by the collective agreement of the sector.” Out in Colombia, Clever Leaves employs 312 people. In an interview with Cannabis Wire, the company’s cofounder, Julián Wilches, also declined to say how much the average employee earns. However, he did say that the law requires the company to pay its workers “more than minimum wage,” which is currently set at $828,116 Colombian pesos (about $255 USD) per month.
In general, Uruguayans earn more than their Latin American counterparts. By law, they’re entitled to at least $15,000 pesos (about $430 USD) per month. Still, employees in both Uruguay and Colombia make markedly less than those working in North America and Europe. (In Canada, where the minimum wage varies by region, like in the United States, employees must be paid no less than $11.06 (about $8.32 USD) an hour. In the Netherlands, minimum wage depends on age, but those who are at least twenty-one years old are entitled to € 1,635.60 (about $1,830 USD) per month.)
Still, according to Julián Wilches of Clever Leaves, the Latin American companies’ ability to offer cannabis products at cheaper prices is not solely a result of global wage discrepancies. Colombia, he said, is simply an excellent place to grow cannabis due to its ideal cultivation conditions, which include twelve daily hours of sunlight. Because the company spends less controlling for these factors than its counterparts, it can manufacture products for a fraction of the cost.
Wilches also underscored that Clever Leaves formally employs its workers. This, he said, is uncommon in the agricultural sector in Colombia, which tends to subcontract workers to “evade responsibilities.” Notably, 75% of his cultivation employees are women, and 40% of them are the heads of their households. As a whole, said Wilches, the company places a premium on gender equity and environmental concerns.
Is Uruguay exporting product needed at home?
Another feature of Cansativa’s announcement that is worth noting is what’s between the lines: Germany is importing cannabis from Latin America to address its medical cannabis demand. Meanwhile, the Uruguayan government has repeatedly indicated that its cannabis supply does not meet its own domestic “non-medical use” demand. (Medical demand has also recently gone unmet: a 2018 Brookings Institute report noted that “Despite the obstacles Uruguayans face in accessing medical cannabis, the government has prioritized large scale production of cannabis for the export medical market.”)
As the government itself has recognized, the sale of “non-medical use” cannabis in Uruguay has been hindered by supply shortages. In fact, in March 2019, the country’s Institute for the Regulation and Control of Cannabis released a report on the state of its regulated market. The report, which includes data through January 30, provides a snapshot of trends—and signals that the supply of cannabis does not meet the demand. This begs the question: Why is Uruguay making efforts to export cannabis when product is needed at home?
The government took on the issue of domestic supply last year. Back in December 2018, the Institute announced that it will issue up to five more licenses to produce and distribute “non-medical use”cannabis, following an analysis of daily sales that pointed to insufficient product at some authorized retailers. In addition, the Institute deemed it necessary to increase the availability of cannabis in its network of pharmacies, as well as to expand pharmacies’ distribution. (To date, only two companies are licensed to produce cannabis in the country.)
And so, in February, the Institute began accepting applications from interested companies, promising to supply three hectares (about seven and a half acres) of land to each winning applicant, along with perimeter security provided by the agency and the National Police. Applicants, in turn, are expected to produce two tons of dry flower per year for the domestic “non-medical use” market.
Still, that pales compared with the new projections for medical cannabis for export to Europe. In April 2019, Fotmer CEO Jordan Lewis told France24 that the company aims to produce six tons of medical cannabis this year, but ultimately plans to reach 400 tons annually. In the related press release, Fotmer indicates that the company’s Uruguayan operation is “solely catered to global export.” When asked to confirm these projections, Eleonora Navatta, a spokesperson at the Institute for the Regulation and Control of Cannabis, did not address them directly. Instead, she supplied Cannabis Wire with Fotmer’s license, which only indicates that Fotmer has been authorized to cultivate, harvest, dry, and gather “psychoactive cannabis” and transport a total of 30,000 clones.
In response to questions on the export of domestically-cultivated cannabis in light of the local supply shortage, Navatta told Cannabis Wire that “Fotmer produces cannabis for medical use. Therefore, they are not the same markets, nor the same product.”
