Rumblings in the Jungle

Total
0
Shares

Colombia’s security situation has improved drastically in recent decades but guerrillas and gangs still exist in rural areas. Marijuana projects could become an easy target.

By: Luke Taylor

A local film is topping the Colombian box office. Pajaros de Verano, from award winning director Ciro Guerra, focuses on the lives of indigenous Wayuu clans in northern Colombia in the 1960s and 1970s, the time of the Bonanza Marimbera, when the region’s desert airstrips made it the exit point for illegal marijuana cargos.

More artfully than most Colombo-narco titles, the film vividly illustrates the extent to which blind greed and criminal interests can quickly envelope local communities once they realise the true value of the crop. Despite the very real security improvements that have made Colombia an up-and-coming tourist destination and led to vastly reduced violent crime rates in major cities, rural areas continue to pose security threats to underprepared enterprises.

Many a grizzled geologist or mining engineer can be found propping up the bar in Toronto or Vancouver with cautionary tales about investing in Colombia. Over the last decade dozens of junior companies left the country, many having experienced conflicts with local communities or illegal miners, extortion from criminal gangs or incinerated helicopters and even kidnappings from hold-out guerrilla groups.

Cannabis investors would do well to be wary. With the illegal routes for selling marijuana as profitable as ever, criminal groups could come to see legal marijuana projects as a new source of revenues. .

“Cannabis is green gold”, says Pablo Mena, CEO of Organic Sativa. “It moves thousands of millions of pesos in micro-trafficking, and at more at the macro level. Imagine if these gangs knew your harvest was ready, that they could easily steal it and sell it in the black market in no time at all.”

Cannabis investors would do well to be wary. With the illegal routes for selling marijuana as profitable as ever, criminal groups could come to see legal marijuana projects as a new source of revenues

In August CCI spoke with entrepreneurs, investors and security analysts to determine the key security threats to the industry, the scale of these threats, and when they are likely to arise.

THREATS: The 2016 signing of the peace deal between the Colombian government and the country’s largest guerilla group, the FARC, earned out-going president Juan Manuel Santos a Nobel Peace Prize. Kidnapping and murder rates are at their lowest in 40 years, although the latter, at 23 per 100,000 inhabitants is still far higher than the global average of 5.3.

Yet the threat of organized guerrilla violence remains. A second guerrilla army, the ELN, is currently engaged in peace talks with the government. Focussed in the border regions near Ecuador and Venezuela, the group has traditionally attacked oil and coal installations and continues to use kidnap for ransom, a tactic the FARC renounced in 2012.

The vacuum left by the disbanding FARC has also led to the creation of splinter groups focused on drug trafficking. Local researchers estimate there are up to 5,000 operatives across 70 criminal groups of which 1200 are former FARC fighters. This is far lower than the FARC’s 1990 peak, when it numbered over 17,000 but the remnants still cause headaches for the government. In April this year a FARC splinter group murdered hostages taken across the border in Ecuador.

“Across the country, the first threats are FARC dissidents, the ELN, and other criminal bands”, says Santiago Gaviria, a former-coronel in Colombia’s armed forces. “They are going to want to convert all this medicinal marijuana into recreational marijuana and begin selling it under the protection of a licence”, Gaviria warns. “They are always going to be a threat for the cultivation of cannabis”.

The ELN threat could be exacerbated by the arrival of new president Ivan Duque, who stated his intention to pull out of the peace talks during the election campaign. However, since taking office Duque has said he will take 30 days to discuss the matter of the ELN with the United Nations and the Catholic church, two groups that have pushed for continuing dialogue.

Industry stakeholders should monitor whether Duque’s election pledges to tackle the ELN and drug traffickers with a  hard-line security approach come to pass. Increased military engagement could fundamentally weaken criminal groups, but such a move would increase the probability of ELN attacks on multinational companies. In addition it potentially squander any chance of a peaceful resolution, thereby prolonging the existence of a significant security threat to the legal cannabis industry for many more years to come.

