The ascent of hemp

Regulators keep watch as CBD oil market grows.

Latin America is known for the production and export of a diverse range of agricultural commodities, whether it is coffee from Brazil and Colombia, beef from Argentina, or bananas from Ecuador. According to the Food and Agriculture Organisation of the United Nations, the region accounts for an estimated 16% of global food and agriculture exports while representing just 4% of global food and agriculture imports.

Hemp, a variety of the Cannabis sativa plant grown specifically for industrial use, is increasingly seen as an agricultural commodity and is currently being exported by Uruguay, Paraguay and Colombia to Europe and North America.

Cannabidiol (CBD) is just one of the cannabinoids extracted from cannabis plants and is being studied as treatments for anxiety, cognition, movement disorders and pain. The CBD oil market was worth USD 90.3 billion in 2020 and is estimated to grow above 20% p.a. for the next five years.

Latin America has high availability of all the raw materials and inputs required for industrial production of CBD oil but governments in the region have been grappling with how to regulate the sector.

A lawyer in Montevideo with expertise in the sector describes the local market, “At present, the biggest business in Uruguay is the production of genetically modified buds for medicinal use but more producers are looking at CBD oils that can also be used for beauty and nutritional products. Uruguay mostly exports plants to the EU and Brazil but are trying to target the US and Australia.”

“At present, the biggest business in Uruguay is the production of genetically modified buds for medicinal use.”

Corporate lawyer, Montevideo

A local producer talks his book, “Producers in Uruguay are three to four years ahead of other countries in the region in terms of production. Producers here are focusing on offering high-quality product with good traceability and regulatory checks to guarantee there a no illegal actors in the system.”

The lawyer explains the regulatory landscape, “Lacalle Pou’s administration was key to eliminate export bottlenecks by empowering the Cannabis Control and Regulation Institute (IRCCA) [part of the Ministry of Health]. For instance, the IRCCA is now handling and issuing export licences which has significantly reduced bureaucracy for producers and exporters. Beyond this, the decriminalisation and, to a larger extent, legalisation of the cannabis consumption and trade in third states will bring new regulations which will have an impact at national level here in Uruguay.”

“The decriminalisation and, to a larger extent, legalisation of the cannabis consumption and trade in third states will bring new regulations.”

Corporate lawyer, Montevideo

The ability and willingness of the Uruguayan government and regulator to adapt to changes in attitude towards this sector is a good sign for the future.

 

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