Catching Up with Uruguay, the First Country to Legalize Cannabis

UruguayWhile Canada’s decision to fully legalize cannabis has grabbed headlines recently, our neighbor to the north is actually the second country to make such a progressive move.

The honor of being first goes to Uruguay.

Located along the eastern coast of South America, just next door to Argentina, this unassuming country officially legalized cannabis in the final days of 2013. It was signed into law by President José Mujica, a supporter whose administration submitted the original proposal. And just last summer, cannabis finally became available to purchase at registered pharmacies across the country.

The team here at Medicine Man Technologies has watched closely over the last year to see what type of impact cannabis would have on the country and its 3.44 million citizens, including over 22,000 registered purchasers. Overall, we’re impressed and encouraged but agree that there’s room for improvements.

What Legalized Cannabis Looks Like in Uruguay

Currently, registered adult citizens may purchase up to 40 grams (almost 1.5 ounces) per month. These quantities are tracked via thumb scan which is required at the point of sale. To undercut drug traffickers, cannabis prices are set at $1.30 per gram – less than half of what it costs on the black market.

In addition to purchasing cannabis at local pharmacies, Uruguay’s regulatory body, the Institute for the Regulation and Control of Cannabis (IRCCA), has also green-lighted the following options:

  • Home Growing – Adults who have registered with the government can grow up to 6 plants per household. These plants should not produce more than 480 grams each year.
  • Cannabis Clubs – Registered clubs must include 15-45 members and may grow up to 99 plants, all kept in the same space. They’re responsible for adhering to quantity maximums (480 grams per member annually), and all surplus cannabis must be handed over to the authorities.

As for consumption, the law closely parallels tobacco use. If you’re over 18, you can smoke at home or in public, but not in enclosed spaces such as a café, restaurant or any place of work (yours and others).

Currently, non-residents cannot legally purchase cannabis in Uruguay. A local can share or give cannabis to a tourist, but sales are strictly forbidden.

To supply the country’s pharmacies, the government is completely in charge of production and has only licensed two cultivators. This has led to demand far outpacing the supply.

Going Forward, WOLA Suggests Improvements

One organization that has been watching events unfold in Uruguay is the Washington Office on Latin America (WOLA). Focused on research, advocacy and protecting human rights in the Americas, WOLA published a report that included ideas to improve the current program. Here are a few highlights:

  • Banking & Finance – One of the most common challenges for any cannabis-based business is the lack of banking options and being forced to operate as cash-only. With Canada also making the move to legalize cannabis, Uruguay should look to banking with their financial institutions. Large Canadian banks may also provide stability and protection from U.S. financial regulators.
  • Legal Enforcement – To protect the rights of citizens and/or prevent unwarranted seizures or prosecution, law enforcement personnel should be properly trained on the most current laws.
  • Supply & Distribution – Without enough cannabis to go around, 4 out of just 16 pharmacies in Uruguay have already ceased sales. Expanding beyond just two cultivators will help to ensure that supply meets demand and pharmacies begin to profit from a legal cannabis program. The government may also want to explore more options to give citizens access to product, such as private or government-run dispensaries.
  • Medical Cannabis – The government should fund research and education for doctors and other medical professionals regarding the efficacy of cannabis to treat various illnesses. In the future, a dedicated medical cannabis program should be established to offer patients treatments such as topicals, sprays, edibles and strains specifically cultivated for their medicinal properties.
  • Non-Resident Sales – With tourism an integral component of the country’s economy (10.6% of the GDP), giving visitors the ability to purchase legal cannabis may help to further reduce black market activity. The government may consider lower quantity maximums to prevent illegal sales of excess product and higher purchase prices to secure more tax revenue for the country.
The Bottom Line in Uruguay

While there is the need for a few changes, Medicine Man Technologies has seen this small country make huge strides in the last year. In fact, according to a local news outlet, drug-related crime dropped by 20% since cannabis was legalized and could be reduced further by opening sales to tourists. We’ll be keeping an eye on developments as Uruguay continues to be a role model for the world.

If you want to start a legal enterprise anywhere across the globe or here in the U.S., please contact Medicine Man Technologies for private consulting, as well as help with licensing, cultivating, dispensary operations and more.

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