Uruguay names three new recreational cannabis producers

To put an end to the supply issues Given the current state of Uruguay’s recreational cannabis market, the country’s authorities have decided to increase production. The Uruguayan Institute for the Regulation and Control of Cannabis (IRCCA) has just designated three new producers. There are now five producers sharing the lion’s share of the market.

The first legal recreational cannabis market

Uruguay was the first country to legalize recreational cannabis in 2013. The authorities have established a production system run by private entities but overseen by a government agency (the IRCCA). The agency selects producers, sets production caps, and determines prices. The cannabis is intended for sale in pharmacies, but Uruguayans can also grow their own cannabis or obtain it through membership in a club.

Despite having been in existence for six years, Uruguay's legal market has many flaws. Sales in pharmacies began in 2017, but due to the limited number of retail outlets—there are only 17 nationwide—and frequent shortages, users are struggling to obtain the product and are turning to the black market.

Insufficient production

So far, only two companies (ICC Labs, now owned by the Canadian giant Aurora Cannabis, and Symbiosys) have been authorized to produce recreational cannabis, up to 2,000 kilos per year each. However, they have never reached the 2,000-kilo-per-year threshold. Since production began, They supplied only 3,000 kilos Between the two of them. That's four times less than the expected 12,000 kilos.

At the same time, the number of users registered with the government to access legal cannabis is steadily increasing. According to the latest IRCCA report, As of June 2019, there were 47,067 registered users, including 36,487 who made purchases at pharmacies (representing 88% of the total number of registered users and 2,736 more people than in January).

However, the report also indicates that sales are declining: while they totaled more than 100 kilograms per month between March 2018 and May 2019, they dropped to 91 kilograms in June 2019. As the legal market gains ground, insufficient production threatens to strengthen the black market. That is why the IRCCA had announced, last December, to increase production.

Three new producers

«Given the steady increase in the number of people registered to legally access recreational cannabis—mostly through pharmacies—in December 2018, the IRCCA (Uruguayan Institute for the Regulation and Control of Cannabis) decided to grant three new production licenses,» according to a press release published on the IRCCA website.

The companies selected at the end of the process are:

• Uruguay Biopharmaceutical Research Co.
• Jabelor S.A.
• Legiral, Inc.

According to Marijuana Business Daily, the first is actually an American company. The second is owned by Uruguayan and Chilean investors. As for the third, it is 100% Uruguayan-owned.

New producers will be subject to the same conditions as their predecessors: they will receive 70% of the sale price (currently set at 50 Uruguayan pesos, or 1,35$). Together, the five Uruguayan producers could supply a total of 10,000 kilos of cannabis per year.