But the logic can be puzzling. When Cannabis Wire pressed for details, the Institute pointed to its 2013 legal framework, which stipulates that cultivators must seek separate licenses when dealing with “psychoactive cannabis not for medical use” and “medical psychoactive cannabis”—both of which are defined as cannabis “whose content of natural tetrahydrocannabinol (THC) is equal or over 1% (one percent) in volume.”
But if both are psychoactive, Cannabis Wire then asked the agency, why can’t the cannabis grown by Fotmer be used locally, for the adult use market? Its response: “Because the license is for medical use.” In a subsequent written exchange, Navatta added that:“The systems for medical and non-medical are separate and independent, which is why they are not mixed at any point in the process.”
Uruguay has reasons for this careful dance. Like other countries engaged in the export-import of cannabis, Uruguay is making painstaking efforts to comply with international drug treaties, which only allow for export-import of medical cannabis. But Uruguay’s situation is more delicate than other countries because it was the first nation in the world to legalize adult use cannabis in 2013, subjecting the tiny country to criticism. In fact, in 2015, the International Narcotics Control Board, which oversees the implementation of the UN drug conventions, carried out a mission to Uruguay to discuss its adult use program. In a subsequent report, the Board signaled that legalization “is contrary to the provisions of the international drug control conventions” that limit drugs to medical and scientific purposes.
How Germany Got On Board
This criticism does not go unnoticed by other nations. Indeed, when weighing its medical cannabis import options back in June 2018, the German Parliament also wondered whether Canada, which was poised to legalize adult use in October, would come to be condemned by the International Narcotics Control Board.
Getting Germany to import from Uruguay, then, is no small feat.
Jakob Sons, Co-CEO of the German company Cansativa, told Cannabis Wire, “we provided German authorities with all the necessary information on the system in Uruguay, which led to a direct exchange of information between the regulators. In fact, the German authorities contradicted the former assessment of the parliament—this is quite uncommon in the German administrative system.”
(When contacted by Cannabis Wire, Federal Institute for Drugs and Medical Devices spokesperson Anja Kremzow, who did not confirm Sons’ exchange, said that the agency “only supervises the cultivation of medicinal cannabis in Germany,” adding, “We do not have a central coordination function in the import of cannabis.”)
Niema Movassat, a member of the German Parliament representing The Left party and spokesperson on drug policy, was present during the June 2018 deliberations.
When asked to speak to the country’s change of heart, Movassat noted that “In the past, the German Government rejected [imports] from Uruguay because the country has also legalized cannabis for recreational use.” Now, he said, the Federal Institute argues that “any country that operates a cannabis agency and licenses for the cultivation of cannabis exclusively for medical purposes under the provisions of the 1961 Convention, is worthy of consideration as an exporting country for the import of cannabis to Germany.”
The “fact that cannabis is available as a recreational drug and as a medicine at the same time in one country doesn’t matter anymore,” he added.
Movassat also noted that German officials changed their minds because “they couldn’t cover the needs of thousands of cannabis patients.” When it comes to medical cannabis, he added, the “biggest problems in Germany are the shortness of supplies,” and the first domestic harvest is not expected until the end of 2020. “So,” said Movassat, “the German Government had to react and decided to relax the requests of cannabis import.”
As noted, the export-import deal could generate more employment in Latin America. However, in prioritizing exports, Uruguay is allowing for the cultivation of cannabis that is comparable to the kind that is in short supply at home to be shipped abroad.
Could Fotmer one day cultivate cannabis for locals? Maybe.
“We are currently focused on exporting to international open markets,” Vera Tochetti, a Fotmer spokesperson, told Cannabis Wire.
She then added: “nonetheless, we hope to also supply the domestic market within the near future.”
Meanwhile, officials in Canada, Latin America, and Europe continue to be in conversation about the cannabis industry and the potential for expansion and cooperation. In April, the president of Uruguay’s Secretariat of the National Drug Board and the executive director of Uruguay’s Institute for the Regulation and Control of Cannabis met with Canadian officials in a bilateral meeting on the development of legal cannabis regulatory systems in both countries. More recently, Julián Wilches, of Clever Leaves in Colombia, traveled to France to participate in a discussion on medical cannabis hosted by that country’s National Agency for Drug Security.