On July 23rd of this year, the Colombian Government issued the Decree 811, regarding the safe and informed access to the use of cannabis and the cannabis plant. From the Decree, there are multiple modifications on the regulation of medical cannabis, especially regarding the elimination of the prohibition to export dried flower.
Along with the authorization for the export of cannabis and its derivatives for medicinal uses, the regulation of Free Trade Zones becomes relevant. Free Zone users, according to article 18.104.22.168.8 of the new Decree, may export seeds for sowing, grain, plant component, cannabis plants, cannabis, cannabis derivatives and products obtained from cannabis derivatives and plant component. This export will be able to take place from the Free Trade Zone to the rest of the world, and at the same time, the following processes related to the export of cannabis will be able to be carried out there:
- The cultivation of cannabis flower in the Free Trade Zone;
- The production of medicines in the Free Trade Zone; and
- The production, transformation, or packaging of cannabis products.
In this way, from these processes that can be carried out at the Free Trade Zone to medical cannabis products, and their eventual export, Decree 811 creates a great incentive for the development of new projects in the cannabis industry, which together with the tax benefits maintained by the Free Trade Zone, create a great opportunity for the dynamization of the industry.
Let’s remember that the legal benefits of the free trade regime that apply in Colombia are the single income tax rate of 20%; the non-causation of customs duties (VAT and tariffs) on the goods that are introduced to the Free Trade Zone; and the possibility of exporting from the Free Trade Zone to third countries and to the national market.
Once the aforementioned operations have been carried out, the flower, cannabis extract, cannabis products and its derivatives may (i) be exported and commercialized in the National Customs Territory; (ii) develop partial processing activities outside the Free Trade Zone; or (iii) be exported to the rest of the world.
For this type of processes, it is important to remember that free zone users must have the required licenses for the cultivation or manufacture of cannabis and cannabis derivatives. These licenses may be held either by a free zone user or by a third party authorized by the interested party, who will finally be covered under the licenses of the former and will be able to carry out the aforementioned operations.
In this way, Decree 811 of 2021 allows the cannabis market to develop in the free trade zone and multiple business opportunities to arise from exports, giving room for the dynamization of the industry and the economic activation of the country from the hand of this sector.