Cannabis flowers into a regional economic model
Big multinationals are eyeing the cannabis market, which estimates say could be worth more than US$60 billion by 2024. As cultivation begins in Jujuy province, with San Juan looking on, could Argentina soon be exporting more marijuana than lemons?
No more about Rastafarians, Bob Marley or any of those other stereotypes. Today marijuana has caught the attention of multinational corporations, such as Coca-Cola and even Corona, who are exploring production in line with a global commercial phenomenon of liberalisation towards cannabis cultivation.
Argentina recently stepped into the game, with the help of private partners, to encourage cannabis as a rising “regional economic” model, one whose growth could quickly surpass lemon or blue berry production in the country.
In Jujuy province, the Security Ministry gave Governor Gerardo Morales the green light to facilitate the production of marijuana in dry, sunny areas for export. San Juan province is also looking into production, with Canadian firm Wayland Group already buying up land for cultivation.
Global spending on legal cannabis – whether for medicinal or recreational use – totalled US$20 billion last year, the news portal statista. com reports. By 2021, that figure is expected to rise to US$35 million; and in 2024, it could be as much as four times higher, at US$64 million, the site predicts.
In the United States and Canada, observers put the value of the legal cannabis market by 2022 at US$23 billion. In 2018, consumption levels reached US$11 billion, according to Arcview Market Research and BDS Analytics.
Israel, one of the most recent nations to enter the industry, estimates cannabis exports could bring in US$1 billion: in other words, twice as much as the Middle-Eastern country’s lemon exports in 2018. By way of comparison, Argentina last year sold US$262 million in citric fruits and US$242 million in oils, according to data from the INDEC national statistic bureau.
Unlike Ur ug uay, where production is a state monopoly, the local market in Argentina is open to foreign firms from the United States and Canada.
In Jujuy, Governor Morales has left the business in the hands of a private company, Cannabis Avatara, which will work in association with the provincial state and US firm Player’s Network Inc, the controlling company of Green Leaf Farms Holdings, which is reportedly providing financing.
Cannabis Avatara is run by the governor’s son, Gastón.
FAMILY BUSINESS
Gastón Morales has no background in agricultural production. However, he does have experience with provincial state-owned companies.
His associates in the cannabis venture, Green Leaf Holdings, have refrained from commenting on allegations of nepotism, preferring for the most part to keep a low profile.
Mark Bradley, CEO of Player’s Network Inc, a marijuana company “with licensed grow operations in Las Vegas, Nevada and Jujuy” cancelled a project in California to focus on the Argentine province.
“The lands where this joint venture is located are a thousand times bigger than the plantations in the United States,” he said, adding that his venture in Jujuy would also come with access to an airport and water provisions from two rivers.
The project is looking to access the domestic market initially, though providing only for legal use in clinics and hospitals for the treatment of epilepsy.
The cultivation of cannabis is currently illegal in Argentina, though the Judiciary has slowly but steadily authorised individual cases.
BIG FIRMS WATCH ON
Meanwhile, big multinationals are watching on, not wanting to miss out on “the cannabis moment”, with many analysing whether to launch products or to invest in companies that are exploring the cultivation of the plant.
For example, Coca-Cola reported last year that it is “closely monitoring” the development of Cannabidiol (CBD), a nonpsychoactive component of marijuana, as an ingredient in what it describes as functional beverages for wellbeing.
In addition, the main shareholder and parent firm of the tobacco giant Philip Morris, Altria Group, paid US$1.8 billion to buy a 45-percent stake in Cronos Group, a major Canadian cannabis producer.
Constellation Brands, the producer of the beer Corona, injected some US$4 billion into a Canadian firm, Canopy Growth, taking its stake in the firm to 38 percent as it seeks to take advantage of the global trend towards legalisation.
On Wall Street, investment in marijuana has spiked and there are now funds specialising in what has been labelled the new “gold fever,” although that should really be green.
In 2019, more than a dozen firms in the sector will list on the stock exchange.
In Jujuy province, the Security Ministry gave Governor Gerardo Morales the green light to facilitate production of marijuana for export. San Juan province is also looking into production, with a Canadian firm already buying up land.