Ecuador will use cannabis to revitalize its economy

Even if processing cannabis for medical use is still illegal in Ecuador, many of the restrictions linked to the consumption and distribution of this plant were lifted, opening the gates for businesses to invest in the sector. Many experts believe that the decision will bring the Ecuadorian economy to new heights, helping in the development of many key sectors, like food and construction.

Since June 21st, 2020, with the reforms to the Comprehensive Organic Penal Code (COIP), non-psychoactive cannabis or hemp has ceased to be a controlled substance in Ecuador. 

Personal hygiene products based on cannabis oil have already started to be produced in Ecuador. This follows the entry into force of the reforms to the Penal Integral Organic Code (COIP) on June 21st, 2020. 

Article 127 of the regulations provide for the decriminalization of “the cultivation and production of hemp with a delta-9-tetrahydrocannabinol (THC) content of less than 1 percent by dry weight.”

While there are laboratories in the country interested in processing cannabis for medical use, that is not yet legal. 

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Processing cannabis for medical purposes in Ecuador is still illegal

“The technical norm of the Agency of Regulation, Control and Sanitary Surveillance (Arcsa) for this type of product is not yet in force,” explained Cecilia Falconi, legal advisor and founding member of the cluster of cannabis for medical and industrial use of the Quito Chamber of Commerce.   

Companies from five other sectors are already preparing to plant and use medical or industrial cannabis to obtain everything from oil to biomass for construction materials. 

“The decriminalization of non-psychoactive cannabis was decided in 2019, through the actions of people who fought for its medical use. It had nothing to do with the pandemic,” Klaus Graetzer, president of the Board of Directors of the School of Floriculture of the National Association of Flower Producers and Exporters of Ecuador (Expoflores).

Cannabis will help develop many sectors of the Ecuadorian economy

However, Graetzer acknowledged that “hemp production will be one of the productive motors that will help to bring the country out of the crisis caused by the COVID -19 pandemic.″

• Cosmetics 

The company Beautik Laboratories, located in Duran, has been one of the first to use non-psychoactive cannabis in its production.  

In July 2020, the company launched a new hair line, composed of shampoo, conditioner, styling cream and hair mask, based on hemp seeds.  

The cannabis raw material, cannabidiol (CBD), used by this laboratory is imported from Germany. To market cannabis products on the local market, the company had to comply with Arcsa processes. 

Cannabis oil is attractive in the cosmetic industry because it is rich in essential fatty acids and omega-3, 6 and 9.

• Flower growers

The COVID-19 pandemic crisis hit the flower industry especially hard. During this period 17% of the hectares disappeared.

Therefore, there are flower growers who are looking for other crops, such as medicinal cannabis and blueberries, to have a product that is not so risky, such as flowers, considered a luxury good. 

“The flower grower can easily migrate to this new crop because he has the infrastructure, the land, the greenhouses, the risk system, and the skilled labor because cannabis is a flower,” said Graetzer. 

The cultivation of medical cannabis is also attractive to the industry because it yields more than roses. 

“In Colombia, we have already seen that for one hectare of hemp, we obtain $5,500 in sales per year,” explained Graetzer, who added that in Ecuador production could be higher due to climatic conditions.  

However, Falconi suggested that those interested, should be starting with a small investment, since it is a new industry in the country.

Although there are flower growers interested in planting and growing non-psychoactive cannabis, it should be borne in mind that the first formal harvests will be in 2021. This is because regulations, licenses, authorized seeds, and standardization tests are still pending.

• Food industry

“There is a lot of interest in the food industry in using non-psychoactive cannabis seed,” said José Antonio Dávalos, president of the Ecuadorian Association of Medical and Industrial Hemp – EcuaCáñamo.  

That is because hemp seed is rich in essential fatty acids, protein and magnesium. A confectionery company would already be working to produce chocolates with hemp.  

“As long as it does not contain THC, food can be produced with CBD, hemp derivatives, or hemp seeds,” explained Falconi.  

The local food industry would also be interested in hemp oil for cooking. In addition, there are companies in the sector that want to use the plant for animal consumption. 

“There are studies that show that when cows are fed with hemp seeds or leaves there is better production of milk,” said Davalos.

• The Construction sector

“A university in the country is interested in importing hemp fiber, until this plant can be produced locally, to study its use in construction,” explained Dávalos.  

Graetzer added that hemp is attractive in the sector because “with the plant’s biomass, concrete is produced to make walls. The advantage of hemp fiber is that it doesn’t burn.”

In the United States, hemp is already being used as a replacement for wood to make floors.

• Bioplastics

In recent days, it has also become known the intention of entrepreneurs to process hemp to make bioplastics or biofuel. 

The use of hemp in this industry will take longer because “much more expensive industrial machinery is needed,” said Dávalos.

The long-term goal “is not just for the country to export the plant, but also goods with added value,” said Dávalos. 

Regulation on cannabis planting is still pending as businesses are waiting for their licenses 

While the manufacture of non-psychoactive cannabis products with a THC content of less than 1 percent is already permitted in the country, what cannot yet be done is to plant or grow the plant for commercial purposes. 

Why not? Because the Ministry of Agriculture and Livestock has to issue regulations.

“Hemp production is not totally free, it must meet certain parameters. The Ministry of Agriculture is responsible for issuing permits for processing, marketing, and export,” explained Graetzer. 

Since the reforms came into effect, the ministry has 120 days, that is, until Oct. 18, 2020, to publish the regulations with the guidelines for its production. 

However, on social networks and in WhatsApp groups there are people who claim to have licenses and authorized seeds, which is false. 

“Nobody in Ecuador has licenses, nobody,” said Graetzer, who added that “those seeds are not legal, yet, because they do not have the certification that the Organic Law of Agrobiodiversity, Seeds and Promotion of Sustainable Agriculture (Loasfas) determines. 

The Ministry of Agriculture is working on five types of licenses, according to Falconi:

• Import and production of hemp plants, seeds or cuttings. 
• Plant breeding and/or scientific research and germplasm banks. 
• Hemp cultivation. 
• Production of hemp derivatives and industrialization of hemp products. 
• Marketing.

Ecuador is looking for the sector stability avoiding speculation

The regulation on which the Ministry of Agriculture is working also seeks to avoid problems already faced by other hemp-producing countries 

For example, in Colombia, people were getting cannabis production permits to make their land more valuable and then put it up for sale.

To avoid that, the Ministry would be assessing whether to establish a minimum production within a time frame or that the company’s shares could not be transferred without their authorization. 

“With these measures, Ecuador is seeking agro-industrial stability,” Falconi concluded.

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