Pubdate: Sun, 22 Dec 2013
Source: Jerusalem Post (Israel)
Copyright: 2013 The Jerusalem Post
Contact: http://info.jpost.com/C002/Services/Feedback/editors.html
Website: http://www.jpost.com/
Details: http://www.mapinc.org/media/516
Authors: Malena Castaldi and Felipe Llambia, Reuters
Page: 16

HIGH PROSPECTS FOR URUGUAY'S LEGAL MARIJUANA BUSINESS

MONTEVIDEO (Reuters) - Uruguay's pioneering move to legalize the
planting and sale of marijuana opens the door for a clandestine
cottage industry of pot growers to transform into a legitimate
business that could even export medical cannabis, a commodity in short
supply.

More and more countries are setting up medical marijuana programs to
help relieve the pain of terminally-ill patients and treat other
health conditions, but there are few legal sources of the drug in the
world and Uruguay could tap that tight market.

Uruguay's domestic marijuana output is expected to expand rapidly
under a law that cleared Congress on Tuesday allowing its citizens to
grow up to six plants a year in their homes and more in smoking
collectives.

Many have been doing this secretly for years. Smoking marijuana - and
indeed the private consumption of all drugs - has not been a crime in
Uruguay since 1974, but the small South American nation of 3.3 million
people is now the world's first to fully regulate marijuana from
cultivation to consumption.

When the law is implemented in 120 days, Uruguayan residents will be
able to buy 40 grams (1.4 ounces) a month over the counter at
pharmacies licensed by the state, which will fix the price, tax the
trade and issue permits for larger producers.

"The big difference is that we are no longer outlaws," said Alvaro
Calistro, who has grown pot in his Montevideo backyard for 20 years.
"This allows us to increase the scale of cultivation."

Calistro expects a rise of licensed entrepreneurs growing marijuana on
small farms outside the city, though who will get permits to grow the
drug for sale in pharmacies has yet to be specified in regulations the
government is to draw up by April.

Licensed medical marijuana for export would have to be grown in
greenhouses to pharmaceutical and security standards required by the
health authorities of importing nations.

"A whole new spectrum of opportunities opens up," said Juan Vaz, head
of the Uruguayan Cannabis Studies Association, which campaigned for
legalization. "It's the end of the hypocrisy of prohibitionist
policies that failed to combat drug trafficking."

Vaz, who has smoked marijuana for 30 years and does research on the
genetics of the plant, said legal cultivation will provide good
quality pot at a price that will put the criminals out of business.

"The difference between homegrown and illegal pot is like that between
a good wine and plonk," he said.

Uruguay's government plans to fix the price of marijuana sold in
pharmacies at $1 a gram, which is roughly enough to roll two joints,
Vaz said.

With costs estimated at between 20 and 50 cents, the official price
should provide growers a tidy margin and undercut the black market
price for marijuana, which is mostly smuggled in from Paraguay and
peddled at around $1.40 a gram on average.

Uruguay's leftist president, Jose Mujica, a 78-year-old former
guerrilla fighter, has recognized that legalization is an experiment
and says it will be reversed if it backfires.

Critics say it will increase marijuana use, lead to abuse with harder
drugs and attract pot smokers from the world over looking to pick up
the drug at Uruguayan pharmacies. To prevent that, the marijuana sales
will be restricted to adult residents of Uruguay who must be
registered as users on a government data base.

The immediate impact, most experts agree, will be to reduce the
smuggling of Paraguayan marijuana into Uruguay, often thrown in
bundles from planes or stashed in the fuel tanks of trucks.

Success in reducing drug-related crime in Uruguay would strengthen
advocates of legalizing marijuana elsewhere in Latin America, where
leaders have tired of the US-led "war on drugs" and the failure to
curb the power of the region's drug cartels.

"Other countries will be watching very closely to see how it plays out
for Uruguay now that this is a real political option," said John
Walsh, a drug policy expert at the Washington Office on Latin America,
which monitors US policy in Latin America.

"Uruguay has a good shot at doing it well," Walsh said. It is small
and safe, unscathed by the brutal violence unleashed by cocaine
traffickers in other Latin American countries such as Colombia and
Mexico, he said.

The Uruguayan experiment could add momentum to the marijuana
legalization debate in the United States, where the states of
Washington and Oregon last year made it legal to grow and smoke pot.

If regulation works, Uruguay could become an exporter of medical
marijuana to countries such as Canada that are allowing an expansion
of the use of the drug for health reasons.

Canada became the first country to allow terminally ill patients to
grow and smoke their own marijuana in 2001. Since then, the number of
people in the country legally authorized to use marijuana has grown to
more than 37,000 and will rise to 434,000 by 2024, according to
official projections.

The rapid growth led Health Canada to take legal production of medical
marijuana out of private homes and put it in the hands of licensed
growers as of April next year, a business that is estimated to be
worth $1.3 billion by 2024.

In the transition, Canada will have a deficit of some 100,000 kg of
medical marijuana that a foreign supplier could cover, says Ron
Marzel, a Toronto lawyer for the Canadian cannabis industry.

Canada's health industry did not respond to questions as to whether it
might seek to import medical marijuana from Uruguay.

At present, there are few lawful jurisdictions that can supply medical
marijuana. Israel is a pioneer in the field but only supplies its own
patients. The Netherlands has for decades allowed licensed cafes to
sell cannabis, but the supply side of the business is only legal for
medical marijuana, sold at a fixed price of 12 euros a gram.

Marzel, who has been retained by an advisor to the Uruguayan
government on medical marijuana regulation, believes patients should
not have to pay high prices when they have a medical need.

"I am optimistic and bullish about Uruguay being able to produce
low-cost, high-quality medical cannabis for export to Canada," Marzel
said. "If it acts fast, it could look at placing some 20,000 kilos in
Canada over the next year."

Others are looking beyond the medical side of the business.

US marijuana entrepreneur Brian Laoruangroch, whose Seattle-based
company Prohibition Brands aims to mass-produce marijuana cigarettes
one day, sees huge potential with the trend towards legalization. But
he says Uruguay must get the regulations right because the world is
watching.

"If a good business structure is implemented, free of corruption and
black market problems, perhaps my firm would be interested in doing
business with Uruguay," Laoruangroch said.

"Anything less than the most tightly regulated industry with
professional businesses will send the wrong message."
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MAP posted-by: Matt