All around the globe, governments are looking into the economic benefits that the cannabis sector would bring in the mid and long term, and are discussing the most efficient ways to lift the prohibitions related to this plant. Argentina is no exception and, as the pandemic continues, plans to develop the cannabis industry and become a strategic supplier of cannabis.
The end of global cannabis prohibition is happening. Cannabis is now legal in 44 countries and the number is growing month by month. The cannabis global market is worth more than $340 billion and it has about 263 million consumers, according to the report ‘The Cannabis Industry as an Investment’ by the broker XTB and other publications by consulting firms such as Euromonitor or Prohibition Partners.
More than 200 companies related to this activity are listed on the Canadian and New York Stock Exchanges, with a total of $80 billion in market capitalization. Cannabis emergence is influencing all categories of consumption. Cannabis derivatives are now part of the daily consumption routines of millions of people either as a functional ingredient in the food, in beverages, in beauty products, or health care.
In the United States, the total market for infused products is worth $17 billion annually, growing at a rate of 25%. To understand the magnitude of this phenomenon, it is important to broaden the view and begin to act decisively to integrate the country of Argentina into this global trend, complemented by the debate on the decriminalization of adult consumption, self-cultivation (medicinal and recreational), medical issues and the rights agenda.
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Argentina has the potential to become a strategic supplier of cannabis
Argentina is an agro-industrial country that has all the conditions to become an important global player due to its geography, climate, installed capacity, domestic market, and human resources. It can position itself as a strategic supplier for the export markets given these favorable conditions, as well as the fact that the installation and production costs are 80% lower than in Europe and North America.
The regional context only corroborates this evidence. Uruguay, Paraguay, Chile, Colombia and Peru, to mention only a few cases, have established conditions for obtaining licenses for research, import, marketing and production purposes. The countries have already obtained or are in the process of receiving a direct private investment of close to one billion dollars, launching a vigorous economic activity and generating thousands of jobs directly and in their associated activities.
According to the fourth annual report of the consulting firm Leafly from the beginning of 2020, only in the United States, this industry currently generates 243,700 full-time jobs, with a year-on-year increase of 15%, an indicator of the continuity of its expansion. It is the industry that generates the majority of new jobs, growing at a faster rate than any other sector of the economy in the last four years.
If a regulated legal market is successfully opened in the country, it is likely that the economic effects will extend not only to cultivation and production but also to other areas, giving rise to the necessary formation of new businesses and activities in ancillary sectors such as legal, strategic and marketing services, to accompany the growth of companies that develop and market new cannabis products. Argentina must not delay its entry into this market and the opportunity to do so is now.
Legalization of cannabis is necessary for Argentina in a post-pandemic world
The challenges Argentina faces in the post-pandemic scenario pose an urgent need for regulation of the activity in all its stages to serve as a starting platform for this industry. The establishment of investments, productive diversification, innovation, generation of added value, creation of jobs, potential foreign exchange and tax revenues, and the necessary articulation with universities, researchers and other public and private sector actors are the expected consequences.
In this way, the State will guarantee access to an infinite number of products made with good manufacturing and traceability practices, in a safe and legal manner, leaving behind a scenario where these are within the reach of the population without any type of quality control as is currently the case.
The new regulation of the medical cannabis law should be the first step in that direction. Let this, then, be a request to the authorities to convene all sectors of civil society that are working on this agenda, to collaborate on a strategic plan for the early implementation of the cannabis economy in Argentina.
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First published in Perfil, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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