As cannabis legalization makes progress in Ecuador, many international companies are starting to get interested in this new market. It is expected that this new legalization would bring many economic benefits to the Latin American country. It could open many new investment opportunities to companies all over the world, specially those from the US and Canada.
In the midst of the severe economic crisis that Ecuador is experiencing, in the medium term, it is possible to attract new investment to the country through the development of the medical cannabis industry.
An important starting point for progress towards that goal will be the publication of regulations related to the decriminalization of the cultivation of non-psychoactive cannabis products (hemp) for industry and medicine.
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Several international cannabis companies eyed Ecuador
According to the Ministry of Agriculture, which is in charge of defining this regulation, it will be ready on June 21st. On that date, the deadline set by the reforms to the Comprehensive Penal Code expires.
Once the regulations are approved, this Portfolio will issue licenses for import and production of seeds, sowing and cultivation, plant breeding or research, processing and industrialization, as well as export and marketing of biomass or non-psychoactive crude cannabis oil.
The explanation was given on May 20th by Andrés Luque, Undersecretary of Agricultural Production of the Ministry of Agriculture, in a videoconference.
“Several companies, national and international, have shown interest in investing in hemp cultivation and industrialization in Ecuador. However, all are waiting for the regulations to be established, to formalize their intentions,” said Production Minister Ivan Ontaneda in an interview with this newspaper.
Investments in cultivation and industrialization can reach tens and even hundreds of millions of dollars, the Minister explained, depending on the development of this new sector. “It is a dynamic market that is growing rapidly; the projections are very favorable,” he said.
Companies from the US and Canada are looking to invest in Ecuador’s emerging cannabis market
Xavier Valverde Carcache of the Hoban Law Group, a law firm specializing in the cannabis industry, noted that so far there is early interest from companies especially in the United States and Canada. “We cannot establish an exact number until we have regulation and these investors can review the conditions, safeguards, and incentives to operate in our country.”
In this regard, Minister Ontaneda explained that hemp production will be classified as agricultural or agro-industrial. Therefore, investments in this sector will enjoy incentives for new investments: exemption from income tax and tax on foreign exchange, in the case of signing an investment contract in the country, as established in the current Organic Code of Production, Trade and Investment and Law for the Promotion of Production.
An important aspect that Valverde notes has to do with the areas or provinces where there may be more opportunities to undertake hemp planting.
That will depend, he said, on the variety of seed used, and the processes that allow for its adaptation to the country’s climatic conditions. “Ideal is not to mention exact areas to avoid speculation on land prices, which in Colombia generated many scams and damages,” he said.
Among the provisions to be issued by the Ministry of Agriculture and Livestock regarding authorizations for hemp planting and cultivation is that these economic activities will not be carried out in protected areas, primary forests, or located in border or beach areas.
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First published in El Comercio, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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