The cannabis and hemp industry is booming in Argentina, and this is only the beginning. The country could well be the next big manufacturing hub for medicinal and industrial hemp products in the Southern Hemisphere, as Argentina’s government actively promotes the industry across the country. The country has recently legalised its use, and has already seen its hemp industry bloom, with a number of hemp-related startups setting up shop in the country.

Argentina has been going through a difficult economic crisis for over a decade, while the country has had a steady stream of economic growth, leaving many to believe that more could be achieved. After a few decades of development, the country now has the potential to take advantage of this new tech-driven revolution and build a prosperous future for itself, and hopefully for its citizens. While the issue of legalization of hemp and cannabis may seem to be an insignificant detail, it has a meaningful impact on the economy of Argentina, as they are a part of many other industries and sectors.

word-image-9984 Argentina is making steady progress in its quest to become synonymous with the cultivation of plants other than its beloved yerba mate, namely cannabis and hashish. Earlier this month, Argentina’s government, led by President Alberto Fernandez, released a draft regulatory framework for medicinal cannabis and the country’s cannabis industry, following the passage of key legislative changes in November 2020. Argentina, traditionally one of the most developed and educated countries in Latin America, now faces a stagnant economy and an uncertain future after years of political and economic struggle. Traditionally, the country has been considered one of the world’s leading producers of agricultural products, earning it the nickname El Granero del Mundo, or barn of the world. Not surprisingly, the country is scrutinizing the social and economic benefits of commercial cannabis and its cultivation.

Decriminalisation

Argentina has large fertile areas with significant cultivation potential, a developed agricultural sector and a well-developed export process and supply chain for harvested products. Neighboring Uruguay, which has very close cultural ties to Argentina, legalized cannabis for medical and adult use in 2013. Argentina, however, has taken a more conservative stance on the commercialization of cannabis and hashish. Prohibition in Argentina began to be challenged in 2009 when the Supreme Court decriminalized a small amount of cannabis for personal use, but because the prohibition law (23.237) is still in effect, these changes in the law have had little impact on the daily lives of cannabis users. As a federation, some regional governments are ahead of the country as a whole. In Santa Fe and Chubut counties, for example, patients have been able to legally obtain medicinal cannabis since 2016. In 2017, federal legislation was passed allowing for the nationwide prescription of medical cannabis to treat a short list of conditions.

Progressive legislation

But it was not until November 2020 that Argentina took a decisive step toward a more progressive and comprehensive legal framework that allowed access to medical cannabis for a wider range of conditions. This decision also allowed dispensaries to legally supply cannabis products and gave the green light to the domestic and industrial cultivation of medical cannabis – through the approval of Law 27.350, as described in the report Cannabis in Latin America and the Caribbean: Second edition. Following the passage of the 2020 legislation, the Minister of Productive Development, Matias Kulfas, released a draft regulatory framework earlier this month to guide the burgeoning industry. He also proposes the creation of a national agency (ARICCAME) to oversee the cannabis and hemp production chain to gain access to global export markets for cannabis and hemp. In this way, Minister Kulfas wants to create more than 10,000 jobs, as well as about $500 million in domestic sales and $50 million in export sales per year. Prohibition Partners spoke with Pablo Fazio, President of the Argentine Cannabis Chamber (ARGENCANN), about the proposed legal framework and next steps. The draft law will be sent to the National Congress in the next few days. Once the bill reaches the House of Representatives, it is referred to various committees: Health, finance, general law, criminal law, agriculture and animal husbandry, regional development, etc. We will have to monitor developments closely in order to obtain permission to send the bill to the House of Representatives for a vote, which we hope will take place before the end of the year. We look forward to the early approval of the National Congress and are convinced that this law will be essential for the progress of the sector, Pablo said.

Economic recovery

The main concerns in the bill include questions from some local governments about federal authority, concerns about the apparent concentration of the industry in Buenos Aires, issues related to adult use, and a request to protect and allow non-governmental organizations that have been working with medicinal cannabis for years to continue their mission. Pablo Fazio believes that the growth of small and medium-sized enterprises in the sector must be a priority if Argentina is to overcome its post-pandemic economic difficulties and compete in the global cannabis industry. We believe that the emphasis should be on small and medium-sized enterprises and civil society as protagonists of this new industry that is emerging in our country. I can attest that there are hundreds of entrepreneurs and farmers across the country who are waiting for the conditions to be created and expanded at the federal level to establish a manufacturing, innovation and employment program with broad territorial impact. It will be necessary to overcome the macroeconomic challenges our country has faced as a result of the pandemic and to begin investing to develop the national market and include our country in the emerging and competitive global cannabis market, Pablo said in an interview with Prohibition Partners.

External investment

Argentina appears to have the infrastructure to become a major player in the global cannabis and hemp industry. The country has agricultural expertise, local talent and developed agricultural export routes that could potentially allow cannabis and hemp crops to cross borders effectively and contribute to the country’s much-needed economic recovery. This opinion is shared by Pablo, who also believes that Argentina has all the signs to become a global success story in terms of cannabis and its production, which could also attract the attention of potential foreign investors. Argentina is a world leader in agriculture. We are an agro-industrial country with potential, a skilled workforce, a strong techno-productive institutional structure and an excellent academic and scientific ecosystem. We also have one of the most dynamic entrepreneurial communities in Latin America. We have all the conditions to make that happen. I am convinced that Argentina will be able to turn this legislation into a competitive advantage and that foreign investors will appreciate this, Pablo said. For more information on the cannabis market in Latin America, download the report Cannabis in Latin America and the Caribbean: Second Edition of Partners in Prohibition read for free.

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