Uruguay May Soon Become The World’s Medical Marijuana Hub
Uruguay made history by becoming the first country to legalize cannabis in 2013, with former President Jose Mujica signing legislation to allow for recreational use of the plant. Now, investors are hoping the country can become an export hub for medical marijuana as the industry continues to expand globally.
There is serious money to be made off medical marijuana and investors want in on it.
Uruguay has been at the forefront of regulating and cultivating medical marijuana but a new investment group wants to capitalize on this. Silverpeak Life Sciences Uruguay Inc, one of the companies in the Uruguay’s growing medical marijuana industry, is working with investors to raise $35 million to increase production and build a larger extraction lab next year.
According to Silverpeak Life Sciences CEO and U.S. cannabis investor Jordan Lewis, the company expansion is expected to increase revenues by the millions.
“Our planned and desired expansion would be about 25 tons next year and that should push us above $100 million in revenue,” Lewis said told Bloomberg.
According to a report released in 2018 by Arcview Market Research in partnership with BDS Analytics, Legal marijuana sales in certain South American market are expected to jump from just $125 million in 2018 to $776 million by 2027.
“While Brazil and Argentina will far outweigh other countries in terms of spending, Uruguay is the clear leader in early liberalization of its cannabis regulations,” the report said. “Any adult citizen/legal resident of Uruguay can now legally purchase cannabis from pharmacies at government-controlled prices intended to undercut illicit market rates and starve out cartel operations there.”
Despite getting a head start in terms of legalization, Uruguay’s weed economy hasn’t fully developed.
Uruguay had a head start in terms of the legalization of marijuana compared to countries like the U.S. and Canada. But that hasn’t translated into a profitable economic source for the country.
Instead, various investors have tapped money into the U.S. and Canada in hopes of taking advantage of the relaxed marijuana regulations the countries now have. The inflow of investment in those countries has created a very promising legal marijuana market that comes after the drug was vilified for decades.
Uruguay hopes to see this type of revenue flow as Fotmer Corporation SA, Silverpeak’s subsidiary headquartered in Uruguay, has asked the country’s cannabis regulatory agency Ircca, to increase its allowed annual production to 400 tons of cannabis plants.
There are a handful of companies that have invested in Uruguay by building greenhouses and extraction laboratories. They have done this in order to supply medical marijuana to other countries in Latin America Canada and in Europe.
With enough investment and support, Uruguay could become one of the world’s leading medical marijuana producers.
Since 2015, Ircca has approved cannabis projects that are worth $57 million and is currently looking at other permits for 21 projects worth approximately $40 million. Their goal is to increase the number of licensed marijuana producers that supply recreational weed to pharmacies from two to as many as five by the end of the year.
By the current pace of investments in Uruguay, all this numbers might change as U.S. and Canadian cannabis producers start to look at the country as a pot destination.If there is enough government support, Uruguay could become the first country to reach $1 billion in annual medical marijuana exports in as soon as five years.
Lewis says that based on early projections, Uruguay’s cannabis industry could become a $100-million-plus industry as soon as 2020. Either way, the country of 3.4 million people is sure to reek some of the benefits of what is expected to bring a millions of dollars in revenue.