Supply Shortages Hit Uruguay’s Cannabis Sales

Supply Shortages Hit Uruguay’s Cannabis Sales

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It seems like only yesterday that Canada was desperately scrambling due to a massive marijuana shortage. As the shadow’s of that darker era slowly begin to rescind, Uruguay’s situation reminds us of just how far we have come.

The country also represents a major learning experience about over-regulation – even tighter than Canada’s by leaps and bounds.

Despite being the first country in the world to fully legalize recreational marijuana, the country still suffers from many prohibition era problems, according to Marijuana Business Daily.

One look at their system easily shows exactly where and why the country’s legal cannabis program needs some serious review.

 

Limited Supply

 

Supply in Uruguay is indeed limited. Despite only a population of about 3.5 million – one tenth that of Canada’s, the country is having trouble meeting the demands of customers within that market.

Uruguay’s regulatory agency reports that current registered users are having trouble purchasing product – despite a limit of 10g per person per week.

Marijuana Business Daily explains:

 

“Meanwhile, 10,560 registered customers could effectively buy at least once in January, that number decreased to 6,034 in June, just a fraction of the 35,000-plus registered customers.”

 

Currently, only two licensed producers exist in the small country: ICC Labs and Simbiosys. Their agreement with the government was to each produce 2,000 kilograms of marijuana per year. However, they did not come remotely close to that quota:

 

“Since they were granted licenses, the companies could have produced and sold at least 12,000 kilograms, but they provided only 3,000 kilograms combined. Because of those supply issues, the government decided to decrease the quantities shipped to pharmacies. Now, only 2 kilograms per week are being delivered to each of the 17 retail outlets in order to have a steady – albeit insufficient – supply.”

 

However, Uruguay plans to provide three more production licenses, with each producer expected to provide 2,000 kilograms per year.

 

Restrictive Laws Boost Black Market

 

Despite having years to sort out its issues with the black market, restrictive policies make purchasing marijuana very inconvenient.

As we mentioned earlier, each individual is limited to 10 grams per week – a decent amount for the average user. However, if a person wishes to share or make edibles. 10 grams simply will not cut it in many cases. Cannabis butter (cannabutter) for instance, requires 7 to 10 grams of decarboxylated flower to make one cup.

Another issue is that only pharmacies are allowed to dispense recreational marijuana, greatly limiting the number of retail locations.

The limitations on potency are also quite harsh. Uruguay specifically requires that marijuana not contain any more than 9% THC and must have a minimum of 3% CBD. Not only does this make the product rather weak, but the CBD further reduces THC’s intoxicating effects – the very reason recreational users consume cannabis in the first place.

But perhaps the strangest rule is that recreational marijuana users have to register with the government. This makes sense for medical recipients, but not recreational ones. It is safe to say that no registration is necessary to consume tobacco or alcohol.

The effects are clearly eroding the goals set by legalization, with only 20% of marijuana sales going to the legal market.

With an election coming up, two of the three major parties still support legalization, but one is not happy with the outcome:

 

“The other opposition candidate, Luis Lacalle Pou, called legalization ‘a failure.’ The reason, he said, is because it didn’t help reduce ‘narco’ violence, which was the main objective of the law.”

 

WeedAdvisor’s Desire to See a Balanced Cannabis Framework

 

We have often pointed out some of the restrictive practices in the Canadian marijuana market. But Uruguay’s take this practice to an even more extreme level.

WeedAdvisor understands the delicate nature of legalization and how politicians want to balance their image of supporting public health while also rescinding prohibition.

Sadly, this is an example of overregulation at its worst. With time, Uruguay will hopefully become less restrictive with its marijuana policies, at which point we hope to establish strong ties with more of our South American partners in the industry.

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