Argentina has a foreign currency problem, and Cannabis could be part of the solution as the recent Government regulation and debate highlights. As a high-value agricultural export with a huge potential in both industrial and medicinal fields, the cannabis and hemp industry could span the entire production chain, creating jobs and foreign currency revenue along the entire length.
Green cannabis and perhaps most importantly, green dollars, are what the government of Argentina is awaiting from a sector that could grow strongly over the next decade. The cannabis and hemp industry is slowly flourishing with the approval of Congress. The law regulating the industrial production of hemp and its derivatives has already been passed by the Senate. This week, moreover, the First International Congress on Cannabis and Productive Development was held, convened, of course, by the ministry headed by Matías Kulfas.
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The Hemp Industry is Starting to Bloom in Argentina
The two uses of cannabis that are currently completely decriminalized, or are about to be, are medicinal (oils, nutraceuticals and medicines) and industrial, from which, for example, textile products or construction materials are obtained with the seeds, stems, leaves and flowers of the plant. Although many are campaigning for it and the country discussing it, recreational use is still a long way off for the private sector which might like to invested in this area (they are excited about the possibility).
According to estimates by the Argentine Chamber of Cannabis (Argencann), with the passing of the industrial cannabis bill and its regulation, the door will be opened to a domestic market worth US$500 million. “In terms of foreign currency, our country could generate income of US$1 billion in the next ten years, if the export of dried flower, phytopreparations, medicinal specialties and the use of cannabinoids in cosmetics, food, beverages and veterinary products is expressly authorized, as well as the transformation of hemp biomass into various forms of industrial use,” adds Pablo Fazio, president of the organization and of the American Network of Cannabis Associations.
Cannabis Dollars: Could Hemp Provide Much Needed Foreign Exchange for Argentina?
Prorated over the decade, cannabis could generate more dollars a year than those currently generated by the export of yerba mate, blueberries and tea, all major agriculture products. The organization headed by Fazio is one of the leading organizations in driving a strong and professionalized private sector. From an employment point of view, he says, 10,000 jobs are projected to be created.
The Ministry of Productive Development is looking at the opportunity with greedy eyes. Before organizing the congress in question, it had commissioned a study by economist Andrés López, director of the Interdisciplinary Institute of Political Economy (IIEP) and professor of Economic Development at the Faculty of Economic Sciences of the University of Buenos Aires.
Cannabis Certifying Processes at the Heart of Unlocking its Dollar Potential
López made a detailed report on the opportunity that the industry generated in other countries. Just one example: in Colombia he found 337 authorized seed producers, 37 research units, 30 evaluation units, 56 companies with import licenses and 32 with export licenses. According to the economist, the consulting firm PwC estimated that on Colombian soil 17 jobs are generated per hectare of outdoor cannabis cultivation.
As the law has yet to pass through Congress, the industry is not going to be born overnight. “We have to be patient with respect to the generation of foreign currency: this requires companies to certify processes, it’s not like selling candy,” López told TN. In the case of the non-medicinal market (i.e. the industrial market), it will probably be easier, because the medicinal market has more traceability requirements.
Enabling the Key Hemp Industry Component: CBD
The private sector knows that there are certain conditions that have to be met. For example, Fazio stresses the need to administer the management of licenses “avoiding speculative deviations”, i.e. people who acquire them in order to wait for the industry to “explode” and sell them for a profit.
In addition, he explains, CBD has yet to be “incorporated into the Argentine food code to enable its use in food, beverages, and dietary supplements to facilitate its production and marketing”.
CBD is the component of cannabis that does not have psychoactive properties. In the United States, explains Nicolás Heller of the Argentine Chamber of Cannabis and the company FLORIAN, there dollars can buy you everything from pain relief creams and oils for humans and animals to “consumables” such as gummies, biscuits, and drinks for recreational purposes.
Dollars Locked Within Argentina’s Hemp Potential
“In Argentina, there are many people who have land or agricultural knowledge and who want to get into the industry: there is no lack of desire, only a regulatory framework,” says Heller. And he adds: “We need clear rules and transparency so that society loses its fear of the product: in other countries around the world there are people who make a living from this, just as you can make a living from tobacco, tomatoes or software.”
For the moment, it’s all in potential here. In the meantime, Lopez has a warning: Neither the demand for nor dollars from medical cannabis [produced at scale] is not going to jump from 0 to 100 overnight” because many people will continue to rely on self-cultivation or on the ‘grey’ supplier who already sold them the oil. It would be wise not to oversell overnight to avoid the bubble that happened in other countries.
What about Dollars for the Controlled Cannabis Product?
Finally, what about recreational use, now the focus of debate in the legislative campaign? López recalls that when the industrial cannabis bill was presented to the Economic and Social Council there was interest from some governors in regulating this modality. “In reality, it is not about legalizing, but regulating: that there be a controlled product in conditions of health and safety, where legal jobs can also be created,” the economist points out.
Argencann conducted a survey in July 2021 and interviewed 1,500 Argentines: 60% agreed with the regulation or decriminalization of adult cannabis consumption. “It is a market with enormous potential, the largest in terms of volume, dollar, and economic impact,” concludes Fazio.
(Featured image by David Gabric via Unsplash)
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