One US penny per gram of dry flower. That’s the bold production cost goal Allegiant Pharma have set for mechanized hemp cultivation at their project in Tolima, north of Bogotá. The forecast price for high-CBD dry flower for medicinal products is only a little higher at an estimate of $0.05 per gram.
“We looked across Latin America for low-cost production and Colombia made perfect sense,” says Adrian Garza, the company’s Co-Chairman. “Growing conditions are great, regulations are export driven and there is plenty of land available. With mechanization we’ll soon be processing hemp like tobacco.”
With seeds and CBD cultivation licenses in place – and with THC cultivation and fabrication permits imminent – the US-based company has successfully navigated some of the bureaucratic challenges facing many cannabis start-ups. The initial focus will be producing a low-THC, high-CBD product and making the most of Colombia’s geographic and economic advantages, including year-round 12 hour sunlight, a wide range of cultivable altitudes and inexpensive labor.
“Personally, I’m a believer in full spectrum THC products, but it’s not for everybody,” says Garza. “We see the market for CBD opening up around the world and a huge growth in nutraceuticals and medicines.”
Allegiant is in the final stages of transferring its cultivation licenses to a 150 hectare plot in Tolima, the same department in which Khiron Life Sciences, one of the sector’s leading firms, has its operations. That area could be expanded to up to 300 hectares. Having met the Colombian Agricultural Institute’s (ICA) deadline for seed registration, the firm also has 725 strains pending approval and has begun agronomic evaluation of its first batch of 66 seeds with THC levels of under 1%. “We want to combine cannabis and hemp seeds rich in cannabinoids and low in fiber, we’re confident we can produce at under 0.2% THC for export markets” says Garza.
The firm is currently raising capital for stage one development. It has engaged third-party consultants to design a EU-GMP certified processing facility, using an ethanol extraction process. Plans are also afoot to locate some parts of the production process in a free trade zone, cutting corporate taxes from 33% to 20%. The cultivation lands and plant are fully scalable and later planned developments include the installation of solar panels and self-generated ethanol. “It’s not enough to be low cost, we want to build a sustainable model too,” says Garza, whose brother Cory – the company’s Co-Chairman – founded Texan renewable company Solar Alliance.
The company remains flexible enough to adapt to changes in the regulatory environment in Colombia and internationally. The first phase will be to sell CBD isolate via brokers with the option to modify ratios of compounds to meet shifting market demands in the future. The Tolima site is also large enough to develop industrial hemp under WHO good agricultural and collection practices (GACP) standards. Regional expansion is also an option. “If the government would remove the barrier on the export of dry flower, we could adapt our strategy and make Panama a focus for processing facilities,” says Garza.
With a strong technical team already in place and financing well under way, Allegiant stands out from the pack of second generation Colombian cannabis firms. “I think the cannabis business could be worth US$1 trillion in the next 20 years,” says Garza. “As a place to grow cheaply, Colombia blows everywhere else out of the water.”