According to Energias Market Research – a provider of in-depth market analysis – cannabis is on the rise with an expected global growth rate of 19.1% from 2018 to 2024. In numbers, it will significantly increase, from US$8.28 billion in 2017 to US$28.07 billion in 2024. This is driven by several factors, including global recognition of its potential uses and an increased social acceptance of the plant.
In the United States, there are already 28 states which have approved the use of cannabis for medical purposes. In the same vein, Canada also recently changed its laws on cannabis.
Recently in Peru, there have been discussions regarding changes in legislation relating to this sector, potentially unlocking exciting opportunities for North American and European cannabis companies, entrepreneurs, and experts, looking to take advantage of an ideal cultivation climate and economic labour costs.
Investment Opportunties – National Cannabis Debate in Peru
The international debate on legalizing medicinal cannabis has been an interesting and passionate one. Politicians have paid increasing attention to the legalization of cannabis for a medicinal purpose.
As a result, on September 18, 2017, the country’s congress approved by majority a draft law to regulate the use of the plant for medicinal purposes. Nevertheless, the law had still not taken effect.
The Cannabis Law No. 30681
On February 23th 2019, the government approved the regulation of Law No. 30681 that regulates the medicinal and therapeutic use of Cannabis and its derivatives. Its purpose is to regulate the legal use, address provisions, encourage research, and provide a strict framework for products intended solely for medicinal and therapeutic purposes.
Through Supreme Decree, new regulation guarantees access to Cannabis to respond to the need to protect the health of almost 6,700 people, who require it to improve and alleviate health problems.
See below some fundamental elements of the new law:
- The state guarantees access to cannabis and its derivatives for medical and therapeutic purposes and promotes its rational use.
- The Directorate General of Medicines, Supplies and Drugs (DIGEMID) grants production licenses, import licenses and the marketing, and control of pharmaceutical facilities.
- Licenses are granted to natural or legal persons operating as pharmaceutical institutions, universities, and research organizations.
- The period of validity of the licenses is indefinite.
- The license gives the right to do research, production, to import, commercialize cannabis for medicinal purposes and its derivatives solely for medical and therapeutic purposes.
License to Cultivate and Commercialize
The license for the importation and/or commercialization of cannabis for medicinal use and its derivatives for medicinal and therapeutic purposes is granted to natural or legal persons constituted as an authorized pharmaceutical establishment and certified by the DIGEMID upon compliance with the conditions established in the regulation.
A production license empowers the following activities: acquisition of seeds and/or seedlings of cannabis, planting, propagation, cultivation, harvest and post-harvest, and manufacture of products derived from Cannabis, as well as storage and transport activities regarding Cannabis for medical use. There are three types of production licenses granted by the DIGEMID:
- Production license that allows for the cultivation of cannabis plants.
- Production license that does not include cultivation (exempted from an Agricultural Production Plan, certification of genetic material used, and a Safety Protocol approved by MININTER for cultivation).
- Production license that includes seed production.
Investment Opportunities in the Peruvian Cannabis Sector
The vast amount of commercial success in the Colombian Cannabis Sector illustrates how experienced companies and newcomers are benefiting from global demand for cannabis products. By potentially enacting new legislation, allowing for the therapeutic use of cannabis, the Peruvian government has paved a new road that entails new investment opportunities in the Peruvian Cannabis sector. In addition to Peru, Canada joins a number of countries with changed laws on cannabis. Consequently, for Canadian and American companies, among others, it is the perfect time to consider investing in the Cannabis sector in Peru.
Luiz Novaes, general manager of Spectrum Cannabis, a subsidiary of Canada’s Canopy Growth which produces and distributes cannabis, congratulated the Government’s decision. “Peru has assumed a leadership role with the introduction of these regulations’’.
This will significantly increase imports made directly from Canada. Also, direct investments in Peru could, on the one hand, favour the availability of cannabis products, and on the other hand, create new beneficial opportunities for medical cannabis suppliers in Peru.
Tony Salas, president of the agribusiness consultancy ACM, states that Peru has a lot to offer the global cannabis market. Additionally, ACM estimates that crops could generate income of US$1 million per hectare and in five years, 3,000 hectares of cannabis could be grown in Peru, mainly in the coastal area. For this reason, cannabis giants have been exploring the Peruvian cannabis market since the draft of the cannabis legislation 2 years ago.
An important note is that the production of cannabis will be limited to public entities and laboratories that are ‘duly authorized’. While local cannabis cultivation will provide for around 10,000 people in Peru (with a lower price), this business will mainly focus on exports, due to increased demand from abroad, mainly North America and Europe. It is therefore why different types of investors (foreign business, local investors in the pharmacy sector, agro-exporter entrepreneurs, etc.) will likely become involved in the sector within the upcoming years, pending the implementation of legislation.
Home to a tremendous climate, Peru is a perfect fit for agricultural business. Where Peru already shows its extensive experience in agricultural products, it will soon offer even more opportunities thanks to the recent legislative changes relating to medicinal cannabis.
Understanding local legislation can be hard, therefore, it is advisable to team up with a local partner. For corporate assistance in Peru, reach out to team Biz Latin Hub here to see how we can support you and your business.
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