TerraLex Cross-Border Guide to Cannabis Guide

Yes. With the enactment of Legislative Act No. 002 of 2009 and its subsequent regulations, medical cannabis was legalized in Colombia.

General information As a general rule, growing cannabis plants requires the prior obtention of a license. Colombian regulations divide cultivation licenses into the following two types: (i) the license for the cultivation of non-psychoactive cannabis plants and (ii) the license for cultivation of psychoactive cannabis plants.

In both cases, the license holder has to guarantee that the seeds used for growing have a legitimate origin, which in practice means that the license holder must either have a specific license for the use of cannabis seeds for sowing or buy the seeds from a third-party duly licensed for the use of cannabis seeds for sowing.

The governmental authority in charge of evaluating, granting, and monitoring the licenses for cultivation of both psychoactive and non-psychoactive cannabis is the Office for the Control and Monitoring of Chemical and Drug-Related Substances of the Ministry of Justice.

The licenses are usually granted for a five-year term and might be renewed for the same period as many times as required.

The evaluation and granting of the license can take up to 30 business days from the filing of the application. Nonetheless, due to the Ministry of Justice’s workload, in practice the licensing procedure might take between six months and one year.

The general requirements for applying for a cultivation license (both for physchoactive and non-psychoactive cannabis) consist of the following:

• Application form signed by the applicant’s legal representative or attorney;
• Power of attorney (if applicable);
• Indication of the applicant's Tax Identification Number (NIT) for consultation in the Unified Commercial and Social Register (RUES);
• Copy of the certificate of incorporation and legal representation of the applicant (this is required only if the applicant is not exempt from being registered with the Chamber of Commerce, according to art. 3 of Decree 427 of 1996);
• Copy of the legal representatives' ID;
• Evidence of payment of the application fees;
• Income affidavit signed by the legal representative and the accountant or tax auditor, as applicable;
• Copy of the accountant or tax auditor's professional license;
• Copy of the agreement whereby the consortium, temporary union, and any other of association or collaboration was created (this is required only if the applicant is a consortium, temporary union, and/or any other form of collaboration or association);
• With respect to the real property where the project will take place: (i) indicate the real property's ID number (número de matrícula inmobiliaria) in the application form; or (ii) provide a copy of the document whereby the applicant acquired a right over the property (e.g. lease agreement); or (iii) provide an affidavit attesting the possession of the real property if the applicant is not the owner of the property;
• Description of the equipment and the areas where the activities will take place. This description shall include the measurements and dimensions and the photographic support of the equipment and the areas.

License for the cultivation of non-psychoactive cannabis plants:

This license authorizes the cultivation of cannabis plants with a THC percentage lower than 1% by dry weight, which may comprise the following activities: sowing, acquisition and production of seeds, plants storage, commercialization, distribution and final disposal, export, and use for medical and scientific purposes.

License subtypes:

• Production of grain and seeds for sowing
• Derivatives manufacturing
• Industrial purposes
• Scientific purposes
• Storage
• Final disposal

In addition to the general requirements listed above, the application for a license for the cultivation of non-psychoactive cannabis must meet the following special requirements:

• Description of the strains to be used and a technical data sheet, in order to credit the non-psychoactive condition of such strains;
• Favorable opinion by the Ministry of Justice, as a result of the evaluation visit carried out on the property where the project will be located. The visit will involve the following aspects: (i) evaluation of the location and facilities and cross-checking with the information and photographic records filed with the application; (ii) verification of the internal procedures plan for implementing the security protocol; (iii) verification that the area is free of preexistent cannabis crops;
• Documentation attesting the research/investigation project (this only applies if the use of cannabis seeds for sowing has scientific purposes. The research project shall be carried out by a university or by a duly incorporated legal entity whose corporate purpose includes scientific research);
• Description of the research project (this only applies if the cannabis cultivation has scientific purposes).

License fees:

The amount is equivalent to 420.25 Colombian Legal Daily Minimum Wage (LDMW). This is approximately US$3,870 for 2019.

If the license involves two or more lands located in the same municipality, an additional fee of 138.94 LDMW (this is approximately US$1,278 per additional land) will be charged. If the license application involves two or more lands located in different municipalities, an additional fee of 187.17 LDMW (this is approximately US$1,720 per additional land) will be charged.

License for the cultivation of psychoactive cannabis plants

This license authorizes the cultivation of psychoactive cannabis plants, which may comprise the following activities: sowing, acquisition and production of seeds, storage, commercialization, distribution and final disposal, exportation, and use for medical and scientific purposes.

License subtypes:

• Production of seeds for sowing
• Grain production
• Derivatives production
• Scientific purposes
• Storage
• Final disposal.

