This cannabis country report Uruguay serves as an introduction to potential cannabis growers in Uruguay on how to legally grow and obtain cannabis. This information is relevant to all growers. The information was correct at the time of publication.
Legal cannabis in Uruguay
Cannabis is legal in Uruguay, and is one of the most widely used drugs in the nation.
President José Mujica signed legislation to legalize recreational cannabis in December 2013, making Uruguay the first country in the modern era to legalize cannabis. In August 2014, Uruguay legalized growing up to six plants at home, as well as the formation of growing clubs, a state-controlled marijuana dispensary regime, and the creation of a cannabis regulatory institute (Instituto de Regulación y Control del Cannabis or IRCCA). In October 2014 the Government began registering growers' clubs, allowed in turn to grow a maximum of 99 cannabis plants annually. After a long delay in implementing the retail component of the law, in 2017 three companies originally won a government tender process to sell cannabis to the government who would supply authorized pharmacies.
The new laws were introduced by the socialist government to counteract the growing black market trade in marijuana and the accompanying violence and organised crime that went with it.
This law enables adults over the age of 18 to obtain up to 10 grams per week from their local pharmacist. Originally the law also guaranteed a price of $1 per gram of cannabis. The exact price has fluctuated since then and this ensures that the government has the competitive edge over illegal suppliers.
Companies that cultivate CBD have to export it as it is not permitted in Uruguay. There are CBD products are sold in pharmacies, but these are pharmaceutical products registered with the ministry of health. Patients need a doctor’s prescription to buy them. They are all made from imported raw material.
How to legally obtain cannabis in Uruguay
Uruguayans and legal residents must choose one of three legal ways to obtain non-medical cannabis by registering in a government database:
- Home grow up to six female plants per household but cannot harvest more than 480 grams of marijuana per year.
- Join or create a non-profit cannabis club which is allowed to produce only for members. Clubs must have 15-45 members, the number of plants is limited to 99 and each member is allowed to receive a maximum of 480 grams annually.
- Buy up to 10 grams per week from pharmacies at the government fixed price of about $1.40 per gram. Buyers must register with their fingerprints, which are used to ensure the weekly quota is not exceeded at point of sale. Only two strains of cannabis with a maximum of 9% THC and a minimum of 3% CBD are available
According to IRCCA nearly 32,000 people are registered to legally buy recreational cannabis in Uruguay. The average monthly purchase was 7.8 grams/month per buyer. Currently, a gram of cannabis is being sold for $1.40 in pharmacies, of which about 90 cents goes to the producer. A small fraction goes to the government, with the pharmacy receiving the rest.
The role of the IRCCA in the cannabis industry of Uruguay
The objective of the IRCCA is to regulate cannabis in all spheres and ensure compliance with Uruguayan legislation from a human rights perspective, which values quality public health, combating drug trafficking and the safety of its citizens.
- Seed varieties were provided to these companies by the IRCCA, which will also attempt to standardize the potency of commercially available cannabis across varieties.
- The licenses are valid for periods of up to five years, but companies will be reviewed on an annual basis for renewal.
- Companies will be tasked with packaging the product for sale (in accordance with labelling requirements to be set by the IRCCA), as well as the task of transporting it to participating pharmacies directly.
- The companies themselves will pay for additional security, as well as for electricity and water.
- All packaging must preserve the quality of the product for at least 6 months, and contain a maximum of 10 grams. Storing the product in any location that is not on the designated production site is not permitted.
- Pharmacies will be allowed to restock no more than once every two weeks, and are permitted to make 30 percent of the price of the drug in profits, or around 3.6 dollars for every 10 grams sold.
Problems, goals and practicalities
- In practice it is almost impossible for companies dealing with cannabis to fully operate with Uruguayan banks. Local banks are subject to foreign regulations in particular to the United States Federal Reserve’s prohibition from participating in cannabis-related operations as well as international provisions on money laundering. Therefore, in order to avoid any potential inconvenience Uruguayan banks have been reluctant to participate in operations of this kind or to open bank accounts for these companies.
- Uruguay is one of the countries with the most business-friendly legislation for cultivating and manufacturing cannabis and derivative products.
- There was an increase in amount of growers in 2018 because of shortages.
- Growers stand to make between US$250,000 and US$300,000 per ton produced, with an initial investment of between US$600,000 and US$800,000.
- As of January 2021, the Uruguayan government had issued only six licenses for cultivation of psychoactive cannabis for medical use.
- The Uruguayan government announced distribution of nonmedical psychoactive cannabis would be halted for at least a week because of operative difficulties of the licensed producers.
- Due to security issues, there is difficulty in convincing pharmacies to participate in the programme. Currently there are only 12 pharmacies that sells cannabis.
- The government is establishing cannabis sales centres to circumvent the problem with pharmacies. These centres accept only cash to avoid banking issues.
- Only two strains are being grown commercially in Uruguay, and both varieties are capped at 9% THC.
- It is recommended that contact is made with the Uruguayan Investment and Promotion Agency, Uruguay XXI, for clarity on certain issues.
Controlling bodies and license conditions in the Uruguayan cannabis industry
Who are the controlling bodies in Uruguay?
- Activities with cannabis for medicinal use and scientific research are controlled by: IRCCA, Ministry of Health and the National Secretary for the Fight against Money Laundering and the Financing of Terrorism.
