With Seeds Planted, Cannabis Sales in Uruguay Could Start in Late 2016

Uruguay’s deliberate, cautious implementation of its cannabis law has turned a new page: the seeds of the crop that will be sold on the country’s legal cannabis market are finally in the ground, and users will likely be able to purchase cannabis around the country in late 2016.

Since Uruguay’s historic effort to legalize and regulate the market for cannabis was signed into law in December 2013, it has been implemented in slow, deliberate steps. But major progress was made in mid-February, when the two companies who won contracts to grow cannabis for commercial purposes finally began planting. While it didn’t make headlines, this is a huge development: it means that Uruguayan citizens will likely be able to purchase cannabis for non-medical use at sales points in pharmacies in late 2016.

This article was first published by the Washington Office on Latin America. You can read the original here.

Some have been critical of the Uruguayan government due to the slow rollout of the law since its passage, but the reality is that authorities there have consistently prioritized getting a legal cannabis market right over setting it up quickly. Uruguay is not alone in taking such a cautious approach. The state of Maryland, for instance, approved a medical cannabis program in 2013, but a series of careful adjustments has postponed sales until 2017.

Uruguay's entire commercial cannabis supply is being grown on federal property under

the guidance of the Institute for the Regulation and Control of Cannabis (IRCCA)

After requesting bids in August 2014, Uruguay's Institute for the Regulation and Control of Cannabis (IRCCA) spent 14 months obtaining and verifying the financial records of each of the more than 20 initial applicants. Once the final two bidders were selected, the IRCCA began ironing out the details on issues like distribution, security, and the technical requirements of a database of all registered buyers.

The two companies selected are Simbiosis and Icorp, both of mixed Uruguayan and foreign ownership. Now that these two have been vetted and have begun operating, they should have the necessary technical expertise to get Uruguay’s commercial cannabis market up and running.

The companies are paying their own electricity and water costs, but have been provided with tested seed varieties by the authorities. Consumers will eventually have access to three different varieties of cannabis in pharmacies, with low, medium, and high levels of tetrahydrocannabinol (THC), capped at the legal limit of 15 percent. These three varieties will also contain a corresponding percentage of cannabidiol (CBD), at ratios meant to facilitate three different levels of psychoactive effect. At least initially, all three varieties will be available for the same price: roughly US$1.20 per gram, which is competitive with the local black market rate.

Simbiosis and Icorp will be tasked with packaging the product for sale in accordance with the law’s advertising ban and the IRCCA’s strict labeling requirements. But while regulations initially charged them with transporting the crop to pharmacies directly, an agreement has been reached under which pharmacy suppliers will assume shipping.  Pharmacies will be allowed to restock no more than once every two weeks, and are expected to make an estimated 30 percent of the price of cannabis in profits, or around 3.6 dollars for every 10 grams sold.

In other news:

  • Another initial obstacle to implementation was the fact that, under Uruguayan law, the federal budget spans five years, and is created during the first year of every presidential administration. This meant that in the months between the IRCCA’s May 2014 launch and the March 2015 inauguration of current President Tabaré Vázquez, the institute faced the gargantuan task of creating a regulatory framework for legal cannabis using a limited staff and only a supplementary budget. This has since changed, however. On December 20, 2015, the government of Tabaré Vázquez signed a budget bill into effect that will devote 15 million Uruguayan pesos (roughly $520,000 USD) per year to the IRCCA through 2019, and this figure will be supplemented by licensing fees placed on the companies producing commercial cannabis.  According to official projections, the IRCCA’s revenue from these fees is expected to climb annually, from an estimated four million Uruguayan pesos (about 140,000 USD) in 2016 to 19 million (about 650,000 USD) in 2019. Nevertheless, the institute is starting small: in November 2015 the IRCCA began hiring an initial team of five inspectors, who will monitor compliance among home growers and cannabis clubs throughout the entire country.
  • Cultivation of cannabis for other purposes has begun as well. As El Observador reports, the first batch of hemp seeds imported from the United States arrived in the country in December, and industrial hemp production is well underway. It may be a long way off, but Uruguay is in the early stages of establishing large-scale cultivation of cannabis for medical purposes as well. The government has been engaged in talks with three foreign companies (one Israeli, one Canadian, and one Australian) interested in producing medical cannabis. This could in turn be sold on both the Uruguayan market as well as exported to other countries which allow legal access. In remarks to the press, National Drug Secretary Milton Romani has mentioned plans to lease as much as 74 acres (three times the land currently reserved for commercial cannabis) to interested companies, and described the potential state revenue as “ten times bigger” than the expected income from cultivation for commercial purposes.
  • While it was made legal in 2013, a formal medical cannabis framework in Uruguay will require important shifts to get off the ground. As it stands, patients lack direct and easy access to tested, medical-grade cannabis or medication containing cannabinoids despite the fact that it has been made legal.  They must first obtain an “orange” prescription (receta anaranjada), the most restricted category of prescription in Uruguay from a willing doctor. This essentially puts medical cannabis products—even non-psychoactive medications—in the same category as amphetamines and opiates.  Then, patients need to apply for special permission with the Ministry of Public Health under its “compassionate use” exception, which allows individuals in special circumstances to import (free of tax) experimental drugs that have not yet been approved for use in Uruguay. Public health officials are currently reviewing proposals to reclassify cannabis prescriptions, however, and medical researchers like Dr. Raquel Peyraube are working to educate Uruguayan doctors on the medical uses of cannabis.
  • Alongside the advancement in commercial cannabis, participation is growing in Uruguay’s legal home-growing registry and cannabis clubs as well. As of February 23, there are reportedly some 4,400 Uruguayans who have registered with the IRCCA to grow up to six female flowering plants in their home, up from around 3,100 in October. A total of 17 cannabis clubs are in varying stages of formalizing their registration with the IRCCA, a process that was streamlined after late 2015, when the IRCCA revoked a previous rule stating that clubs had to be one kilometer apart.
  • Even still, both registered cannabis clubs and home growers face difficulties with authorities. Though the Ministry of Interior passed a “police action protocol” in August 2015 meant to lay out standard operating procedures for police encounters involving cannabis (which allows for growers to possess multiple non-flowering cannabis plants, and states that only the suspicion of trafficking should merit police involvement), newspaper La Diaria has documented at least three cases since then in which apparently innocent home growers found their cultivations raided by police. These cases show how, more two years after the law's passage, there is still a disconnect between the letter of the law and how it is enforced on the ground.
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Geoffrey Ramsey is a digital communications officer for the Washington Office on Latin America (WOLA). He previously worked as a researcher and writer for InSight Crime, a think-tank dedicated to tracking organized crime and corruption in the Americas, and was author of the Pan American Post.