Uruguay is creating the world’s first nationwide regulated cannabis market

Here’s how it will work
Geoff Ramsey & John Walsh
Washington Office on Latin America (WOLA)
Monday, May 1, 2017

Beginning on May 2, Uruguayan adults interested in legally purchasing cannabis for non-medical uses can register to do so at post offices around the country. When commercial cannabis hits the market in July, Uruguay will become the first country on the planet to establish a legal, nationwide market for non-medical cannabis. Because the law was passed in December 2013 and authorities have implemented it in careful, protracted steps, much of the related coverage has been incomplete. Here are the facts about Uruguay’s law, and how it will work moving forward.

Obtaining Legal Cannabis in Uruguay: Implementation So Far

The law allows Uruguayan adults (18 years and older) and foreign residents (not tourists) to legally obtain cannabis in one of three ways: homegrowing, cannabis clubs, and commercial sales. These are mutually exclusive, meaning those interested can only sign up to access cannabis from one method at a time.

In the months since the first homegrowing licenses were issued in August 2014, the law’s regulatory authority — the Institute for the Regulation and Control of Cannabis (IRCCA) — has registered over 6,600 households to legally grow cannabis. The law allows each registered household to possess up to six flowering plants at any given time, with the understanding that their annual yield should not exceed 480 grams. The first cannabis clubs were registered in October 2014 and the number of legal cannabis clubs has now grown to 51. These are groups of between 15 and 45 members that, upon meeting a set of security and logistical requirements, can grow up to 99 plants in the same space, but cannot dispense more than the cap of 480 grams to each member per year. Any surplus yield must be turned over to the IRCCA.

Commercial Cannabis: the Final Step in the Process

When cannabis sales start in what officials say will be the “first two weeks of July,” registered buyers will be able to obtain commercial cannabis in pharmacies, which the law’s drafters chose as the point-of-sale due to their familiarity with storing and dispensing controlled substances. Registered adults will be able to buy up to 40 grams per month (10 grams per week) at $1.30 per gram, a price that is intended to undercut the illicit market. It is unclear what varieties will be available initially, but officials have said that their goal is to provide low, mid-, and high levels of Tetrahydrocannabinol (THC), up to the legal limit of 15 percent. It will be available in five gram packages of cannabis buds at first, with larger ten gram packages to be introduced in the coming months.

While the number of participating pharmacies will likely increase as the number of registered buyers increases, for now there are reportedly 30 locales interested in selling. Of these, 15 are located in Montevideo (which, including the greater metropolitan area, is home to roughly half the population of Uruguay). The rest are distributed in 15 of Uruguay’s 18 departments in the interior of the country. This distribution is in line with data from the latest government-sponsored household survey of drug use, which showed that the prevalence of cannabis use is twice as high in Montevideo (30.3 percent) as in the interior (15.4 percent).

The opening of the registry for interested buyers marks the final phase of implementation before the law is fully in place. But here too, Uruguayan authorities are moving cautiously. Although some have estimated the total size of the country’s cannabis market at around 25 tons, the two companies hired to grow cannabis commercially — Lcorp and Simbiosis — are currently capped at producing two tons per year each (for a total of four tons annually), and officials say just 400 kilograms of cannabis will be placed on the market at first.

Uruguayan authorities suspect that, just as registration for homegrowing was slow at first, registration for purchasing commercial cannabis will likely be a gradual process, so starting out with a smaller supply reduces the likelihood of a supply glut that could leave vendors with quantities of cannabis that they won’t be able to sell. While Uruguay is deliberately starting slowly, the initial 400 kilos of cannabis would be enough for more than 16,600 Uruguayans to legally obtain a full 40 grams per month in the second half of 2017.

Public Health Campaign, No Advertisement, and No ‘Marijuana Tourism’

Under the law, all forms of advertisement or public promotion of cannabis use are prohibited, as is smoking cannabis in restaurants, bars, or anywhere else where people are banned from smoking tobacco. This is no coincidence: both current President Tabare Vazquez and former President Jose Mujica have indicated they are concerned about the potential health impacts of cannabis use, and authorities want to highlight those risks for users.

As such, the IRCCA and the Ministry of Public Health (MSP) will be carrying out a nationwide public health campaign in the coming weeks, geared at educating Uruguayans about the health effects of cannabis use. It will be specifically aimed at preventing use by minors or pregnant women, as well as by those driving motor vehicles (it is illegal to drive with any detectable level of THC in one’s body). The commercial cannabis sold in pharmacies will also contain warning labels to similar effects.

Selling to foreign tourists is also against the law. While there have been attempts to get around this ban, like so-called “cannabis tours” that offer the option to tourists to sample cannabis while on a paid tour, the IRCCA has begun enforcing against these initiatives.

For all of Uruguay’s focus on public health during the implementation of the law, however, the government has not prioritized medical marijuana. While the outgoing President Mujica signed a set of regulations in 2015 that provided a framework for doctors to prescribe cannabis and cannabis products, the MSP has not yet authorized the development of cannabis-based medication for sale in Uruguay. This means that patients seeking access to promising treatment for conditions like epilepsy or chronic pain have to seek special permission from the MSP to import these medications from abroad.

Monitoring and Evaluation Moving Forward

The opening of Uruguay’s cannabis purchasing registry is a big step forward. As the first nation to set up a regulated cannabis market, Uruguay’s system will be closely watched at home and abroad. As citizens and leaders elsewhere consider regulating cannabis in their own countries, the lessons to be learned in Uruguay can help inform policy well beyond the country’s own borders.

For this reason, it is especially important for the government to make sure it has set up a robust system to monitor and evaluate the law’s impact. As WOLA has noted in a November 2016 report, “Getting Regulation Right,” doing so allows authorities to make sure that the law is in fact achieving its goals, identify problems that may arise, and show where and how the law may need to be revised.

This commentary was first published by the Washington Office on Latin America (WOLA)