Q24N – The first country in the world to legalize most uses of marijuana is looking to capture business away from illicit sellers and bolster its cannabis industry by allowing foreign visitors to buy pot.
According to Daniel Radio, secretary-general of the National Drug Agency, the government of Uruguayan President Luis Lacalle Pou could unveil its plan as early as this year to build consensus and political support.
The aim isn’t to promote Uruguay as a destination for cannabis tourism but rather to steer tourists away from the black market and into the regulated market, according to Deputy Tourism Minister Remo Monzeglio.
Giving tourists access to legal cannabis would dramatically increase the industry’s pool of potential customers in the country of 3.5 million people. Normally, millions of Argentines and Brazilians flock to the country’s beaches during summer in the southern hemisphere, which runs from December to February. But the pandemic eroded these numbers as the nation severely limited foreign visits.
Uruguay plans to reopen its borders to all fully vaccinated foreigners on November 1.
“It seems to me that if we come up with a good proposal,” Uruguay could open its regulated pot market to tourists, Radio said in an interview. “For the upcoming tourism season, it’s highly unlikely, but I wouldn’t rule it out.”
Uruguayan law allows adult citizens and foreign residents who join a government registry to grow their own pot, join a cannabis club or buy 40 grams a month at authorized pharmacies.
In a separate interview, Monzeglio said he proposes charging foreign tourists higher prices, with the proceeds helping to fund addiction treatment and rehabilitation programs.
A presidential decree would probably be the fastest way to open pharmacies, and potentially cannabis clubs, to tourists that register in the database, Radio said. To waive the database requirement, Congress would have to pass legislation, he said.
Uruguay was at the cutting edge of cannabis legalization when lawmakers passed a sweeping law in 2013 that supporters said would champion personal freedom, undercut drug gangs and generate exports.
However, almost eight years later, the gangs are still in business, annual exports have yet to reach US$10 million and competition is heating up as more countries embrace cannabis.
“I think there was excessive optimism regarding the possibilities of growth, because we aren’t playing alone here,” said Radio, who also heads cannabis regulatory agency Ircca. Cannabis exports more than doubled to almost US$7.5 million in 2020, but that total is still a far cry from the hundreds of millions of dollars some industry participants have predicted.
Colombia is emerging as a competitor for cannabis investment thanks to favourable rules and some of the best growing weather in the world.
Even so, Uruguay can rely on new rules aimed at speeding up exports, as well as its reputation as a transparent, predictable place to do business, to keep it relevant in the cannabis industry, Radio said. Ircca has now approved 56 licenses for activities that include growing medical cannabis, research and development, and the manufacturing of medical and consumer products.
“Some investment is showing up in manufacturing and value-added processes. That has to be our bet, because it’s the only way Uruguay can be competitive,” Radio said, citing the nation’s high labor and energy costs.