The cannabis industry is increasingly going global as cultivators explore the benefits of new growing locations.

As a leader in the adoption of agribusiness technologies, South America is becoming a major draw for emerging companies seeking the optimal cultivation environment. As cannabis cultivators move into new territories, many are taking into account the unique conditions and challenges presented by the areas, including climate, infrastructure and more. Of all the elements that can influence crop production, water is one of the most critical when it comes to the health and quality of the resulting crop. Quality cannabis cultivation is absolutely dependent on efficient and reliable irrigation, particularly in hotter and drier climates.


Due to its unique climate, South America can be ideal for companies looking globally for low cost cannabis operations; however, the continent comes with its own set of considerations.

Benefits and challenges in South America

South American countries like Colombia, Ecuador and Paraguay are becoming hubs for international cannabis companies. Canadian industry giants Canopy Growth (NYSE:CGC,TSX:WEED), Aurora Cannabis (TSX:ACB) and Aphria (NYSE:APHA,TSX:APHA) have all set up or acquired growing operations on the continent along with dozens of other cannabis growers. The international cannabis industry is interested in South America for the same reasons that made the continent an international agricultural hotspot. Many of the countries in South America feature ideal climate conditions for outdoor and greenhouse cultivation along with a low cost and experienced agricultural workforce. Low cost labor doesn’t just extend to cultivation workers. Due to inexpensive construction costs, cultivation facilities can be built in South America for as much as 80 percent less than equivalent facilities in North America, according to Prohibition Partners. All of these factors contribute to a lower cost of production, which is allowing Colombian cultivators to grow cannabis for as little as five cents per gram.

For all of the benefits offered by South American cannabis countries, they also present some challenges. While there is no shortage of skilled agricultural workers, cannabis is a unique plant with unique needs. Most jurisdictions outside of North America are relatively new to legal cannabis production. Workers in emerging cannabis markets generally have little to no direct cannabis experience and could require training before reaching full cultivation capacity.

A key part of the draw for South American countries is the climate, but those climates are often very different from what cannabis growers in Canada and the US are used to working within, so emerging South American growers need to adjust their operations accordingly. Additionally, South America is a very geographically diverse place, so the growing climate can vary wildly from place to place. Growers need to account for the differences in temperature and humidity, which can be significantly different in mountain regions compared to coastal regions. International cannabis growers need to become familiar with the exact conditions of the areas in which they plan to operate while learning the best ways to grow within those climates.

Finally, cultivators need to consider how a growing environment affects their water needs. Hot climates like those found in South America place even greater importance on efficient water usage. Operating within developing nations means that the water infrastructure may be limited when it comes to water-intensive activities like cannabis cultivation. While water access is generally very good, some areas in South America may be prone to dry seasons or periods of drought. Even when water is abundant and readily available, the heat of South American climates places even greater importance on effective and consistent water distribution. A lapse in irrigation in a hot South American region can decimate a cannabis crop faster than it would in a cooler climate. Due to these unique challenges, growers establishing new operations must design their cultivation systems to account for the water conditions of their environment.

Agriculture technology enabling optimal water consumption

No matter the type of climate, cannabis is a very thirsty crop. Whereas a typical grape plant cultivated to produce wine requires about 12 liters of water each day, the average cannabis plant requires 22 liters per day. In California, cannabis growing operations have already been linked to the depletion of local watersheds. The same could easily happen in hot and dry South American regions if local cannabis operations are not efficient with their water use.

When water is one of a company’s most valuable assets, efficiency can become critical to all business operations. Efficient irrigation systems are designed to recirculate as much previously used water as possible to help eliminate waste. Rather than draining into sewers or septic systems, water can be routed back into storage tanks, treated and run back into the irrigation system.

Automation can be a valuable tool for ensuring water is used as efficiently as possible. The use of sensors to detect where water is needed allows growers to use water with precision and reduce the guesswork that leads to waste, and these automated systems can take into account things like climate and weather data to adjust for local growing conditions. Agriculture technology companies have been developing increasingly comprehensive and sophisticated systems to track and respond to the needs of cannabis crops. Israeli company Water Ways Technologies (TSXV:WWT), for example, has developed a system that uses internet-of-things connected sensors along with collected data and specially developed software to control irrigation, fertilizing, filtration, climate and more. The CANNAWays system and others like it has the potential to help international companies collect and utilize data to optimize their systems for various growing conditions.

“Cannabis is a water-intensive crop, and optimizing water input through precision irrigation systems can help maximize crop quality and yield as well as reduce costs and increase profit margins,” Ohad Haber, CEO of Water Ways Technologies, told the Investing News Network.

In October 2019, the company signed a Memorandum of Understanding with Colombian medical cannabis company Emerald Bud to design, build and support an irrigation system for Emerald’s 43,580 square meter greenhouse space in the municipality of San Gil. The project also involves training Emerald’s Colombian cultivation team regarding how to operate Water Ways’ innovative connected system.

In July 2019, CannabCo Pharmaceutical joined the many Canadian cannabis producers working on cultivation in South America. The company signed an exclusive agreement with investment promotion agency Invest in Orinoquia to develop thousands of hectares of cannabis and hemp production in the Los Llanos region of Colombia. CannabCo has developed its own proprietary cultivation system called the PHOENIX system, which could give the company advantageous control over its water efficiency for the Colombian climate. The company is also developing unique genetics designed specifically to thrive in the Los Llanos climate.

Takeaway

South America is attracting the world’s cannabis industry with its ideal climate and growing conditions. As international cannabis companies continue to move into South America, the use of efficient and innovative irrigation technologies could help them get the most out of these climates.

This INNSpired article was written according to INN editorial standards to educate investors.

INN does not provide investment advice and the information in this article should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.

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