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Key milestone for Uruguayan cannabis market

FlorenciaBerro
Florencia Berro
fberro@bda.com.uy
Almost four years after the cannabis law was enacted in Uruguay, we are close to witness a key milestone in the Uruguayan cannabis market: the sale of recreational cannabis in pharmacies. But expectations are not mainly focus on such kind of legalization, but instead, because its represents a step toward one of the most desirable legalization purposes: medicinal cannabis.
Meanwhile, the production of non-psychoactive cannabis (hemp) for industrial use continues to advance, under the orbit of the Ministry of Livestock Agriculture and Fisheries; despite of the exhaustive controls required considering the substance, such activity resembles to agricultural activity in which the country is an expert. It is therefore important to highlight the main characteristics of the Uruguayan cannabis legal framework.

(I) Principles of law regarding cannabis, mainly consists of:
• Public education, health assistance and mandatory publicity to increase awareness and prevention of risks and damages related the use of cannabis
• Ban of all forms of advertising, promotion or sponsorship of psychoactive cannabis
• Restriction of driving under effects of cannabis in all territory
• Prohibit consumption and possession at work; regulations provide rules for detection of consumption, and establish prevention, diagnosis and eventual rehabilitation treatment measures.

(II) The creation of the Institute of Regulation and Control of Cannabis (“IRCCA”), as a non-state person ruled by public law, which faculties and objectives include:
• Promoting actions towards reducing risks and health damage associated with the problematic use of cannabis.
• Advise the Presidency of Uruguay on the design of cannabis policies and strategies.
• Register of cannabis operators.
• Grant certain licenses or authorizations provided in the law and determine the price
• Controlling all stages of planting, cultivation, harvesting, distribution and dispensing of psychoactive cannabis through systems which allow traceability.
• Powers of inspection and to apply sanctions.


(III) Cannabis legalization subject to authorizations: exceptions to general prohibition to plant, cultivate, harvest and commercializing drug.

The different kind of licenses provided under the cannabis legal framework differs considering the activity, the type of cannabis implied, the purpose and/or the final destination. Broadly they consist of the following.
• Recreational cannabis. Regulations lay out three mutually exclusive methods for individuals to accessing psychoactive cannabis for recreational purposes, open to Uruguayan citizens and permanent residents over the age of 18. Accessing methods are:
1. Purchase of a limited amount per month, without prescription, in pharmacies authorized by the Ministry of Hearth, and licensed by IRCCA. Individuals must personally attend the pharmacy and be registered within the IRCCA. The cannabis is subject to the respective registrations and controls of the Ministry of Public Health.
Planting, cultivation, harvesting, processing and distribution of psychoactive cannabis for dispensing in pharmacies, shall be performed by companies licensed under tender processes carried out by IRCCA. In 2014 two licenses were awarded for such purpose for the term of 5 years.
2. Domestic production for personal or shared consumption; individuals and plantations shall be registered the within IRCCA.
3. Membership of “cannabis clubs” authorized by the Executive Branch and IRCCA. Collection shall be in proportion to the number of members and the amount authorized for personal consumption. Members and clubs must be registered within IRCCA.

• Non-psychoactive cannabis (hemp) for industrial use. Regulations provides the following authorizations:
1. Plantation, cultivation, harvesting, as well as the industrialization and commercialization of non-psychoactive cannabis
2. Import and export of non-psychoactive cannabis and seeds
3. Production of seeds and cuttings of non-psychoactive cannabis
Those aspiring to obtain the aforementioned authorizations should submit the respective request to the Ministry of Livestock, Agriculture and Fisheries. In this case, it is the Ministry of Livestock, Agriculture and Fisheries, which is the competent authority to grants the licenses, control all stages of production and commercialization, as well as it is entitled to apply sanctions.

Those aspiring to obtain the aforementioned authorizations should submit the respective request to the Ministry of Livestock, Agriculture and Fisheries. In this case, it is the Ministry of Livestock, Agriculture and Fisheries, which is the competent authority to grants the licenses, control all stages of production and commercialization, as well as it is entitled to apply sanctions.

• Psychoactive and non-psychoactive cannabis for scientific research or the development of vegetable specialties or pharmaceutical specialties. Regulations provide the following authorizations:

1. Scientific investigation, subject to the authorization of the Ministry of Public Health according to the respective investigation project approved by such office or other competent authority.
2. Planting, cultivation, harvesting and commercialization of psychoactive and non-psychoactive cannabis for research purposes, subject to IRCCA’s authorization, which shall be granted in regards to a scientific investigation project previously approved.
3. Elaboration, industrialization and distribution of “vegetable specialties” or “pharmaceutical specialties”, with the authorization of the Ministry of Public Health. The distribution of these specialties shall be conducted directly by the manufacturer or importer thereof or through certain drug stores category dully authorized by the Ministry of Public Health. Acquisition shall be subject to the presentation of an official prescription, and registration in the registry of IRCCA.
4. Planting, cultivation, harvesting, distribution and commercialization of psychoactive or non-psychoactive cannabis for the development of vegetable or pharmaceutical specialties, subject to the prior authorization of IRCCA. The license applicant must evidence that the recipient of the cannabis produced is authorized for the elaboration of vegetable or pharmaceutical specialties.
5. Foreign trade. Those interested in importing and exporting seeds, plants, processed or semi-processed products of cannabis for medicinal or scientific research purposes must request import or export authorization to the Ministry of Public Health in accordance with the respective legislation.
In all cases, be aware that authorizations introduced under the cannabis law are without prejudice to comply with other applicable laws and permit (for instance, National Seed Institute, National Customs Bureau, Municipal Governments.

(IV) Anti-money laundering restrictions with respect to the holders of licenses.
Cannabis legalizations were introduced as certain exceptions under the general drugs law enacted to combat drug trafficking, and which provides criminal offenses in case such activities are carried out illegally, or in case activities involving goods, products or instruments proceeding from such other criminal offenses takes place, including money laundry, as well as provisions applicable to financial institutions concerning the prevention of such crimes.

The National Anti-Money Laundering Secretariat evaluates the proper identification of final beneficiary of licensees, as well as the origin of the funds proposed to be allocated to the implementation of the projects, within the framework of anti-money laundering and prevention of financing of terrorism legal framework.
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