Uruguay approves new rules to facilitate exports, spur cannabis industry

Uruguay cannabis exports, Uruguay approves new rules to facilitate exports, spur cannabis industry

Uruguayan President Lacalle Pou signed two decrees with the aim of spurring development of the medical marijuana and hemp industries and encouraging exports, Deputy Secretary of the Presidency Rodrigo Ferrés said during a news conference late last week.

The new rules simplify the export process of medical cannabis.

One decree allows businesses to export psychoactive cannabis flower – defined in Uruguay as having 1% THC or more – harvested between 2018 and 2020. The product does not need be registered as a medicine in Uruguay.

Several requirements would still apply, however, including a stipulation that the health authority of the receiving destination approves the import.

In a webinar hosted by Marijuana Business Daily on Aug. 3, Uruguayan panelists said a restrictive interpretation of a decree from 2015 has been effectively blocking companies from exporting cannabis for medical purposes because the Uruguayan Ministry of Health required the products to first be registered as medicines in the country.

That also effectively made exports of raw materials impossible, because they can’t be registered as medicines.

The second decree published Thursday simplifies the trade of nonpsychoactive plant material inside Uruguay as well as for export.

Comparable to the decree facilitating exports of psychoactive cannabis, the second decree allows hemp plant material harvested between 2018 and 2020 to be exported for medicinal purposes without the need to first register the products as medicines under the Uruguayan Ministry of Health.

Daniel Radío, head of the Uruguayan national drug agency, confirmed that the decrees are intended to solve a specific situation with the 2018-20 harvests only, simplifying how these can be exported.

Asked about future crops, Radio said, “We need to rethink the rules.”

Tide change?

Industry sources in Uruguay anticipate the new rules will attract fresh investment at a time when funding is less available.

Recently, Toronto-based Auxly Cannabis largely retreated from Uruguay.

Earlier this year, Auxly’s Uruguayan subsidiary, Inverell, was sanctioned by the country’s cannabis agency for operating an unauthorized extraction laboratory, holding more inventory than permitted and growing larger plants than allowed by the research license granted to the company.

Khiron Life Sciences – a Toronto-based company with its main operations in Colombia – announced earlier this year it suspended the construction of its Uruguayan assets.

The reason Khiron cited for the suspension was not related to Uruguayan regulations but because “global market conditions have changed dramatically. The company is implementing … measures to ensure liquidity and increase focus of company resources.”

Larger Canadian producers such as Canopy Growth and Aurora Cannabis, among others, have also recently scaled back their international production ambitions across the globe after their aggressive international expansion strategies failed to produce much revenue.

The new meat?

Industry players in Uruguay hope cannabis could become the country’s top agro-industrial export based on estimates by the country’s investment promotion agency.

That enthusiasm echoes a Colombian report written in 2019 by two former ministers that was even more optimistic, saying that Colombian cannabis exports could surpass those of petroleum, or $17 billion.

However, it remains unclear who will import all that cannabis. About a dozen countries want to be net exporters of medical marijuana, and current net importers such as Germany, Israel and Australia are ramping up domestic cultivation.

According to official customs data, Uruguay exported almost 3,000 kilograms (6,614 pounds) of high-THC flower for an average price of about $2.50 per gram so far, despite the restrictions that had existed until now.

One company, Fotmer Life Sciences, shipped almost 2,500 kilograms to Portugal, 500 kilograms to Israel and 10 kilograms to Australia. Smaller quantities went to the United States.

Uruguay saw the first meaningful exports of hemp flower in recent weeks but not for medicinal purposes.

Customs data updated as of Aug. 4 shows two companies, Cplant and Cannabis Uruguay, shipped a total of 2,834 kilograms for an average price of 16 cents a gram to Switzerland.

Only one company, Toronto-based Ramm Pharma, is known to have exported value-added medical cannabis products from Uruguay so far.

The company regularly ships full-spectrum CBD oils to individual patients in neighboring countries under “compassionate use” access schemes and is expected to soon make the first bulk export to Peru.

Because Ramm Pharma’s products are registered under the Uruguayan Ministry of Health, the company did not face much difficulty exporting under the previous rules.

Alfredo Pascual can be reached at alfredop@mjbizdaily.com