WOLA: Advocacy for Human Rights in the Americas
2 Oct 2015 | Commentary | News

Uruguay’s Big Step Toward Regulating its Cannabis Market

Uruguayan authorities made a major announcement on October 1, laying out plans for the biggest step yet in the country’s efforts to regulate all levels of the cannabis market: cultivation for commercial sales. Officials revealed that two companies have been selected to grow cannabis for sale in pharmacies. The first commercial offerings will likely be available to registered consumers in about 8 months, or mid-year 2016.

SEE ALSO: WOLA’s Work Regarding Legal, Regulated Cannabis

In a press conference, Juan Andrés Roballo, presidential undersecretary and head of Uruguay’s National Drug Board (Junta Nacional de Drogas, JND) and Augusto Vitale, president of the Institute of Regulation and Control of Cannabis (Instituto de Regulacion y Control de Cannabis, IRCCA, created by Law 19172 in 2013), shed light on some of the most important pending questions around Uruguay’s cannabis policy innovation. Among other things, they revealed that after a thorough vetting process of the more than twenty companies that submitted proposals in reply to IRCCA’s August 2014 request for bids for commercial cultivation, two companies of mixed Uruguayan and foreign ownership were selected.

For more on the announcement, and on what this means for Uruguay’s reform effort, see the questions and answers below:

What does this mean for the future of Uruguay’s unprecedented cannabis policy innovation?

Setting up commercial cannabis is the final step in the country’s efforts to bring the cannabis market under the regulatory authority of the state, and out of criminal hands. Under the law, users can access recreational cannabis by choosing one of three legal methods: growing up to six registered plants at home, joining a licensed “cannabis club” to grow collectively with up to 45 people, and signing up to purchase up to 40 grams of cannabis per month in participating pharmacies (the only commercial distribution points allowed under the law). Since the law was passed in December 2013, Uruguayan authorities have proceeded painstakingly with implementation, opting to err on the side of caution rather than haste. The first home-growing permits were issued in August 2014, and the registration of cannabis clubs began in October 2014.

In Uruguay’s Fall 2014 national elections, the Broad Front (Frente Amplio) political coalition—which ushered the cannabis measure into law—retained control of the presidency and majorities in both chambers of the legislature. The new administration of President Tabaré Vázquez stated its commitment to full implementation of the cannabis law, but has moved forward at a deliberate pace, wishing to avoid unnecessary mistakes. The October 1 announcement that the first commercial growers have been selected and that commercial sales are on the horizon means that the major components of Uruguay’s new system should all be place by the middle of 2016.

How soon will commercial sales actually begin, and how much will the commercial product cost?

The two companies have been licensed to grow a maximum of two tons of cannabis each, which will mean consumers will be able purchase the product “in no less than eight months from now,” according to Roballo. While there are a number of details that will need to be ironed out before then, such as how many and what varieties of cannabis will be available on the market, the IRCCA’s Vitale announced that it would be competitive with the black market cost, at roughly US$1.20 per gram.

Why will the companies produce a maximum of only four tons? 

Estimates of the size of Uruguay’s cannabis market have placed it at around 25 tons, so the initial output of the two licensed companies will fall well short of the full market size. However, starting small was a deliberate choice by Uruguayan authorities, in line with their careful implementation of the law. It will keep from flooding pharmacies with too much product that they won’t be able to sell, a concern that drug policy analysts in Washington State have voiced about the newly legal market there.

Starting small also allows for a more realistic assumption of the number of those who will register to access their allotted 40 grams per month. Like the registration for other methods of access, it will likely be slow at first: around 2,500 home growers have registered with the IRCCA since 2014, and 18 different cannabis clubs applied for official state recognition. Moreover, in the context of Uruguay’s market and access rules, four tons of cannabis products can go quite a long way. If the full four tons are produced and commercial sales begin in June 2016, the quantity would be sufficient for over 15,000 Uruguayans to register and consume their 40 grams per month allocations per before the end of the year.

Will the country do anything to address the potential harms of cannabis use?

Yes. The law specifically calls for authorities to carry out a campaign to educate the public on any health risks associated with cannabis use. In the press conference presidential undersecretary Juan Andrés Roballo told reporters that such a campaign would be carried out in the coming months, comparing it to the awareness campaigns associated with Uruguay’s particularly effective anti-tobacco laws.

“The implementation of the cannabis regulation law has precisely this as a fundamental objective: to regulate its consumption,” said Roballo. “With a policy that guarantees harm reduction, prevents and addresses abusive and problematic consumption, educates the different actors in society on the consequences of its use, foments a collective responsibility, and also contributes to the fight against drug trafficking and organized crime.”