The medical cannabis business in Argentina: estimated to generate $1 billion over 10 years

More than three years after the law allowing the medical use of cannabis was passed, the decree of Nov. 12, which enabled self-cultivation and the sale of oils and creams in Argentinian pharmacies, allows one to think a couple of frontiers ahead. What could be the economic impact of national cannabis production? Investors are looking forward to business models like those in Canada and the United States where companies are listed on the stock exchange.

So far, the state-owned company Cannava was the first to receive authorization for the production of pharmaceutical ingredients derived from cannabis. Under the leadership of the Government of July, it is already developing the first medical grade products and plans to cultivate the first 35 hectares of plants by the end of 2021.

One billion dollars in exports and 15,000 jobs estimates the Argentine Chamber of Cannabis

The Argentine Chamber of Cannabis (Argencann) estimates that medical cannabis could generate more than a billion dollars in exports and 15,000 jobs in the next 10 years, and it is excited that soon the legal framework will be relaxed and the use of industrial (non-recreational) hemp will be allowed.

“We believe that this regulatory framework will be of a temporary nature,” Pablo Fazio, president of the association, which today includes actors ranging from growers’ shops to manufacturers of products such as substrates, pots and lighting systems for indoor cultivation, told Clarín.

“The law creates a platform to establish a legal market for cannabis in Argentina, which although it has as a tool for access to self-cultivation, provides that the large universe of users can acquire a prescription in a pharmacy. And to supply this system, it will be necessary to start productive crops with which these phytopreparations will be made,” explained Fazio. He emphasized that it is indicated for very frequent pathologies, such as sleep problems or chronic pain.

According to the president of Argencann, it is in Argentina’s interest to join the Pharmaceutical Inspection Co-operation Scheme (PICs). “It is a platform for pharmaceutical exchange so any medicinal or phyto-preparative specialty developed in Argentina and approved by Anmat can be automatically exported to countries in the region because it is part of that system,” he said. In the Americas, only Mexico and the United States are members.

Argentina, a silo full of cannabis buds?

“In almost all provinces of our country we could plant cannabis, except for some in the south where we would have to go through closed schemes. It is a plant that would contribute to the recovery of the soil in places where it is very damaged, we have a great accumulated knowledge as an agro-industrial country, human resources and a great network of universities and public laboratories,” said Natalia Del Cogliano, an official of the Ministry of Productive Development.

Cogliano spoke – in replacement of Minister Matías Kulfas – the day after the publication of the decree at a conference at the National University of Quilmes, and clarified that the government aims at “national, regional and currency production, which does not focus only on demand, but on the production of the entire chain of medical cannabis. And he considered that “is a strategic bet for a productive reactivation in the long term”.

He said the executive branch will seek to “provide a legal framework that allows us to take another step forward for the national economy and regional development,” and justified that “the current regulatory framework is very restrictive for that. Mara Brawer, deputy of the “Frente de Todos” (Everyone’s Front), presented a bill in October that seeks to legalize the production and commercialization of industrial hemp, the plant that, because of the way it is grown, does not contain THC, the molecule that generates psychoactive effects.

Cannabis production vision is nothing new

The vision of economic development in cannabis production is nothing new in history. The cannabis plant is of Chinese origin and has been consumed throughout the East since at least 3,000 BC. In America, it arrived with Columbus, because hemp was used as a textile raw material for making boat sails and ropes, and it was Hernán Cortés, who led the genocide in Mexico, who distributed it on the continent.

In Argentina, Manuel Belgrano already saw in the hemp the possibility of a national development, whereas in 1900 they were sold prepared with their derivatives in the apothecaries. Later it was prohibited and the international conventions deepened the persecution of its production. The hippy movements of the 60s and 70s popularized it again for its recreational effects. The cultivation of hemp for industrial purposes has been banned in Argentina since 1977.

Are there realistic expectations?

“Let’s be clear. Cannabis is not going to be the next soybean, nor is it going to move the amperemeter of the national economy,” researcher Andrés López reasoned. The first reason is “structural,” he explained. “If one takes the 2019 medical cannabis development in Canada and corrects it by population and GDP, in purchasing power parity of Argentina, with the domestic market of our country, we could think of a domestic market of 400 million dollars. This is not negligible, especially for regional economies and as a generator of jobs, although it does not reach the wheat or the car market”.

