Global fluctuation linked to the regulation of the use of the plant.
The medical cannabis industry seems to be at its best, in the middle of so many legal difficulties it has had a fast growth, with great movements and performance; that’s the reason why a row of large companies from different sectors of construction, food, textiles, pharmaceuticals, among others; await legalization. However, while that so dreamed legalization ceases to be a utopia to become reality, there are still many doubts and small markets have great supply and access limitations.
A representative in charge of international sales for Rhizo Sciences, a company located in Washington, U.S.A. dedicated to the development, production and exportation of cannabis-based products; identified the production and market opportunities in which they can add value through their products, which is why he confesses that they spend a large part of their time generating prices.
The reality is that several Canadian, European, Israeli and Australian companies, despite being involved in international trade agreements, have encountered difficulty in establishing fair market prices in international commerce, since liquidity, volume, transparency and open participation are required but almost none of these currently exist in the industry. Countries such as Canada and the Netherlands have been the main exporters of cannabis and as we approach 2022 this number of countries is expected to increase as legalization happens.
Although new producers have emerged in countries such as Uruguay, Colombia and some parts of Africa, due to their low cost in labor, their growth conditions, and regulations, there are still delays for users in obtaining products, since the demand of patients has had exponential growth, they have found themselves in a position where the need leads them to grow their own plants or go to artisan products to obtain their medicine, consequently affecting global prices. So, great doubts arise, what is a fair price? What is the reasonable price for investors, buyers and sellers to work with when planning projects and negotiating deals in the regulated market for legal cannabis?
These are questions hard to answer since everything depends on two factors: the first, the legal and regulatory progress that the cannabis industry has in each country; and the second, the quality and safety of the products, which varies according to the control and care given to the plant.
Something very clear and evident is that production costs will go down as the industry consolidates, becomes more professional and technology improves. However, prices will remain highly sensitive to regulation, trade restrictions, and changes in supply and demand, which is why we see that the cannabis industry cares more about legality, compliance, and market timing than product growth.
In 2019, speakers at the CannaTech held in Panama explained that to lower the costs of medical cannabis, it is necessary to increase the production of the plant and the companies that generate technology and research for medical use, in addition to developing a massive technology that facilitates the process of production, extraction, manufacturing, commercialization of cannabis products, at the same time that countries execute coherent policies and comply with the legal framework.
For now, the use of cannabis-derived drugs remains regulated in several Latin American countries, including Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Peru, Puerto Rico and Uruguay.
Sources:
Dallas Mc Millan. (2017). ANÁLISIS INTERNACIONAL DEL MERCADO DEL CANNABIS MÉDICO. 30/03/2021, de GREEN HEALTH
Redacción Web Ciudad Cannabis News. (2019). Expertos hablan sobre futuro y precio del cannabis medicinal. 30/03/2021, de Cuidad Cannabis News
Bloomberg. (2019). Cannabis medicinal presenta ventana para obtener altos precios por cinco años. 30/03/2021, de AGRO NEGOCIOS