Uruguay selects three new commercial growers of recreational marijuana to meet consumer demand

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(Photo by Olaf Speier)

The Uruguayan government announced the three winning companies chosen to grow recreational marijuana for commercial purposes under an application process that began in February.

To meet a shortfall of adult-use cannabis, the Uruguayan Institute for the Regulation and Control of Cannabis (IRCCA) selected:

  • Uruguay Biopharmaceutical Research Co., based in the United States and conditioned to register a company in Uruguay.
  • Jabelor S.A., based in Uruguay.
  • Legiral S.A., based in Uruguay.

The three winners had to obtain an approval from the Uruguayan National Secretariat for the Fight Against Money Laundering and Terrorism Financing (SENACLAFT).

Other companies that participated in the application process obtained more than 60% of the total points but didn’t end in the first three positions can be wait-listed for a period of up to three years.

For that, the government keeps a $5,000 warranty deposited by the applicants.

Because the price of cannabis is fixed by the government, the criteria to select the winners was purely based on technical aspects, Martin Rodriguez, executive director of the IRCCA told Marijuana Business Daily.

The price was last updated by the government in August 2019, fixed at 50 Uruguayan pesos per gram ($1.35) retail, of which the producer receives about 70% and the rest goes mostly to the retail pharmacy and a small part to the IRCCA.

Supply shortages

The three winners will join two existing cultivators chosen four years ago during the country’s first tender for cultivating adult-use marijuana: ICC Labs, which was acquired last year by Canada’s Aurora Cannabis, and Simbiosys.

ICC Labs and Simbiosys were each authorized to grow 2,000 kilograms (4,409 pounds) a year, although they failed to keep up with demand.

The three new companies will grow cannabis under the same terms and conditions applied to ICC Labs and Simbiosys.

That means five companies will be able to produce a combined total of 10,000 kilograms of recreational cannabis flower per year at a price fixed by the government.

The new awards come after ICC Labs and Simbiosys combined were unable to successfully grow the total authorized quantities.

They were able to produce only about 3,000 kilograms combined as of mid-2019, which led to constant supply shortages in Uruguay.

Local industry sources who spoke with MJBizDaily on the condition of anonymity confirmed that Uruguay Biopharmaceutical Research Co. is a U.S.-based company.

They also said Jabelor S.A. is a Uruguayan company comprised of Uruguayan and Chilean capital, while Legiral is 100% Uruguayan-owned.

In 2013, Uruguay became the first country in the world to federally legalize the commercial production of adult-use marijuana.

According to the IRCCA, as of Oct. 27 almost 50,000 people were registered to legally access recreational marijuana in Uruguay using only one of the following three ways:

  • 37,971 customers are allowed to buy up to 10 grams of cannabis per week in 17 pharmacies, the only legal retail locations for the recreational marijuana grown so far by ICC Labs and Simbiosys. Customers can buy only flower, of which only two strains capped at 9% THC are available.
  • 7,576 home growers can produce up to six cannabis plants at home and harvest up to 480 grams per year.
  • 3,962 members of 135 clubs where collective cannabis growing is allowed can produce a maximum supply of 480 grams per member per year.

Uruguay also has business opportunities in the medical and hemp sectors of the industry.

Mexico is expected to become the second country in Latin America, and only the third in the world, to fully legalize cannabis on a federal level.

More information can be found in the recently published report Cannabis in Latin America: The Regulations and Opportunities.

Alfredo Pascual can be reached at alfredop@mjbizdaily.com