Since the regulation of the cannabis market in 2013, the cannabis industry in Uruguay has experienced a gradual expansion that now includes nearly a hundred projects and directly employs around 756 people, 77% of whom work outside the capital.
Half of the companies in the sector authorized to grow and process cannabis completed exports throughout 2023. Of the 90 active projects in the country, only 4% can be defined as large companies, while the remaining 96% are classified as MSMEs, according to data from the government agency Uruguay XXI.
In 2023, approximately 27 companies exported 25 tons of hemp by-products, generating a total revenue of $3 million—a decrease of 44% compared to 2022, when revenues exceeded $5 million. This decline was mainly due to the low price levels at which most of the merchandise was traded.
Last year, medicinal flower sales totaled $1.5 million, reflecting an annual decline of 66%, although new markets, such as Australia, Brazil, Spain, New Zealand, and the Czech Republic, were opened, with Germany remaining the primary destination. The volumes exported saw a 14% decrease compared to the same period the previous year.
In this context, medicinal cannabis production reached a total of 28,574 kilograms, including 24,186 kilograms of non-psychoactive cannabis (100% flowers) and 4,388 kilograms of psychoactive cannabis (72% flowers and 28% trimmings). As of March of this year, a stockpile of 46.5 tons of cannabis crops and nearly 1 ton of cannabis-based commercial products was recorded.
The 35 companies authorized by the Ministry of Livestock, Agriculture, and Fisheries (MGAP) to cultivate non-psychoactive cannabis cover a total of 335 hectares of open-air cultivation and have covered facilities totaling 43,000 square meters. Nationally, about 43,750 square meters are used for hemp cultivation, primarily in the department of Canelones.
Uruguay positioned itself as the eighth-largest exporter of medicinal cannabis in 2022, achieving a 2.1% share in the global market by exporting approximately 15 tons. Additionally, it accounted for 1.2% of the global stock with 15.3 tons, according to data from the International Narcotics Control Board (INCB).
Legal Challenges on the Global Market
Against this backdrop, the Uruguayan cannanbis industry seeks to attract new national and foreign investors to boost a market facing multiple challenges in international trade. These difficulties are mainly due to the stringent international standards regulated by the United Nations (UN) and the varying regulations imposed by different countries.
Although regulations for medicinal use are becoming more widespread, the growth of international cannabis trade is closely tied to legislative developments in different countries. The revision of international treaties will also play a significant role in shaping regulations for the recreational use of marijuana by adults.
The lack of a clear regulatory framework is currently stifling any increase in exports due to the constraints it imposes on the cannabis industry at an international level. Therefore, the reevaluation of prohibition measures by some developed countries could be pivotal for a paradigm shift in this sector.
In July, Brazil decriminalized the legal possession of marijuana for personal use, although its commercialization remains illegal. In Argentina—where recreational use is still illegal—the state-owned company Cannava from Jujuy closed million-dollar contracts in the same month for medicinal cannabis flower exports to Germany, Australia, and Portugal.
In addition to the existing UN regulations on legal drugs, which prohibit the consumption and distribution of cannabis for non-medical purposes, individual countries often have strict THC (Tetrahydrocannabinol) limits. These limits vary significantly from country to country, further complicating international trade.
The United Nations Office on Drugs and Crime (UNODC) reports that cannabis has been the most widely consumed drug globally "for some time now," with an estimated 228 million users in 2022, reflecting a 28% increase over the past decade.
The global cannabis market is projected to be worth around $42 billion in 2023 and is expected to close the year at approximately $47 billion, with further growth to over $51 billion by 2025. BDSA, a leading research firm in the sector, estimates that the U.S. market alone will "well exceed" $30 billion in 2024, contributing over $4 billion in tax revenues.
Source: ambito.com