Uruguay was the first country in the world to legalize cannabis for both medical and recreational adult use in 2017, and is generally seen as the most ‘advanced’ country in Latin America for CBD and cannabis. The legislation was signed into law in 2013.
Uruguay wants to position itself as the regional hub in growing, refining and processing medical cannabis for export.
On Euromonitor’s ‘readiness index’, it is number one.
However, Milenkovic warned that the country’s “convoluted, government-controlled system” and the “slightly complicated, slow process” for getting legal permits risk blunting its competitive edge.
“It takes time to sort out the legal situation, get the permits for cultivation and then begin refining, processing and exporting CBD,” she said, and Uruguay needs to “maintain momentum” if it is to keep up with its own ambitions.
Around 200,000 hectares of land were devoted to global hemp production in 2017, and Uruguay held only 3,000 hectares, she said.
“Latin America started ahead of the game and Uruguay was certainly ahead of the game but it seems to be slowly falling behind. The only reason is that everything else is moving so fast," said Milenkovic.
“The Latin American potential could disappear in puff of smoke – pardon the pun – while lawmakers seem to be possibly dragging their feet,” she added.
Uruguay does have one advantage that could give it a competitive edge, however.
“Their hemp can legally be grown with a THC content of up to 1%. [THC is usually sourced from cultivars that have been bred to contain high amounts. Hemp generally contains only a trace amount of THC - around 0.3%,] - although this is not always the case.] That could be a benefit for Uruguay.”
In any case, Uruguay's regulatory situation has not dampened interest from foreign investors.
Canadian company Aurora Cannabis, for instance, bought company ICC Labs in November last year, a Uruguayan company that owned 70% of the domestic market share.
Aurora said the acquisition “immediately” transformed it into a LATAM market leader by giving it access to the region’s some 650 million consumers.