Cannabis and hemp should boost Argentina’s economic recovery?

Hector Gomes, LATAM analyst, prohibition partner

June 16, 2021

Earlier this month, the Argentine government, led by President Alberto Fernandez, released a draft regulatory framework for the development of the country’s medicinal cannabis and hemp industries after a major change in law was passed in November 2020.

Argentina, historically one of the best developed and most educated countries in Latin America, is now faced with a stagnating economy and an uncertain future after years of political and economic struggle. Traditionally regarded as one of the world’s top agricultural producers, which earned the country the nickname El Granero del Mundo, which means “The Barn of the World,” it’s no surprise the country is paying more attention to the socio-economic benefits of commercial cannabis and hemp cultivation.

Decriminalization

Argentina has vast fertile soils with significant growing potential, a developed agricultural background, and a well-oiled export process and well-functioning supply chain for its crops.

Neighboring Uruguay is a country with very close cultural ties to Argentina and legalized both medicinal and adult cannabis in 2013. Argentina, however, took a more conservative stance on the commercialization of cannabis and hemp.

The ban in Argentina was challenged in 2009 when the Supreme Court sought to decriminalize small amounts of cannabis for personal use. However, since a Prohibition Act (23.237) was still in force, this change in the law had only a minor impact on the everyday life of cannabis users.

As a federation, some regional governments were one step ahead of the whole country. In the provinces of Santa Fe and Chubut, for example, patients have had legal access to medical cannabis since 2016. In 2017, federal law was passed allowing the nationwide prescription of medical cannabis for a short list of conditions.

Advanced legislation

But it wasn’t until November 2020 that Argentina took a decisive step towards a more advanced and comprehensive legal framework that would allow access to medical cannabis for more diseases. The move also allowed retail pharmacies to legally sell cannabis products, and the green light was given to the domestic and industrial cultivation of medicinal cannabis, approving Law 27,350, as described in the Latin America and Caribbean Cannabis Report: Second Edition.

Following the enactment of the law in 2020, the draft regulatory framework published earlier this month by the Minister for Productive Development, Matias Kulfas, aims to help guide emerging industries and also proposed the creation of a national agency (ARICCAME) to help guide the emerging industries Cannabis and hemp production chain, aiming to enter the global cannabis and hemp export markets.

In doing so, Minister Kufas aims to create over 10,000 jobs and generate approximately $ 500 million in domestic sales and $ 50 million in export sales annually.

Prohibition Partners spoke to Pablo Fazio, President of the Argentine Cannabis Chamber (ARGENCANN), about the draft regulatory framework and the next steps.

“In the next few days the bill will be sent to the National Congress. As soon as it reaches the Chamber of Deputies, it is forwarded to various commissions: for health, finance, general legislation, crime, agriculture and livestock, and regional development, among others. We need to monitor progress closely to get approval so that the bill can be put to the Chamber for a vote, which we hope will come later this year. We await its immediate approval by the National Congress, firmly convinced that this law will be a key to boosting the sector, ”said Pablo.

Economic recovery

The main challenges of the bill are questioning some local federal agency governments, with concerns about an overt industry focus on Buenos Aires, adult use issues, and a call to NGOs who have worked with medicinal cannabis for years to be protected and able to continue their mission.

Pablo Fazio believes that the growth of SMEs in the industry must be a priority if Argentina is to overcome post-pandemic economic adversity and compete in the global cannabis industry.

“We believe that the emphasis must be placed on small and medium-sized enterprises and civil society as protagonists of this new industry that is being born in our country. I can testify that there are hundreds of entrepreneurs and growers from across the country waiting for the conditions for the creation and federal expansion of a production, innovation and employment agenda with a broad territorial impact to emerge.

It will be necessary to overcome the macroeconomic difficulties our country is facing as a result of the pandemic and to be able to invest in order to develop a single market and integrate our country into the emerging and competitive global cannabis market “, Pablo told Prohibition Partners.

Foreign investment

Argentina appears to have the infrastructure to become a major player in the global cannabis and hemp industry, with its agricultural expertise, local talent, and mature agricultural export routes that may allow cannabis and hemp plants to cross borders efficiently and support the country’s much-needed economic recovery

This is a sentiment that resonates with Pablo, who also believes Argentina has all the hallmarks to become a global success story in the cannabis and hemp industries – which could also attract the attention of potential overseas investors.

“Argentina is a world leader in agriculture. We are an agro-industrial country with capacities, qualified human resources, a high-performing, technologically productive institutional framework and an excellent academic and scientific ecosystem. We also have one of the most vibrant business communities in Latin America. We have the perfect prerequisites for this.

I am convinced that Argentina can turn this legislation into a competitive advantage and that foreign investors will appreciate it, ”said Pablo.

For more information on the Latin American cannabis market, download The Latin America and Caribbean Cannabis Report: Second Edition by Prohibition Partners for free.

For tailor-made research and advice as well as funding opportunities, please contact: info@prohibitionpartners.com.

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