In addition to the general requirements listed above, the application for a license for the cultivation of psychoactive cannabis must meet the following special requirements:

• Security protocol which includes the measures to ensure the appropriate protection levels of the areas and facilities where the activities will take place;
• Cultivation plan, consisting of the plan for the initial period of the license (first year);
• Favorable opinion by the Ministry of Justice, as a result of the evaluation visit carried out on the property where the project will be located. The visit will involve the following aspects: (i) evaluation of the location and facilities and cross-checking with the information and photographic records filed with the application; (ii) verification of the internal procedures plan for implementing the security protocol; (iii) verification that the area is free of preexistent cannabis crops;
• Documentation attesting the research/investigation project (this applies if the use of cannabis seeds for sowing has scientific purposes. The research project shall be carried out by a university or by a duly incorporated legal entity whose corporate purpose includes scientific research);
• Description of the research project (this applies if the cannabis cultivation has scientific purposes).

License fees:

Amount equivalent to 1,231.29 Colombian Legal Daily Minimum Wage (LDMW), this is approximately US$11,334 for 2019.

If the license involves two or more lands located in the same municipality, an additional fee of 138.94 LDMW (this is approximately US$1,278 per additional land) will be charged. If the license application involves two or more lands located in different municipalities, additional fees of 187.17 LDMW (this is approximately US$1,722 per additional land) will be charged.

Ordinary quota allocation for the cultivation of psychoactive cannabis

The license holder shall request and obtain from the Ministry of Justice a quota, which consists of the maximum amount of plants that the license holder is allowed to sow and the maximum total area in which the license holder is authorized to sow psychoactive cannabis plants.

To request the allocation of an ordinary quota, the applicant must be in possession of a valid license for the cultivation of psychoactive cannabis. The annual quota must be requested on or before the last business day of April of the previous calendar year.

The quota is consumed upon reception of the cannabis for its transformation and shall be consumed on or before the end of the calendar year.

General information Manufacturing cannabis derivatives such as resin, oil, and extracts obtained from cannabis is subject to previously obtaining a license by the Ministry of Health and Social Welfare. This requirement does not apply to the fabrication of final products with cannabis contents (however, other authorizations such as a sanitary registration may apply).

The license for manufacturing cannabis derivatives has 3 different sub-types consisting of the following:

1. Manufacture of cannabis derivatives for domestic use: This type of license comprises the activites starting at the reception of the crop at the manufacturing area and up to the delivery of the cannabis derivatives to third parties or to the license holder. These activities may include cannabis purchase activities, manufacture of cannabis derivatives, storage of cannabis and its derivatives, transportation of cannabis and its derivatives, use, distribution and commercialization of cannabis derivatives in national territory.

2. Manufacture of cannabis derivatives for scientific research purposes: This type of license comprises the activities starting at the reception of the crop at the area and up to the cannabis derivatives manufacturing with scientific purposes. These activities may include cannabis purchase activities, cannabis derivatives manufacturing, storage of cannabis and its derivatives, transportation of cannabis and its derivatives, and research activities with cannabis and its derivatives.

3. Manufacture of cannabis derivatives to export: This type of license comprises the activities starting at the reception of the crop at the manufacturing area and up to the direct export of the cannabis derivatives. These activities may include cannabis purchase activities, cannabis derivatives manufacturing, storage of cannabis and its derivatives, transportation of cannabis and its derivatives, and cannabis derivatives exportation.

The licences are granted for a five-year term and may be renewed for the same period as many times as required.

The evaluation and granting of the license can take up to thirty business days as of the filing of the application. Nonetheless, due to Ministry of Health and Social Welfare's workload, in practice the licensing procedure might take between six months and one year.

Requirements for applying to a license for manufacturing cannabis derivatives:

• Application form signed by the applicant’s legal representative or attorney;.
• Power of attorney (if applicable);
• Indication of the applicant's Tax Identification Number (NIT) for consultation in the Unified Commercial and Social Register (RUES);
• Copy of the certificate of incorporation and legal representation of the applicant (this only applies if the applicant is not exempt from being registered with the Chamber of Commerce according to art. 3 of Decree 427 of 1996);
• Copy of the legal representatives' ID;
• Evidence of payment of the application fees;
• Income affidavit signed by the legal representative and the accountant or tax auditor, as applicable;
• Copy of the accountant or tax auditor's professional license;
• Copy of the agreement whereby the consortium, temporary union, and any other association or collaboration was created (this only applies if the applicant is a consortium, temporary union, or any other form of collaboration or association);
• With respect to the real property where the project will take place: (i) indicate the property's ID number (número de matrícula inmobiliaria) in the application form; or (ii) provide a copy of the document whereby the applicant acquired a right over the property (e.g. lease agreement) or (iii) provide an affidavit attesting the possession of the property if the applicant is not the owner of the property;
• Description of the manufacturing area where the activities will take place;
• Description of the equipment and the areas where the activities will take place: The description shall include the measurements and dimensions and the photographic support of the equipment and the areas;
• Security protocol;
• Manufacturing plan, consisting of the plan for the initial period of the license (first year).