LOCAL THREATS:  But despite national groups being the most obvious threat to international businesses in Colombia, entrepreneurs in the legal cannabis sector should be more concerned – at least in the short term – with smaller, regional criminal gangs seeking to make a quick buck.

“Cannabis—a weed—only generates huge profits when it’s illegal and thus scarce”, explains Adam Isaacson, Director of WOLA’s Defense Oversight program, which closely monitors the presence of armed groups in Colombia. “Legal cannabis will have far lower profit margins: it will be a business like any other. The main security challenges that “regular” businesses face in Colombia come from small-scale criminal groups that rob, extort, and assault”.

Some of these groups may hold affiliations with national organized-crime networks such as the Clan del Golfo, “but the same is true of the gangs extorting regular businesses”, the analyst says.

This threat of national groups could increase should they adopt a strategy of diverting high-quality medicinal product to the recreational market, or if businesses are forced to deal in large sums of cash due to banking limitations (as is the case in the U.S.), Isaacson warns. Either of these would mean the industry quickly becomes more attractive to larger, national groups.

Should Duque push ahead with his plans to reintroduce aerial fumigation of illegal coca plantations – a policy ended under the Santos administration – crime levels in rural areas could further increase according to Sergio Guzman, an independent political and security risk analyst based in Bogota told CCI.

BE PREPARED: To minimise the threat of criminal groups the government has established formal security requirements for the sector. But whilst several military intelligence experts told CCI the requirements are more than adequate, many operating within the industry remain unconvinced.

Concerns centre around both the ambiguity of these regulations and whether in reality they will be enough to protect businesses from criminal interests. For non-psychoactive cannabis strains, for example, at present no concrete regulations or protocols exists at all. It is also unclear what exactly the regulations require for vehicles, security personnel and the transportation of cash.

The best official guide, suggest many entrepreneurs, is to follow the security protocol established in Resolution 2892/2017, but most in the industry are choosing instead to follow their own experience and the advice of consulting experts.

Various business representatives told CCI that this has influenced their decision to purchase greenhouses guarded by the latest security technology or at least covered cultivation sites as opposed to cheaper open-field cultivation sites (reducing the chance of burglary). “No amount of security personnel is enough to protect an open field” a lawyer told CCI.

It is also becoming quickly apparent that the preferred locations for cultivations sites are within an hour of airports to minimise security risks in transit (SEE MAP). Some firms are reportedly considering utilizing helicopters to transport product, a costly compromis that is out of the reach of small businesses.

A thorough understanding of local crime issues and social dynamics is essential to the reduction of security risks. Each region of Colombia poses its own unique risks and on-the-ground analysis is the first step towards developing an effective security strategy. .

“One of the things I have been repeating for years is that its very difficult to put a blanket rating on Colombia”, says Guzman. “All politics is local and all criminal activity is also local”.

In Cauca, for example, as well the presence of various armed groups, there are many recreational drug plantations who may see legal cultivations as a form of competition that endangers them. Although it offers great cultivation possibilities, “in Cauca everything is a risk”, advises Guzman.

Thus businesses should extensively evaluate the threats in the areas they propose to operate – principally criminal groups, transportation options, local community relations and illegal drug cultivation. While some areas offer great advantages, these advantages could be outweighed by security issues. Investors should be equally vigilant when laying their money on the line.

“I would look where the licences or project is based”, adds Guzman. “Secondly, look for the papers. Do they have policy, do they have insurance, do they have good relationships with the communities where they operate, and what are their relationships with authorities?”.

Subscribe to our readers list and receive our free month edition

You May Also Like

Dose Days are Gone

The government’s decision to revoke the personal marijuana allowance won’t directly impact Colombia’s medicinal cannabis firms but it does raise questions about political support for the industry.  By: Luke Taylor…
View Post

Where are the Greenbackers?

Entrepreneurs are scrambling to enter Colombia’s rapidly growing cannabis market, but could financial and legal barriers be hindering their chances of success? By: Luke Taylor Over the last month, the…
View Post