If the export variable is added, the market for non-recreational cannabis could reach some one billion dollars, estimated López, noting that “perhaps in small countries, like Jamaica, it would make a difference, but not for the Argentine economy, which is more diversified. Exports from the soybean chain in Argentina represent about 15 billion dollars a year.

In any case, he said, Argentina has comparative advantages over other countries in the region, both in production costs – “clearly, it is cheaper to produce cannabis here than in Germany,” he said – and in the potential for domestic consumption, which is greater than, for example, Uruguay.

The second reason why cannabis will not live up to the standards of soy is regulatory, said the director of the Interdisciplinary Institute of Political Economy (IIEP – Conicet), which conducted an economic analysis of cannabis at the request of the Ministry of Productive Development. “Argentina has great potential. The technology and capacity exists, although it is important not to fall asleep because there are many countries interested in investing in this market. The issue is that regulation, as it stands, does not allow you access to those 400 million dollars, because it does not open space to private enterprise,” he detailed.

What does the latest cannabis regulation allow?

Decree 883/2020, published Nov. 12 in the Official Gazette of Argentina, made official a commitment that Alberto Fernández had expressed after taking office as president: to review the regulations of Law 27,350 on the Medicinal Use of Cannabis Plants and their derivatives. The most important novelty is that it enables self-cultivation by creating the National Cannabis Programme (REPROCANN), a cultivation register in which patients, family members, friends or NGOs can register and donate their crops in a spirit of solidarity.

The number of plants remains to be defined, as well as the authorized genetic criteria: what percentage of THC is allowed is one pressing question yet to be answered.

Cannabis self-cultivation

Self-cultivation of cannabis in Argentina is authorized for medical purposes only. To do so, you must register with the Cannabis Program Registry.

The other effect of the decree is that it enables pharmacies to sell medicines with their derivatives and to make their own medicinal formulas, such as oils, creams and tinctures. “Prescription drugs, such as sativex and others that are approved in the United States or England, or Epidiolex, which is used for refractory epilepsy, are not yet being developed in Argentina. They may be big markets , but all of that is long-term because you have to go through all the clinical trials and regulatory approvals,” explains López.

“Then you have the easiest market that already exists, which is that of oils and creams that are already sold illegally, but are not really approved,” said the researcher, noting that until Anmat advances in authorizing these formulations, the country will maintain “a semi-illegal market,” whereby anyone enters the Internet and buys things that they don’t know what they have or what their effects are.

The logic of the ban

For the official defender and specialist in the legal approach to cannabis, Victoria Baca Paunero, that the cultivation of cannabis is in the hands of the state alone is a human rights problem. Even if “the state starts to produce, it is not going to respond to the number of patients and the diversity of demands they have in terms of product content, because there are a lot of people who need specific genetics,” she explained.

Law 27,350 was passed under “the logic of prohibition,” the specialist said. “Cannabis is unjustly and inadequately, for political, not scientific, reasons, on the list of substances that require greater control by the international system, alongside drugs like heroin that have no medical use. In Argentina, which has adhered to these international treaties, the exception is established en those uses where medicinal purposes are recognized, but we think how we can control this and that is leaving the production in the hands of the State, as in Uruguay”, she detailed.

The law forgets about the logic of cannabis production

There are very specific pathologies, such as fibromatosis, which require a mixture of genetics, and many patients become refractory to strains and need access to a new one after as little as 6 months. That person, for example, if he or she grows his or her own crop, has to cultivate a number of plants with different genetics in order to rotate,” said the academic, who is a professor in the diploma program in Cannabis, Regulation and Drug Policy at the National University of Quilmes (Unqui).

For Baca Paunero, “the law aimed at controlling the substance and did not think about a logic of production. “We are losing that possibility, which has enormous potential, if you scratch a little bit of what can be done here in Argentina, with strong agricultural production, an industrialized country with scientific capacity, and you measure what is being done outside. And industrial hemp is a huge industry that Argentina should never have stopped producing,” he said.

—

(Featured Image by Tree of life Seeds via Pexels)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Hemp.im, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in Clarin, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Hemp.im assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Hemp.im is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.