Additional requirements applicable to the license for manufacturing cannabis derivatives for scientific research purposes: documents supporting the research project.

Additional requirements applicable to the license for manufacturing cannabis derivatives for exportation: documents that support the exportation plan.

Ordinary quota allocation for manufacturing cannabis derivatives

If the products derive from psychoactive cannabis, the license holder shall request the allocation of an ordinary quota for manufacturing psychoactive cannabis derivatives.

The license holder shall request and obtain a quota before the Ministry of Health and Social Welfare, which consists of the maximum amount of cannabis (in dry weight) that the license holder is authorized to acquire for manufacturing psychoactive cannabis derivatives during a specific period.

Requirements for requesting an ordinary quota: The applicant must be in possession of a valid license for psychoactive cannabis cultivation. The annual quota must be requested on or before the last business day of April of the previous calendar year.

The quota is consumed upon sowing and shall be consumed on or before the end of the calendar year.

License fees:

The amount equivalent to 162,60 Colombian Legal Daily Minimum Wage (LDMW), this is approximately US$1,470 for 2019.

Acquisition of psychoactive cannabis derivatives

The acquisition of psychoactive cannabis derivatives requires the registration of the buyer/recipient in the National Narcotics Fund.

Colombian law does not require a specifc license to distribute cannabis final products to other re-sellers. Therefore, to distribute products containing cannabis to other re-sellers, the companies must follow the specific regulation according to each product (e.g., food, beverages, cosmetics, dietary supplements, and drugs).

Colombian law does not require a specifc license to distribute cannabis final products to other re-sellers. Therefore, to distribute products containing cannabis to other re-sellers, the companies must follow the specific regulation according to each product (e.g., food, beverages, cosmetics, dietary supplements, and drugs).

The advertising of cannabis, its seeds, and derivatives is forbidden, except in technical and scientific publications addressed to medical and veterinary staff.

The potency is only regulated for the growing and distribution of cannabis and cannabis derivatives. Therefore, conducting activities with a cannabis variety that contains more than 1% of THC requires one to obtain the license for the cultivation of psychoactive cannabis plants before the Ministry of Justice.

The Colombian regulatory authority has not authorized any medicine containing cannabis derivatives; however, current regulation allows ompounded medication, provided that such medication complies with the following requirements:

• Physician prescription;
• Prepared for a specific patient;
• Prepared at an authorized pharmaceutical establishment; and
• The cannabis derivatives must be provided by an individual duly licensed to manufacture cannabis derivatives.

For other cannabis final products, there is no specific regulation. Therefore, such products shall comply with the corresponding food, drugs, dietary supplements, beverages, and cosmetics regulation.

License for the use of cannabis seeds: This license authorizes the handling of seeds for sowing, which may comprise the following activities: acquisition, import, storage, commercialization, distribution, possession, final disposal, export, and use for medical and scientific purposes. The license holder is entitled to undertake research activities related to its operation and to increase the productivity of the activities authorized by the license.

License subtypes:

• Commercialization or delivery;
• Scientific purposes.

Special requirements:

In addition to the general requirements listed in section a) above, the application for a license for the use of cannabis seeds must meet the following special requirements:

• Security protocol;
• Documentation attesting the research/investigation project (this applies in case the use of cannabis seeds for sowing has scientific purposes).
• Description of the research project (this applies in case that the use of cannabis seeds for sowing has scientific purposes).

License fees:

An amount equivalent to 351.92 Colombian Legal Daily Minimum Wage (LDMW), this is approximately US$3,190 for 2019.

If the license involves two or more lands located in the same municipality, a fee of 138.94 LDMW (this is approximately US$1,280 per additional land) will be charged. If the license application involves two or more lands located in different municipalities, additional fees of 187.17 LDMW (this is approximately US$1,720 per additional land) will be charged.

The licenses are granted for a five-year term and might be renewed for the same period as many times as required.

The evaluation and granting of the license can take up to thirty business days as of the filing of the application. Nonetheless, due to the Ministry of Health and Social Welfare's workload, in practice the licensing proceeding may take between six months and one year.

The cannabis industry is still a budding sector in Colombia and there are no official assessments or statistics on the economic impacts of its legalization. Nonetheless, it is foreseeable that the pharmaceutical and cosmetic sectors will be permeated by the appearance of cannabis supplies and the growing intertest in cannabis-related products.

