Sun, Dec 15, 2013 - Page 14 News List

High prospects for Uruguay’s legal marijuana business

The South American nation will be able tap into the tight market for medical marijuana, as an increasing number of countries legalize its use

By Malena Castaldi and Felipe Llambias  /  Reuters, MONTEVIDEO

Success in reducing drug-related crime in Uruguay would strengthen advocates of legalizing marijuana elsewhere in Latin America, where leaders have tired of the US-led “war on drugs” and the failure to curb the power of the region’s drug cartels.

“Other countries will be watching very closely to see how it plays out for Uruguay now that this is a real political option,” said John Walsh, a drug policy expert at the Washington Office on Latin America, which monitors US policy in Latin America.

“Uruguay has a good shot at doing it well,” Walsh said.

It is small and safe, unscathed by the brutal violence unleashed by cocaine traffickers in other Latin American countries, such as Colombia and Mexico, he said.

The Uruguayan experiment could add momentum to the marijuana legalization debate in the US, where the states of Washington and Oregon last year made it legal to grow and smoke pot.

MEDICAL EXPORTS

If regulation works, Uruguay could become an exporter of medical marijuana to countries such as Canada that are allowing an expansion of the use of the drug for health reasons.

Canada became the first country to allow terminally ill patients to grow and smoke their own marijuana in 2001. Since then, the number of people in the country legally authorized to use marijuana has grown to more than 37,000 and will rise to 434,000 by 2024, according to official projections.

The rapid growth led Health Canada to take legal production of medical marijuana out of private homes and put it in the hands of licensed growers as of April next year, a business that is estimated to be worth US$1.3 billion by 2024.

In the transition, Canada will have a deficit of about 100,000kg of medical marijuana that a foreign supplier could cover, says Ron Marzel, a Toronto lawyer for the Canadian cannabis industry.

Canada’s health industry did not respond to questions as to whether it might seek to import medical marijuana from Uruguay.

At present, there are few lawful jurisdictions that can supply medical marijuana. Israel is a pioneer in the field, but only supplies its own patients. The Netherlands has for decades allowed licensed cafes to sell cannabis, but the supply side of the business is only legal for medical marijuana, sold at a fixed price of 12 euros (US$16.50) a gram.

Marzel, who has been retained by an adviser to the Uruguayan government on medical marijuana regulation, believes patients should not have to pay high prices when they have a medical need.

“I am optimistic and bullish about Uruguay being able to produce low-cost, high-quality medical cannabis for export to Canada,” Marzel said. “If it acts fast, it could look at placing some 20,000 kilos in Canada over the next year.”

Others are looking beyond the medical side of the business.

US marijuana entrepreneur Brian Laoruangroch, whose Seattle-based company Prohibition Brands aims to mass produce marijuana cigarettes one day, sees huge potential with the trend toward legalization. However, he says Uruguay must get the regulations right because the world is watching.

“If a good business structure is implemented, free of corruption and black market problems, perhaps my firm would be interested in doing business with Uruguay,” Laoruangroch said.

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