June 16, 2021

Cannabis and Hemp to Kickstart Argentina’s Economic Recovery?

4min read

Argentina is making steady progress in its quest to become synonymous with the cultivation of other plants besides its beloved Yerba Mate, namely cannabis and hemp.

Hector Gomes, LATAM Analyst, Prohibition Partners

16th June 2021


 

Earlier this month, Argentina’s government, led by president Alberto Fernandez, published a draft regulatory framework for the development of the country’s medical cannabis and hemp industries, following a major legislation change approved in November 2020.

Argentina, historically one of the most developed and educated countries in Latin America, is today faced with a stagnant economy and an uncertain future, after years of political and economical struggles. Traditionally viewed as one of the world’s top agricultural producers, earning the country the nickname El Granero del Mundo, meaning “The World’s Barn”, it is no surprise that the country is paying closer attention to the socio-economic advantages of commercial cannabis and hemp cultivation.

Decriminalisation

Argentina boasts vast fertile lands with significant cultivation potential, along with a developed agricultural background, and a well-oiled exportation process and supply chain for its harvested goods.

Neighbouring Uruguay is a country with a very close cultural relationship with Argentina and legalised both medical and adult-use cannabis in 2013. Argentina, however, took a more conservative stance on the commercialisation of cannabis and hemp.

Prohibition in Argentina started to be challenged in 2009 with a move by the Supreme Court to decriminalise small quantities of cannabis for personal use, but having a prohibitionist law (23.237) still in place, this legislative change had a minor impact on the day-to-day lives of cannabis consumers.

Being a Federation, some regional governments took a step ahead of the country as a whole. In the provinces of Santa Fe and Chubut, for example, patients have been able to access medical cannabis legally since 2016. In 2017, a federal law was approved allowing medical cannabis to be prescribed country-wide for a short list of medical conditions.

Progressive Legislation

But, it wasn’t until November 2020 that Argentina took a decisive step towards a more progressive and comprehensive legal framework, enabling medical cannabis access for more medical conditions. The move also allowed retail pharmacies to legally provide cannabis-based products, and the green light was given for home and industrial cultivation of medical cannabis, with Law 27.350 being approved, as outlined in The Latin America and Caribbean Cannabis Report: Second Edition.

Following the approval of legislation in 2020, the draft regulatory framework published earlier this month by the Minister of Productive Development, Matias Kulfas, is designed to help guide the nascent industry, and also proposed the creation of a national agency (ARICCAME) to oversee the cannabis and hemp production chain, with the aim of entering the global cannabis and hemp export markets.

By doing so, Minister Kulfas aims to create over 10,000 jobs along with approximately USD$500 million in domestic sales and USD$50 million in export sales annually.

Prohibition Partners spoke to Pablo Fazio, President of the Argentine Chamber of Cannabis (ARGENCANN), about the draft regulatory framework and next steps.

“In the next few days, the Bill will be sent to the National Congress. Once it enters the Chamber of Deputies, it will be sent to different commissions: Health, Finance, General Legislation, Criminal, Agriculture and Livestock, and Regional Development, among others. We will have to closely follow the progress in order to obtain an approval, so that the Bill can be sent to the chamber to be voted on, which will hopefully be before the end of the year. We expect its prompt approval by the National Congress, with the firm conviction that this law will become key to promoting the sector,” Pablo said.

Economic Recovery

The main challenges to the Bill are the questioning by some local governments of the federal agency, with concerns about an overt industry focus around Buenos Aires, issues around adult-use, and a call from NGOs that have been working with medical cannabis for years to be protected and allowed to continue their mission.

The growth of SMEs in the industry, Pablo Fazio believes, needs to be prioritised if Argentina is to overcome post-pandemic economic adversity and compete in the global cannabis industry.

“We believe that the emphasis needs to be placed on small and medium-sized enterprises and civil society as the protagonists of this new industry that is being born in our country. I can testify that there are hundreds of entrepreneurs and growers from all over the country that are waiting for the conditions to start up and spread out federally, opening a production, innovation and employment agenda with a broad territorial impact.

It will be necessary to overcome the macroeconomic difficulties faced by our country as a result of the pandemic and be able to launch investments to develop a domestic market and to insert our country in the emerging and competitive global cannabis market,” Pablo told Prohibition Partners.

Outward Investment

Argentina appears to have the infrastructure to become a major player in the global cannabis and hemp industries, with its agricultural expertise, localised talent and mature agricultural export routes, potentially allowing cannabis and hemp crops to cross borders efficiently and assist the country’s much needed economic recovery

This is a sentiment that resonates with Pablo, who also believes that Argentina has all the hallmarks to become a global success story in the cannabis and hemp industries – which could also attract the attention of would-be investors from abroad.

“Argentina is a global leader in agriculture. We are an agro-industrial country with capacity, qualified human resources, a powerful technoproductive institutional framework, and an excellent academic and scientific ecosystem. We also have one of the most vibrant entrepreneurial communities in Latin America. We have the perfect conditions to make it happen.

I am convinced that Argentina can turn this legislation into a competitive advantage and that foreign investors will appreciate it,” Pablo said.

For more information on the Latin American cannabis market, download The Latin America and Caribbean Cannabis Report: Second Edition by Prohibition Partners for free.

For bespoke research and consulting as well as sponsorship opportunities, contact: info@prohibitionpartners.com.

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