Paraguay issued detailed guidelines governing the business licensing system for its new medical cannabis program, including the application process for companies hoping to secure a production license.
A speedy application timeline – applications must be filed this month – suggests that authorized pharmaceutical laboratories will have an inside edge in winning a production permit.
The detailed guidelines come after the health ministry last month published a 20-page document that spells out issues such as the scope of the licenses, the obligations of licensees and the application procedures.
The new guidelines confirm that five vertically integrated licenses are up for grabs initially, although additional permits may be issued in the future. The licenses cover cultivation as well as the manufacture of medical cannabis products.
The National Health Surveillance (Dirección Nacional de Vigilancia Sanitaria – DNVS) will be the main authority responsible for the tender, and the results are expected during November.
The new licensing details were issued after Paraguayan Health Minister Julio Mazzoleni announced during a press conference last month the approval of a resolution establishing the general guidelines governing the production licenses.
‘Cautious but optimistic’ approach
Only pharmaceutical laboratories approved by the DNVS and compliant with Good Manufacturing Practices (GMP) can apply for a production license.
Applicants will need to prove they have a professional pharmaceutical chemist and a substitute who would be responsible for overseeing the production process.
As noted, only companies approved as an authorized pharmaceutical laboratory – or that have a deal with one – have a realistic chance of applying and winning a license given the short timeline.
Starting from scratch and registering a company, getting approval from the DNVS as a pharmaceutical lab and applying before the end of October is a huge task.
Guillermo Delmonte, chief operating officer of Ramm Pharma, a company that is focused on the development of cannabis-based products in Latin America, told Marijuana Business Daily “it is clear that the Paraguayan government sees this as a big opportunity.”
“But unlike other countries where authorities are having to deal with hundreds of license applications, Paraguay is setting the bar higher by focusing on the last stage of the production cycle and only allowing applicants with ties to pharmaceutical laboratories as possible licensees,” Delmonte said.
Fernando Krug, chief of staff of the anti-drug agency (Secretaría Nacional Antidrogas – SENAD), told MJBizDaily that the government is taking a cautious approach with the initial licenses by:
- Granting only five licenses.
- Mandating that production only takes place in the Central Department.
- Requiring companies to already be authorized pharmaceutical laboratories before applying.
“If things go well, authorities will consider expanding the scope and magnitude of the program. Our approach is cautious but optimistic, and open to adjustments along the way,” Krug said.
Selection criteria and other requirements
In case more than five companies successfully apply in October, these will be the criteria for selecting the winners:
- The percentage of total production – final products – the company would be be willing to donate to the government. The government would use those products to grant access free of charge to domestic patients.
- The amount the company plans to invest as a result of the production license. Companies willing to invest more would have a better shot at receiving a license.
- Investigative and medical contribution.
The resolution doesn’t detail how these three criteria will be weighed.
The application fees remain unknown but that information is expected to be published “within days,” Krug said.
Applicants must submit the following:
- A cultivation plan, which will be evaluated by the National Service for Plant and Seed Quality and Health (Servicio Nacional de Sanidad y Calidad Vegetal y de Semillas – SENAVE).
- An industrialization plan, which must include a description of the equipment and manufacturing process, quality control procedures, the percentage that the company plans to donate to the government and a business plan including planned investment.
- A security plan, which the SENAD will review. The anti-drug agency issued a separate protocol with the security requirements. The 14-page document details, for instance, that facilities will need a double fence at least three meters high; the two fences would be spaced at least 5 meters apart. If production takes place in urban areas, walls instead of fences must be built, with an added electrical fence on top.
- A transport plan, which must include the vehicles that will be used for transport. A minimum of two vehicles is required.
- A waste management plan.
- An export plan if the company plans to send product out of the country. The plan must include the possible jurisdictions where the exports would go as well as the legal status of cannabis there.
Evaluating the applications
The evaluation of the applications will be done by a committee composed of:
- Three members of the DNVS.
- Two members of the Ministry of Health.
- One member of the Ministry of Industry and Commerce.
- One member of the SENAD.
- One member of the SENAVE.
Licensees must implement their licenses within 24 months after being granted. Licenses will be valid for five years and can be renewed.
Licensed producers must register with the DNVS any “psychoactive products” they’ll produce.
Two questions remain open:
- The new guidelines don’t specify special requirements to register cannabis products with the DNVS. They do say such products must be registered complying with law 1,119 of the year 1997 – which regulates medicines in general – and other already existing regulations. Without a special access scheme for cannabis, a strict interpretation of the resolution could indicate that only only pharmaceutical medicines with clinical trials could be produced.
- The guidelines don’t define what a “psychoactive product” is, but a 2018 decree does, at 0.5% THC. This suggests that CBD products won’t need a sanitary registry or at least be regulated separately.