Known as the father of the cannabis industry, Steve DeAngelo is an entrepreneur, activist, author and on-screen personality. He co- founded several iconic cannabis businesses, including Harborside, one of the US’s six licensed dispensaries, and ArcView Group, the first cannabis investment firm. He made his first visit to Colombia in May.
CCI: What were the highlights of your trip to Colombia?
SD: There was a “best” in every place I visited. In Bogotá, the conference was amazing, and I had the opportunity to attend a Muisca ceremony with a shaman, which was a great experience and brought me closer to the Colombian indigenous culture. In Bogotá and Cartagena, both conferences were a lot more international than others I had attended. There were people from every continent, and I think every Latin American country had representatives. There were a couple of different groupings of people with deep personal connections to cannabis and we found each other.
In Bogotá I also saw one of the smartest, most efficient cannabis farms I’ve ever visited. They’re using organic production techniques I’d never seen before. Seeing the legal Colombian cannabis industry starting to move towards organic production was another highlight, both as a citizen of the world and also a cannabis consumer knowing organic cannabis is superior in quality.
CCI: How was your trip to the Sierra Nevada near Colombia’s Caribbean coast?
SD: The interesting thing about Santa Marta was finding a new type of cannabis investment called conservation cannabis. I met a few American conservation economy specialists who are developing a project in Santa Marta. Investors in these projects can fund agriculture and forestry projects to develop a piece of land with the promise to keep the rest undeveloped. Typically, the ratio is 70% undeveloped and 30% developed, but because of the margins on cannabis, it may be possible to conserve even more land.
CCI: What’s your perspective of Colombia’s much vaunted climate for cannabis cultivation?
SD: The climate is both an opportunity and a challenge. It’s an opportunity because Colombia has an abundance of light and the quality and yield of cannabis are directly related to the amount of light. The challenge is that thus far, most cannabis production has been in places with different light cycles, and different strains are going to need more work.
I went to Toribio, and at nightfall you can see the mountains lit up because they’re growing strains that are not adapted to the natural climate. The lights manipulate the photoperiod cannabis is exposed to; cannabis won’t go into flower until the amount of light is reduced. When you take the standard cannabis growing techniques being used in the rest of the world to a tropical climate like Colombia, some adjustments are necessary. It’s going to be a learning process that’s going to unfold in the coming years, and in the answer will be found another opportunity.
My advice to regulators is to understand the position of small growers, and help them find a safe and legal livelihood for their families.
CCI: Does Colombia have the genetics
to be a world player?
SD: When I was young, there were Colombian strains with very specific terpene and cannabinoid profiles that were highly prized by consumers. When I went to Colombia, I was not able to find the real thing, but I believe the original genetics are still present in the more remote parts of Colombia. From a commercial point of view, they would be very valuable. There may be some very unique medicinal applications for these strains because of the specific cannabinoid and terpene profile.
CCI: Are there any other major advantages to cultivating in Colombia?
SD: I think the first opportunity is the people of Colombia, who I find are resourceful, smart, inventive and determined. They have multi-decades of experience; it has been part of the culture for some time. It has not been adequately exploited, but the cannabis talent is deep and has expertise.
CCI: Do you have any concerns or see areas of opportunity in the Colombian regulations?
SD: I understand small farmers are required to destroy illicit crops before requesting a cannabis license. What I understood from Juan Manuel Galán was when the peace process was being designed and cannabis being legalized, one of the key purposes was to provide a legal market for armed groups that were growing illegal crops.
With legalization, they wouldn’t need to build armies to protect their crops, and instead would get involved in legal activities. It will be very counter-productive to exclude people who were growing because these small growers don’t have other options. They’ve taken the risk to grow because it’s the only crop that enables them to provide for their families, and they cannot afford to destroy those crops. So, this requirement operates to exclude small farmers, and I think excluding small farmers is a very certain way of perpetuating the underground market.
They cannot afford to stop what they are doing. If they are denied access to the legal marketplace, they will have no alternative but the underground market, where their crops will empower criminal organizations. Unfortunately, it looks like that is what is beginning to unfold in Colombia, so my advice to regulators is to understand the position of small growers, and help them find a safe and legal livelihood for their families.
When you take the standard cannabis growing techniques being used in the rest of the world to a tropical climate like Colombia, some adjustments are necessary.
CCI: Colombian cannabis firms have very different strategies. Where do you think Colombia will find its place in the global cannabis industry?
SD: Right now, the largest cannabis growers in the legal space seem to be B2B mass production extract for the European medical market. I think all the sectors are going to be important, but one of my concerns about this sector is if it comes to dominate the Colombian industry, a lot of the added value is going to be claimed by foreign companies. That’s an unfortunate pattern Colombia has seen in the past, and I think the potential to create, brand and market final added value products is huge. In Colombia, I saw a lot of young, excited entrepreneurs who understand cannabis and the reasons people use it pretty well and have the ability to create cannabis brands.
If Colombia focuses on B2B exports of raw materials, it will be selling its shelf short of its full potential. All the creativity of the Colombian cannabis community, the inventiveness, the ability to make new products and the vitality of Colombian culture could be expressed in brands.
CCI: What do you think are the main concerns for American investors? And have you perceived growing interest in Colombia?
SD: I think their major concerns are going to whether Colombian operations are able to scale up to become a dominant suppliers to the European market. How’s the cost of production going to change?
Now, I am an unusual investor who has concerns other investors may not have. I personally am a fan of socially conscious cannabis companies. Organic production is very important to me. I want to know things like how the workers are being treated, is the operation being conducted in an environmentally sustainable way, is there diversity, is there any quality of opportunity, etc.
CCI: What do you think a small producer can do to compete against big corporations and not be left out the cannabis boom?
SD: One of the most important things is to construct the regulatory system in such a way to allow the entry of small producers. The challenges those small producers face are developing the skill and the capital required for compliant production. Most small producers have grown up in an underground economy and have not had the opportunity to learn the necessary skills to succeed in the mainstream economy. The typical investment criteria are hard for people who come from the underground market. Investors typically look at financials and most underground producers don’t keep financial records, so there needs to be some support and understanding of these challenges.
They also have skills the legal cannabis industry does not have now – an understanding that comes from generations of working with the plant. My belief is ultimately the most successful cannabis companies are going to be built by those who combine ancestral knowledge and modern mainstream skills.