Uruguay Three years after cannabis was legalised, Uruguay’s government announced just a few months ago that it would soon commence state-controlled sales. The first harvest has already arrived and the cannabis buds should already be in the process of being dispensed to adult consumers with the assistance of the 1100 pharmacies in the country. However... More about the background to this story can be found here:
Pharmacies don’t want to deal with cannabis
Cannabis buds should of course be dispensed under stringent conditions and at a set price of around one euro. The sales price is fixed so low with the hope of putting a stop to the black market. According to the government’s plans, the maximum quantity you are allowed to purchase as a registered user in accordance with legislation 19.172 is 40 grams per month. However, even at the beginning of 2017, Uruguay’s cannabis fans must once again exercise patience until they are allowed to purchase it legally.
The administration of President Vázquez explained that the sale that was announced for January has now been postponed to an unspecified date later this year. The main reason for this is that so far, only around 50 pharmacies had said that they are willing to sell cannabis. If that doesn’t change soon, the country-wide dispensation system prescribed by law will be fundamentally called into question. However, Uruguay’s pharmacies don’t want to be forced by the government to sell cannabis.
The country’s pharmacy association (AQFU) has spoken out multiple times against the sale of cannabis for non-medicinal uses, as it is alleged to be unethical, confusing to the public and would fundamentally call into question the reputation of pharmacies as health centres, explained AQFU spokesperson Dr Eduardo Savio. In addition to ethical considerations, the pharmacies also seem to fear illegal competition. “I don’t want any trouble with the people who sell cannabis in this area,” explained pharmacy owner Marcelo Trujillo in an interview with “The Cannabist”.
Cannabis for oral consumption
The government already announced that it estimates demand for cannabis for oral consumption to be 26.5 tonnes per year, based on just under 60,000 regular and not quite 100,000 occasional users. To meet their demand, each pharmacy that has a vendor’s permit should stock two kilograms of cannabis. That in turn triggers additional security considerations among licensees, because they fear becoming victims of assault or burglary.
Of the 20 companies that applied for a growing licence, the International Cannabis Corporation (ICC) and Symbiosis were successful. Yet even on the ICC sites, people have long been searching in vain for licensed retailers selling something of the two tons in total produced so far.
To enable the identification of black market goods more easily in the future, the two companies have so far only been allowed to grow one variety which, according to the cannabis agency’s (Instituto de Regulación del Cannabis – IRCCA) data, could be differentiated from illegal substances if tests were carried out.
So far, there has never been an unproblematic separate medicinal cannabis programme, particularly for sceptical pharmacies. The only options for Uruguay’s estimated 160,000 cannabis consumers and patients, three years after legalising cannabis, is to grow it at home or join one of the many Cannabis Social Clubs. One club in Uruguay is only permitted a maximum of 99 members, so that it doesn’t become a commercial cannabis trafficker. Individual adults are legally allowed to grow up to six plants with a yield of up to 480 grams.
Even today, 66% of cannabis still comes from the black market
In Uruguay, two-thirds of cannabis sold still comes from the black market, as proven by current seizure figures, the quantity of which, according to data belonging to the Ministry of the Interior, has increased by over 150% from the time of legalisation to 2016.
The latest results of a study commissioned by the government when the legalisation entered into force, confirm that black market goods “[…] are of lower quality and contain a higher proportion of leaves to buds. It is usually grown in the east of Paraguay and known as ‘Pressed Paraguayan’, because it is compressed, so that it can be smuggled and sold throughout the River Plata Basin, which covers parts of Argentina, Brazil and Uruguay. The price for a gram, or a ‘palanca’, on the black market can be between 15 and 50 Uruguayan pesos (50 cents to 1.60 euros), whereas 10 grams can cost around 200 pesos (7 euros), while high-quality cannabis buds can cost up to 600 pesos (20 euros) per gram.”
In view of this, observers wonder how future high-quality cannabis can be sold for the same price as cheap black market produce from Paraguay. Because even in a country that has low electricity and staffing costs, the price aimed for by the government of around one dollar per gram is a truly competitive price for cannabis that is checked, standardised, grown and allegedly cultivated without pesticides or fungicides. For those reasons alone, it seems rather unrealistic. It recently became public knowledge that the sales price of 1.17 euros announced for the first harvest doesn’t even cover the producer’s transportation costs, because the pharmacies are supposed to receive 90 cents per gram.
The only people to have benefited from the government’s policy so far are the 5000 small growers and the 1000 members of Cannabis Clubs who have registered with the cannabis agency. But the study established that there is a vast grey area here too, which has so far only registered a small proportion of all those growing for personal use, and many consumers didn’t want to participate at all in future pharmacy sales, for which you have to register.
There is still no master plan
With his brave step in 2013, former President Mujica took an important stance without giving much thought to the economic and social consequences. If anything, it was a political stance, because Mujica regards the war on drugs as one of the greatest evils of the present age. His successor, Vásquez, is decidedly against the new policy, but is nevertheless implementing it, albeit willy-nilly and therefore perhaps also very slowly.
Unfortunately, the planned system mixes the medicinal dispensation with the sale of cannabis for recreational use. Sales are also over-regulated, impaired by the compulsory registration of consumers’ personal freedoms. The pricing policy is reminiscent of a socialist five-year plan from the GDR; variety is nowhere near being guaranteed due to the prescribed mono-strain culture and free-market legislation is therefore being overturned completely. If Uruguay doesn’t over-think the details of the legislation, sells medicinal cannabis via pharmacies and otherwise permits licensed specialist dealers, even after a period of four or five years following legalisation, there would still be a grey area as well as a lucrative black market.
In 2014, shortly after the legalisation was effected, it was announced that cannabis would temporarily be obtained from Canada, without having spoken to the Canadian cannabis agency at all. After that plan failed, Urugay’s new plan was for the army to grow cannabis, which didn’t work either. The pharmacy association recently had the brilliant idea of selling cannabis at police stations for security reasons, which poses the question as to what comes next. The fire brigade, the local shooting club, the pub on the corner, or perhaps the neighbouring alternative medicine practitioner? That said, it’s not all that hard to find a few serious businesspeople who would like to sell cannabis in a safe, responsible and law-abiding manner. They even don’t mind having their business models monitored by the state and work in a more transparent manner than many authorities, as shown by more than a handful of US states and even the cities of Vancouver and Toronto in Canada.
If things proceed in Montevideo as they have so far, Uruguay’s legalisation of cannabis won’t be the positive international example that the citizens of the first country to offer legal cannabis had hoped it would be back in 2013. A glance towards Canada would be extremely helpful, even though they recognised there that a well-thought-out legalisation process is rather expensive and can only be implemented if you already have a well-devised plan. Otherwise, cannabis will only disappear from the black market in order to be traded over the next few years in a barely controlled grey area, becoming a driver of tax-free profits.