Ecuador's flower industry shifts toward hemp as rose sales wither

By Alexandra Valencia

TABACUNDO, Ecuador (Reuters) - At one of Ecuador's oldest flower farms, workers are planting hemp on land that traditionally used for roses, making a bet that selling cannabinoid products will help offset the decline in flower sales caused by the pandemic.

Declining sales spurred by the coronavirus outbreak dealt a heavy blow to Ecuador's flower sector, one of the Andean nation's traditional export industries, leaving farms cutting output or seeking to reinvent themselves.

The Boutique Flowers farm in Tabacundo, an hour north of the capital Quito, has built cannabis greenhouses to take advantage of recent legal reforms that allow for cultivation of the plant - even though marijuana remains illegal.

Marijuana contains higher levels of tetrahydrocannabinol (THC) - the cannabinoid that causes a high - than hemp. Ecuadorean law requires that cannabis have less than 1% THC.

"The project was born from hard times," said Klaus Graetzer, Boutique Flowers floriculture manager and president of hemp startup CannAndes.

"In the pandemic, the flower industry was hit hard. We saw the chance to take advantage of this new regulation."

His 30-hectare (74-acre) farm slashed rose production by 37.5% to 15 million stems during 2020 due to a drop in orders from the United States, Europe and Russia, its main markets.

Ecuador's total flower exports fell 8% last year, according to flower producer and export association Expoflores.

Cannabis plants are increasingly cultivated globally for the extraction of cannabinoid, which is being researched for various medical applications and has found increased use as a relaxant.

But CannAndes sees the greatest potential in the niche business of hemp flowers, which can be smoked as a palliative for conditions such as nausea or anxiety.

Hemp flowers do not have psychotropic effects, and can be produced with much of the flower industry's traditional infrastructure. CBD oils, in contrast, require industrial machinery to separate oil from plant material.

"The idea is to get to export smokable CBD flowers to Switzerland: that's the biggest market for this flower," said CannAndes manager Felipe Norton. "Given the experience we have with flowers, it's a good opportunity."

CannAndes plans to start its export in the next two years, and it is seeking licenses from Ecuadorean authorities to sell CBD products such as creams for body care as well as teas and edible oils for chocolates and sweets.

Ecuador's flower industry leaders remain skeptical of hemp because the value of the associated products swing sharply with shifts in consumer fads and government regulatory decisions, said Expoflores president Alejandro Martinez.

Ecuador in late 2019 legalized the imports of hemp seeds, as well as the production, marketing and export of hemp. The Agriculture Ministry has approved 46 ten-year licenses for various phases of hemp development.

"We have the climate and soil conditions to do the cultivation, but it will be the demand that will dictate the level of supply," said Ecuador's Vice Minister of Productive Development Ney Barrionuevo. "For now, it is incipient."

(Additional reporting Tito Correa, Editing by Brian Ellsworth and Nick Zieminski)