How to obtain a license to cultivate cannabis in Uruguay
Updated: Jun 20, 2022
2013 was a celebration time for Uruguay. At the time, the country was ahead in the region after having passed the law (Law No. 19,172) that currently regulates and controls the production and distribution of cannabis. “Go for the green gold market!”, many thought. But progress was not as fast as expected and, although in 2015 the Uruguayan government issued a decree to regulate the medical market and another decree in 2021 that facilitated the export of cannabis, many years have gone by and the rules are still not entirely clear.
The steps to follow to obtain authorization for the production and sale of cannabis are still somewhat vague. Especially if medicinal use is pursued. No one quite knows what to do or how long the whole process will take. Therefore, our first recommendation is to arm yourself with patience, seek advice for the process and not wear yourself out in thousands of twists and turns. At times it seems impossible but it is not, a few years ago we were there too.
With our team of expert agronomists and operations and finance specialists, we accompany our clients through the different stages of planning and executing a commercial-scale cannabis project.
What documents do I need, what concepts must be clear, what types of permits exist, what agencies are involved, what timelines must be calculated?
With the help of Enrique Pabon and Hugo Bittencourt, the team in charge of providing support to companies and entrepreneurs seeking advice on these issues, we give you an overview of the fundamental notions to obtain a license to grow medical cannabis in Uruguay and Argentina.
What types of licenses exist?
There are two organizations that grant licenses to cultivate cannabis in Uruguay: the Ministry of Livestock, Agriculture and Fisheries (MGAP) that authorizes -in a simple process that takes only a couple of months, the cultivation of hemp for industrial purposes; and the Institute for the Regulation and Control of Cannabis (IRCCA) that grants licenses for two types of crops, recreational crops for which there are three access routes: permits granted to licensees who produce for pharmacies and authorizations for the approval of clubs or for self-cultivation, and permits for medical (CBD or THC) or cosmetic (CBD) products, which are the ones we work with at YVY.
At YVY we have been authorized by MGAP to cultivate industrial hemp for a few years and we currently have IRCCA licenses for the cultivation of medical CBD and THC.
What would be the ABC to apply for an IRCCA license to cultivate medical cannabis?
There are two main aspects that form the skeleton:
1. Defining the final product that will be achieved and for which market it will be, in an exhaustive work plan that includes all the technical details concerning the prior to-, during- and after-cultivation stages: what and how it will be produced, who will participate in the process and the budget available.
2. Demonstrating the origin of these funds to the National Secretariat for the Fight against Money Laundering and Terrorist Financing (SENACLAFT).
The work plan is the result of our consulting service, through which we made business plans for projects of different dimensions in Uruguay, Argentina and Colombia.
IRCCA requires many and very rigorous controls that include the participation of lawyers, agronomists, chemists, among others, and focus on the type of final product to be manufactured and its final destination. Going through this audit successfully implies having a business plan in which all the processes are thoroughly detailed, from the time the idea is conceived to the packed product that is ready to be commercialized. Along the way there are many other points to define which will also determine the length of the road: whether it will be an outdoors or indoors plantation, the genetics that will be planted and where, how the plants will be obtained, who will intervene in the process and… last but not least, the authorization of the Ministry of Public Health (MSP) that gives thumbs up or down regarding the drying and processing of the product and ultimately determines whether it can be sold. There is no room for improvisation.
The protocols and processes must follow the same rationale determined by the IRCCA project submission protocol.
Many entrepreneurs have the idea that cannabis is a business that makes a lot of money and that with a small investment you can sell a product at a very high value. This idea needs to be demystified. Reality is that the price of the product compared to the investment is acceptable. Yes, it yields good returns but to start the business the initial investment is high. There is a lot of money involved and many companies have a hard time knowing what is needed because they do not have information on costs or on the processes required and how to put them in place. The truth is that every time mistakes are made or there is missing information, one moves several spaces backward on the board.
Although in Argentina it is not yet exactly clear what the processes for obtaining licenses will be, it is most likely that they will be very similar to those in Uruguay.
For some companies it takes two years, for others one and some manage to solve it in less time. Each one has their own book of rules and, since there is no standard book that tells us how to produce cannabis, each one defines producing as they see fit. Although IRCCA is open to listening to companies and adapting its processes, it is key to adapt one's internal processes and protocols to the current protocol in force if one wishes to obtain IRCCA licenses. Therein lies the secret to being able to take only -or mostly- steps forward in this process that is still taking shape.
→Our consulting service, through which we seek to help those who are new to the world of cannabis to be able to operate in the shortest possible time, is based on accompanying the adaptation of their own processes and protocols to what is requested by IRCCA. Find more information about our service at: https://es.yvylifesciences.com/consulting