In recent years, Latin America has seen an explosion in legal reform in favor of hemp production. The plant offers a number of alternatives to popular products, construction material and form of shoe fabric.
Increasingly more research is being placed into the seeds of the hemp plant and its versatility. Governments are considering the cash cow that is the hemp industry.
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Hemp Seed Opportunties – Cannabis laws in Latin America and licenses for its use
Latin American governments are incentivizing production by easing the process of getting a license for hemp growth and manufacture.
Uruguay was the first to take the leap into legal hemp production back in 2013 with bill number 19.172. This allowed the import, production, marketing and distribution of ‘non-psychoactive’ cannabis and its derivatives. With little administration and possibly the help of a market entry company, licenses are relatively easy to obtain.
Other Latin American nations have followed the footsteps of the pioneer nation, Uruguay, by ensuring license obtainment is straightforward, hence limiting the bureaucracy and incentivizing market growth. For example, in Colombia, where the crop has exploded in rural areas, only one license is needed to grow the non-psychoactive strain of cannabis which is granted from the Ministry of Justice. If the aim is to produce cannabinoids (CBD) and other CBD derivatives, then another license has to be granted by the Ministry of Health. These licenses cost in total around USD$3700.
Marijuana and hemp – what is the distinction?
One of the main barriers this market faces is the stigma attached to its production. The word ‘Cannabis’ in the name of a plant is enough to discourage investors from entering the market. However, increasing clarity around Latin America of the distinction between marijuana and hemp has significantly accelerated production in the last years. Better understanding on a global level is certainly needed to whet the appetites of foreign investors and tempt them into this historically misunderstood market.
Technically speaking, both marijuana and hemp fall under the same broad category – Cannabis (a flowering plant within the Cannabiceae family). Nevertheless, the distinctions are clear:
Hemp is the term used to describe the varieties of Cannabis that contain 0.3% or less Tetrahydrocannabinol (THC) in their content. This makes hemp the title for non-psychoactive cannabis harvested solely for the industrial use of its derived products.
Marijuana is the term used to distinguish the species of Cannabis which contains more than 0.3% of THC. Many consider the term ‘marijuana’ to be a gross misinterpretation of the broader ‘cannabis’ plant.
In sum, the defining characteristic between the two is a single factor — the amount of THC in the plant.
Hemp seed’s growing adoption in health products
It is a little-known fact that hemp has been recorded to have thousands of different uses and in a wide variety of sectors, from industrial textiles, to food and, more recently, cosmetic products.
The plant offers countless opportunities and its byproducts adapt to fit into any market from clothing, to fuel production, to even dog treats. The seeds, leaves, stem and even the root of the plant have different commercial uses, making it both extremely versatile and efficient.
The uses of the leaves and stem are better-documented, and have been part of human construction materials and clothing weaves for millennia. However, it is the seed which is undergoing rapid expansion.
Opportunities for businesses
Latin America is at the forefront of the hemp revolution. Since Uruguay’s trend-setting 2013 decriminalization, more Latin American countries have joined the bandwagon in legalizing its production.
According to Energias Market research – a provider of in-depth market analysis – the cannabis industry is expanding with an expected global growth rate of 19.1% from 2018-2024. In cash, the industry’s value will significantly increase, from US$8.28 billion in 2017 to USD$28.077 billion in 2024. This results in increased growth for nations which regulate the industry and opportunities to foreign investors who are up-to-date with global market patterns. The market is undoubtedly a young one and the early-mover advantage is still certainly available in countries such as Colombia, Mexico, Peru and Argentina. The more advanced Uruguay is steaming ahead in the industry opening a new extraction lab in 2020 which will quadruple production for the small nation. Although the uptake of the industry has been extremely positive in the nations where it is grown, there is a foreign investment void due to the lack of education. From an industry standpoint, growers can know a lot about the cannabis agronomy, cannabis laws and cannabis botany but there needs to be a collective global knowledge to really propel the industry.
Agricultural opportunities in Latin America are plentiful – feedstock and biofuels, cereal crop, hemp and livestock to name a few. To foreign investors, Latin American countries present themselves as favorable for the following reasons:
- Suitable climate for crop production
- Access to (low cost) quality land
- Lower costs for production and labor
- Strategic location (close to major consumer countries).
What can BizLatin Hub do?
With expertise in Latin American law and accounting, we can ensure market entry is as smooth as possible. We provide the comprehensive and customized support service businesses need to expand their reach into the Latin American hemp market.
For a basic consultation, contact us now and we will ensure your business needs are catered for.
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The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.