- Activities with Recreational Cannabis are controlled by: IRCCA and by SENACLAFT.
- Activities with hemp are controlled by: IRCCA; Ministry of Livestock, Agriculture and Fishery and SENACLAFT.
What do companies in Uruguay need to know when it comes to licenses for recreational cannabis to sell at pharmacies?
- The general conditions for sale will be those currently in force.
- Each licensee must guarantee the annual production of up to 2 tons of product released.
- The production will be carried out on a property that will be provided by the IRCCA, located in the department of San José (near the city of Libertad), in which individual plots of approximately three hectares will be assigned to each licensee. Each licensee will be responsible for their own consumption and internal security.
- Perimeter security and the management system in which the traceability of production must be recorded will be provided by the IRCCA.
- Production must be carried out in facilities such as greenhouses or closed rooms with controlled conditions of temperature, light and humidity. Likewise, the facilities must have specific areas for the different activities of the production process.
- The proposal must contain a plan that describes in detail the planned cultivation system, as well as the post-harvest processes.
- The varieties of cannabis to be produced will be provided by the IRCCA and the licensee will be responsible for maintaining the traceability and quality controls necessary to maintain the purity and varietal identity of the plants, according to previously defined parameters.
- The licensee must have a quality management system according to the UNIT ISO 9001/2015 standard, audited by a qualified external agent.
- The production plant must have the corresponding authorization from the Ministry of Public Health and the IRCC, who will have extensive control powers at each stage of the process.
- The product must comply with analytical specifications pre-established by the competent authorities (MSP and IRCCA) and may be marketed in containers of 5 and 10 grams, whose specifications and labels will be indicated by the IRCCA.
- Future licensees must have a Technical Director (pharmaceutical chemist), an agronomist and a full-time quality benchmark (with proven GXP training and experience), as well as a work team that will be duly evaluated.
- The licensees will be responsible for the logistics of the products to the authorized dispensing sites throughout the country, which must be carried out through their own vehicles and under strict security conditions.
- The amount of the estimated investment and corresponding elements must be provided as well as details of the origin of the funds. The IRCCA will request a report from the National Secretariat for the Fight against Money Laundering and Terrorism Financing prior to the granting of the respective licenses.
First hand experience from a local grower
We got the license for recreational but as a company we aspire to take on medicinal, textiles and oil. It’s a one-million-dollar-plus investment, where you have a low price. The numbers are very tight, but the primary objective of all of this isn’t to become rich. The objective is to show the world that this is going well, not losing money but not becoming rich either. In any case, concerning profit margins there is always the pharmaceutical market. If we say, ‘as of now we will make pharmaceutical products and export them to Brazil alone,’ a country 50 times bigger than ours, that is where we would have the capacity for better margins. Yes, the price seems to me to be extremely low and it’s a big risk. More than anything there is a risk that when the five years of the license are up another government will have won elections. All this is shut down and then what do you do with everything you have made? But if everything goes well and our license is renewed and we begin producing a ton of other products that will be an interesting business.
Some background on Uruguay
Longform name: Oriental Republic of Uruguay/ Republica Oriental del Uruguay
Legislation: Presidential republic
Ruling party: The National Party/Partido Nacional
Currency: Peso Uruguayo
History
Historians believe that Spaniards brought marijuana with them when the colonised the continent but there is also evidence that the ancient cultures of Mesoamerica were using various plants for traditional sacred rituals. Whether these were related in any way to cannabis is unknown. The Spanish also set up plentiful hemp plantations. Widespread cultivation continued for several centuries. Uruguay is unusual in that cannabis use was never classified as a criminal activity, even at the height of prohibition in the US.
Geography
Geographical Location:Southern South America, bordering the South Atlantic Ocean, between Argentina and Brazil Land boundaries: 1,591 km Coastline: 660km Terrain:Mostly rolling plains and low hills. Fertile coastal lowland. Most of the low-lying landscape is grassland ideal for cattle and sheep raisingHighest point:Cerro Catedral 514 mMajor rivers: Rio de la Plata/Parana - 4880 km. Uruguay - 1610 km
Weather
Weather:Warm temperate. Freezing temperatures are almost unknown Natural Hazards:Seasonally high winds. The pampero is a chilly and occasional violent wind that blows north from the Argentine pampas. Because of the absence of mountains which act as weather barriers, all locations are particularly vulnerable to rapid changes from weather fronts.
Economy
Median age: 38 Population growth: 0.26% Urban population:95.6% of the population live in urban areas Life expectancy: 78 Youth unemployment: 28.7% Agricultural land: 87.2% GDP growth rate: 2.7% Inflation: 7.8% Agricultural products: Soybeans, milk, rice, maize, wheat, barley, beef, sugar cane, sorghum and orangesIndustries: Food processing, electrical machinery, transportation equipment, petroleum products, textiles, chemicals and beverages Population below the poverty line:8.8% Export partners: China, Brazil, United States, Netherlands and Argentina Airports with paved runways: 11Airports with unpaved runways: 122 Natural resources: Arable land, hydropower, minor minerals and fish
Environmental issues
- Water pollution from meat packing and tannery industry
- Heavy metal pollution
- Inadequate solid and hazardous waste disposal
- Deforestation
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