The Costa Rican Government recently unveiled a plan to legalize and regulate the cultivation of hemp and medicinal cannabis in our country, as a key element for its economic reactivation.
The commercialization of products containing CBD (including food, beverages, and cosmetics) is already permitted here, presenting an important business opportunity.
Estimations are that the global cannabis market could grow from $12 billion in 2019 to $55.8 billion by 2025.
It is important to start by explaining, in general terms, about cannabis in its sativa variety. Cannabis is a plant from which many subspecies are derived, such as marijuana and hemp. The following cannabinoids are derived from cannabis: i) THC or Tetrahydrocannabinol (psychoactive component); ii) CBN or cannabinol (with very low psychoactive content); iii) CBD or cannabidiol (free of the psychoactive component).
It should be noted that hemp is not the same as marijuana, a mistaken notion among the uninformed. Marijuana has high levels of THC, which is responsible for creating psychoactive sensations that are directly related to the drug; while hemp, on the other hand, is related to CBN and CBD, so it has a minimum or no psychoactive component, certainly not enough to create the psychoactive effects of marijuana. Industrial hemp is one of the oldest crops in the world and is used for the manufacture of textiles, food, seed oil, biofuels, medicines, and cosmetics, among others. Hemp was largely replaced by plastic-based products such as polyester due to its production cost, and not due to its quality.
The World Health Organization has already ruled on this issue and has ensured that both Hemp and CBD-derived products do not contain any psychoactive effects. WHO also stressed that CBD substances with a level below 0.2% THC are not subject to international control since the product does not represent a risk for the consumers. That is why, in many countries around the world, regulations have already been created in this regard, allowing the consumption and use of hemp or CBD products with low or no levels of THC. Costa Rica is no exception. Last year BLP obtained on behalf of a client one of the first licenses in the country for the commercialization of products with CBD, free of THC, which is an important advance on this matter.
As for the cultivation of cannabis in Costa Rica, it should be noted that we have all the geographical and socio-economic facilities to carry it out. Our climate favors the plant’s cultivation due to the temperature, which is constant throughout the day all year round, as well as the cost of cultivation and processing that can be cents of US dollars compared to several US dollars that it costs to produce cannabis in colder climates, for example in Canada. It is proven that the geographical factors that favor the cultivation of coffee are very similar to those required by cannabis, which is why we are a strategic point for its production. Our closest point of comparison is Colombia, which already regulates the subject through licensing and is seeing very rapid growth in that sector of the economy.
Colombia, a traditional competitor of Costa Rica for its good coffee production, has already legalized and granted over 190 licenses for the cultivation of cannabis, creating around this new market more than 21,000 jobs. Colombia plans to have exports between $2.3 billion and $17.7 billion for the years to come, as a result of their efforts in this market.
The opportunity presented to the country to boost the economy through cannabis is vitally important, but it must be done in an orderly manner. Last year, Congresswoman Zoila Volio presented bill number 21388, which seeks to regulate the production of cannabis and hemp for medicinal purposes. However, the issue of licenses for their production is something that must be thoroughly analyzed, to regulate it in the way that is most convenient for the country and that can be used to the maximum advantage, without creating limitations and/or unnecessary taxes. It is important to have the support of the government to pass the law and take advantage of the opportunity.
In Costa Rica, a model similar to that of Colombia can be implemented, if the necessary parameters are followed to enable adequate control and provide legal security for those involved, creating requirements as well as a specialized agency that performs due diligence for each applicant. As a result, not only would the country be positioning itself as a key market to invest in hemp and medicinal cannabis, but it would also be helping the country’s economy enormously, including the job opportunity for unskilled workers in rural areas for plant cultivation, and developing numerous other paths to direct investment in the many sectors of the market.
Besides local clients who have already seen the strong demand for CBD-based products, transnational companies that are involved in cosmetic products, food, and beverages want to compete and position themselves in the Costa Rican market. Undoubtedly, we must take advantage of our geographical conditions and become a key participant in a new market for the so-called “Green Gold.”