Recreational marijuana is not legal in Colombia.

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Understanding that hemp consists of cannabis seeds and other industrial derivatives of cannabis without CBD and THC, it is legal in Colombia. Hemp does not have any specific regulation, therefore, the cannabis regulation and requirements described above will be applicable.

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Yes, CBD is legal in Colombia. CBD does not have any specific regulation, therefore, the cannabis regulation and requirements described apply to CBD.

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The authorities responsible for regulating cannabis and related products in Colombia are the following: 1. Ministry of Justice/Office for the Control and Monitoring of Chemical and Drug Related Substances 2. Ministry of Health and Social Welfare/Office of Medicines and Health Technologies 3. Colombian Agricultural Institute (Instituto Colombiano de Agricutlura – ICA) 4. National Narcotics Authority (Fondo Nacional de Estupefacientes -FNE)

The legal framework applicable to cannabis consists of the following regulations:

1. Legislative act 002 of 2009
2. Law 1787 of 2016, which regulates the access to the medical and scientific use of cannabis
3. Decree 613 of 2017 and its amendments, which regulate Law 1787 of 2016
4. Resolutions 2891 and 2892 of 2017 issued by the Ministry of Health and Social Welfare
5. Resolutions 577, 578 and 579 of 2017 issued by the Ministry of Justice
6. Resolution 3168 of 2015 issued by the Colombian Agricultural Institute

No, there are no specific incentives for the development of the cannabis industry. Nonetheless, there are several incentives for investment projects, such as the following: 1. VAT paid in the acquisition of productive tangible fixed assets (AFRP in Spanish): The VAT paid in the acquisition of AFRP does not give right to a creditable VAT, but such VAT can be recognized as a tax credit for income tax purposes.

The tax credit can be applied in the year in which the asset is acquired or in the following periods. In relation to the formed or built assets, the tax credit can be applied in the year in which the depreciation begins to be applied.

The tax credit is limited to the income tax value. The final income tax after the tax credits cannot be lower than 75% of the income tax determined under the presumptive income determination system.

The values exceeding this threshold can be applied in the following years.

An alternative to this benefit is to sum the VAT paid for the acquisition of AFRP and apply the depreciation deduction over the result.

2. Tax incentives for the investment in the agricultural sector – income tax exemption: The profits from the investments that increase the productivity in the agricultural sector are exempt from income tax for a ten-year period, provided that the following requirements are met:

• The company must have its main place of business in the city/town where the investment is taking place.
• The company’s corporate purpose has to correspond to one of the activities listed in Section A, Division A of the ISIC (related to agriculture, cattle raising, hunting, and related activities).
• The company must submit the investment project before the Ministry of Agriculture, explaining the financial capacity and economic capacity for undertaking the project.
• If the Ministry of Agriculture authorizes the project, this entity will issue an administrative act confirming that the authorization was granted.
• The company must have at least ten employees exclusively engaged in working on the corporate purpose.
• The minimum investment amounts to COP $856,750,000 (this is, approximately US$259,000). The investment must have a term of at least six years.
• If the gross income exceeds COP $2,741,600,000 (this is, approximately US$830,787), the income tax exception will not apply

No, there are currently no special tax considerations on the field of commerce besides the consumption tax for the sale of goods produced from cannabis.

The financial sector has been the main obstacle for the development of the cannabis industry. Cannabis companies have found that in practice it is very difficult for domestic and foreign companies to open a bank account and/or to obtain loans to fund their activities.

Section 49 of the National Political Constitution forbids carrying and consuming psychotropic and narcotic substances, except under medical prescription. Accordingly, the legalization of recreational marijuana would require an amendment to Section 49 of the National Political Constitution via a legislative act or referendum, plus a deep change in the Colombian Congress’ traditional mindset. Due to Colombia’s drug-related history, we do not foresee the legalization of recreational marijuana in the short term.

The legalization and regulation of cannabis for medicinal purposes in the past years has been the top recent development in Colombia. Moreover, during 2019, the first export of cannabis derivatives was accomplished.

The cannabis industry is still a budding sector in Colombia. In the next year we expect to see an exponential growth of cannabis sowing and production, as well as a massification of medicinal cannabis products amongst consumers.

A reform to Decree 613 of 2017 is currently under discussion. If issued, this reform would, among others, (i) increase the general formalities and documents necessary to obtain the licenses before the Ministry of Justice, (ii) adopt a new regulation for non psychoactive fabrication of derivatives, and (iii) allow the export of cannabis to national free zones for purposes of manufacturing cannabis derivatives. The proposed reform will be the big legal development to be followed in the Colombian cannabis industry.

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