The promising future of cannabis in Latin America

In recent years, the regulatory process of marijuana has had a great impact on the international scene, and especially in Latin America. Countries like Colombia, Costa Rica and Argentina have taken giant steps to create new regulated industries, which has dramatically changed the rules of the game. In this article we review the latest advances in a region that threatens to position itself as a key player in the global cannabis industry.

In recent years, the legalisation of cannabis has generated a global debate with an increasing number of countries having regulated its use, especially for medical purposes. Latin America is one of the leaders of this change, with a medical cannabis sector currently in full growth. So even though the Latin American industry is still in its early days, all these advances mean that its annual growth is estimated to experience a 90% increase in the next five years, with a projected value of $1.2 billion by 2026, according to the market research consulting firm Euromonitor.

There’s no denying that, while Europe cautiously advances under an extremely slow model controlled by the different Member States, it seems that several countries across the Atlantic have decided to speed up the pace.

Argentina: the most anticipated surprise

Take the country of the tango, for instance. This nation has gone from having a strong prohibitionist mindset to being one of the fastest-moving states in Latin America in this regulatory race. This is a country with a strong cannabis culture which celebrated the approval of medical cannabis in 2020, when significant changes were introduced via a bill which would allow registered patients to grow marijuana at home.

A year later, REPROCANN was implemented. This is a national cannabis program that allows registered individuals and organisations to grow and use medical cannabis legally. Additionally, the sale of cannabis seeds to the patients in this program has recently been legalised, providing that they’re registered in the National Seed Institute of Argentina. With this measure, the aim is to encourage the R&D and production of national cannabis genetics.

Chile finally starts after years of delay

Although Chile was one of the first countries to relax its cannabis laws, what promised to be the first legal market in Latin America has been held back by an intricate bureaucratic network, despite being in the spotlight of many investors for quite some time. Chile has a market with all the ideal conditions: not only does this country have a great cannabis culture and high consumption levels, but it also includes a catchment group with greater purchasing power.

However, it was not until March this year that the first significant steps were taken, with the approval of the Anti-drug Act which allows marijuana cultivation for medicinal purposes, provided a prescription has been obtained in advance.

So even though the regularisation of self-cultivation for recreational purposes is still taking shape, the strong R&D strategies and the advantageous characteristics of this country could quickly turn it into a very important asset in the cannabis industry.

Colombia: the export of cannabis as a flagship

If there’s one country that has placed itself at the head of this initiative, then it’s Colombia. This nation is already sending legal cannabis worldwide thanks to Resolution 539, which was passed last year to regulate the cultivation, production and commercialisation of cannabis products for medical and scientific purposes.

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This is why investors from more established markets, like Canada and the United States, are in a hurry to establish ties with licensed Colombian companies, which are able to work at much lower costs and without the current tax structures that are in force in North America.

The cradle of cumbia aims to be the leader in the global export of cannabis thanks to a regulatory framework that is already standard for its neighbouring countries. And with its recent approval of recreational cannabis, the country has put the final piece in place for a process that is as effective as it is fast.

Emerging markets to watch closely

The regulatory process in Latin America has greatly accelerated in the last two years; especially in 2022, which brought a number of very interesting changes. These included the issue of export licences in countries like Panama. In September 2022, president Laurentino Cortizo expressed interest in developing the medical cannabis industry, by approving decrees that will allow local and foreign firms to supply the domestic market using raw materials produced in the country.

On the other hand, Ecuador has already started producing cannabis at a national level, under the regulation for medical use which was approved back in 2019. Its climatic conditions and privileged geographical position make Ecuador the perfect candidate for large-scale production.

Another country that certainly has optimal growing conditions is Costa Rica. This nation has achieved the adoption of a law for the production and use of industrial hemp, which is expected to offer significant commercial opportunities as well as the potential for the medicinal use of the plant.

The president of the country, Rodrigo Chaves, also advocates for the legalisation of recreational cannabis. This promise could soon become a reality, drastically changing the cannabis scene of the country, which every year receives a huge number of tourists, especially from nations with a high purchasing power like Canada and the USA.

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Peru legalised medical cannabis back in 2017, but the system was inefficient, and patients continued finding it difficult to gain access to cannabis products. With the passing of the new law in 2021, which allows officially registered patient associations to cultivate, the Peruvian medical cannabis sector is finally starting to become a viable reality.

Mexico has a much different story, though. This is a country with several competitive advantages for marijuana growing, including its climate, geography, a skilled workforce, and a potentially huge domestic market. However, despite all the efforts that have been made regarding the legalisation of marijuana, the Senate still has to make much progress on the Federal Act for the Regulation of Cannabis. It is expected that this issue will be discussed by the national authorities throughout 2023, with the aim of finally removing it from the limbo where it is currently stuck.

Opportunities as well as rights

As far as the cannabis industry is concerned, Europe and North America have been the dominant markets for several decades. In Latin America, the legal framework prevented the development of the business structure that Europe timidly enjoyed, particularly in relation to R&D, the creation of cannabis strains, and genetic improvement. Nevertheless, there’s been a 180-degree change in only a few years.

The regulatory wave experienced by Latin America could represent an economic boost for many countries that really need it: business opportunities that will generate new jobs and sources of income for both governments and companies, with the export of cannabis products looking like the promise of a bright future.

Thanks to all of this, thousands of patients who have been waiting for a long time for these measures can finally have safe and legal access to cannabis-based therapies. And, after years of struggle, new and exciting revenue streams and employment opportunities have emerged. Having said that, we must not lose sight of the fact that the green light has finally been given to rights that should have never been banned in the first place.