Uruguay faces supply problems

Uruguay was the first country in the world to legalize recreational cannabis consumption in 2013. However, supply problems continue to hamper growth in the Uruguayan market, according to a new report of the Institute for Regulation and Control of Cannabis (IRCCA).

Uruguayans can choose to join a Cannabis Club, grow their own plants or buy cannabis from pharmacies. Today, the country has 3,846 members of 123 Cannabis Clubs, places where collective cannabis cultivation is authorized, and which can produce a maximum stock of 480 grams per member per year. 7,201 local growers can produce up to six cannabis plants at home, and harvest up to 480 grams per year. Finally, 36,763 customers are authorized to purchase up to 10 grams of cannabis per week in 17 pharmacies, the only legal retail outlets for recreational marijuana.

These pharmacies are supplied by only two authorized producers - ICC Labs, acquired last year by the’Aurora Cannabis of Canada, and Simbiosys. Yet the companies failed to produce the agreed quantities of cannabis - 2,000 kilograms per year for each. Since obtaining their licenses, the companies could have produced and sold at least 12,000 kilograms, but they only supplied a total of 3,000 kilograms. Yet from mid-July 2017, when sales began, to the end of June 2019, registered customers bought a total of 2,875 kilograms, peaking in January with 185 kilograms sold. However, due to difficulties in obtaining cannabis, they have been steadily decreasing since. In June, the last month covered by the report, only 91 kilograms were sold. According to the report, «registered customers are finding it difficult to purchase efficiently», which explains the decline in sales.

As a result of these supply problems, the government has decided to reduce the quantities shipped to pharmacies. At present, only 2 kilograms per week are delivered to each of the 17 sales outlets, in order to maintain a stable supply that is still insufficient to meet demand.

To solve these supply problems, Uruguay had announced the award of new production licenses last December. The government is expected to announce the winners of the new licenses in the coming weeks.