Uruguay Considers Opening Legal Marijuana Market to Tourists

Uruguay, the world’s first nation to legalize cannabis for medical and recreational use, is considering opening its regulated marijuana market to tourists. Under the proposal from the administration of President Luis Lacalle Pou, visitors to the country would be permitted to purchase marijuana at licensed outlets, providing a new source of revenue for Uruguay’s struggling regulated cannabis industry.

Daniel Radio, Uruguay’s secretary-general of the National Drugs Board, said that the administration’s plan could be released by the end of this year in order to garner support and build consensus for the proposal, according to a report published by Bloomberg this week. Allowing visitors to the country to purchase marijuana legally would give Uruguay’s cannabis industry access to an additional 3.5 million visitors per year, many who come from neighboring Brazil and Argentina to enjoy beaches during the South American summer during the months of December through February.

“It seems to me that if we come up with a good proposal,” Uruguay could allow tourists to purchase cannabis in its regulated market, Radio said in an interview. “For the upcoming tourism season, it’s highly unlikely, but I wouldn’t rule it out.”

Uruguay’s Deputy Tourism Minister Remo Monzeglio said the goal is not to make the country a cannabis destination for tourists from around the world. Instead, the plan to allow tourists to purchase marijuana legally is an attempt to direct sales from visitors away from the illicit market and provide regulated producers a new source of business.

Uruguay Legalized Cannabis in 2013

Uruguay became the first country in the world to legalize cannabis with a bill passed by lawmakers and signed by the president at the time, Jose Mujica, in December 2013. Under the regulations, adult citizens of the country and foreign residents can join a government registry that allows them to grow their own marijuana, join a cannabis buyers club, or purchase up to 40 grams of cannabis per month at authorized pharmacies.

Supporters of legalizing cannabis in Uruguay argued that the move would support personal freedom, provide a legal alternative to the criminal gangs running the country’s drug trade, and create a new product for export to the rest of the world. But after eight years of legal cannabis, much of the trade in marijuana is still controlled by illicit gangs while exports have yet to hit $10 million in a year. And as more countries around the globe legalize cannabis, competition for lucrative foreign trade in the crop is ramping up.

“I think there was excessive optimism regarding the possibilities of growth, because we aren’t playing alone here,” said Radio, who also heads cannabis regulatory agency Ircca.

Cannabis exports are increasing, doubling to $7.5 million in 2020, but far less than the hundreds of millions of dollars predicted by some in the industry. And now Colombia is emerging as a regional powerhouse cannabis producer, posing stiff competition to other countries including Uruguay thanks to favorable regulations and an excellent climate for growing the crop.

Camilo Ospina, chief innovation officer for the Canadian-owned PharmaCielo Colombia Holdings, noted in 2018 that Colombia’s reputation as a global source for premium cannabis has already been established thanks to decades of trade on the illicit market.

“Our advantage is that the Colombian brand already has a mystique,” Ospina told The Washington Post. “We want to intensify that, so that the Colombian cannabis you already know – the Punto Rojo, the Colombian Gold – is the cannabis you want to buy.”

To contend with the competition, Uruguay has enacted new regulations to boost imports. And the country’s cannabis regulator Ircca has issued a total of 56 licenses for operations including medical marijuana cultivation, research and development, and medical and consumer product manufacturing.

“Some investment is showing up in manufacturing and value-added processes. That has to be our bet, because it’s the only way Uruguay can be competitive,” Radio said, noting the country’s high costs for labor and energy.

Tourists Would Pay More for Weed

Radio said that a presidential decree from Lacalle Pou would be the quickest way to grant tourists who register with the national database access to Uruguay’s authorized pharmacies and perhaps cannabis clubs. A plan that would allow visitors to the country to purchase marijuana without joining the national registry would require new legislation from Uruguay’s Congress, however.

Monzeglio of the tourism ministry said in a separated interview that he has proposed charging tourists who buy cannabis in Uruguay higher prices than those paid by residents of the country. The additional revenue, he suggested, could be used to fund addiction treatment and drug rehabilitation programs.

Although Uruguay is unlikely to establish rules to allow visitors to purchase legal cannabis this year, the country is ready to welcome back tourists following the pandemic. Authorities plan to reopen Uruguay’s borders to fully vaccinated travelers beginning on Nov. 1.