The second-smallest South American country, Uruguay, made history in 2013 by becoming the first in the world to legalize recreational marijuana. What lessons can be learned from the cannabis pioneers?
It seems unlikely that a small country wedged between Argentina and Brazil would become the pioneer of a booming industry that is currently shaking up laws in the world’s top economies. But there it is, the country of Uruguay, perched on the South Atlantic coast with a notable export trade industry and the title of first in the world to legalize the cultivation, distribution, and consumption of marijuana.
With a population of just under 3.5 million people, Uruguay is a quiet country known for its free market and overall belief in egalitarianism, or in other words social equality. According to the World Bank, Uruguay has a “high per capita income,” a low level of inequality, and “the almost complete absence of extreme poverty.”
In an effort to tackle the increasing acts of violence caused by drug cartels, Uruguay lawmakers approved legislation in 2013 that created a new path for cannabis decriminalization across the globe.
“The great responsibility we have in Uruguay is to show the world that this system of freedom with regulation works better than prohibition,” Eduardo Blasina, the founder of the Montevideo Cannabis Museum, told the New York Times.
On July 19, 2017, the small country took another epic step by launching the legal sale of recreational marijuana, three and a half years after the cannabis legalization law was approved.
While the road to full legalization may have felt long to some, the country’s rigorous process has become a framework for the rest of the world.
How Did Uruguay Become a Marijuana Trailblazer?
How did the second smallest country in South America become the global pioneer of recreational marijuana? In the simplest version, it’s the story of a country imagining a better way for its people to live and being willing to face world-wide criticism and opposition to obtain it.
Uruguay first showed the world its forward-thinking by decriminalizing personal marijuana use in 1974 amidst the devastating South American drug wars. However, the Uruguay decriminalization of marijuana law was not specific on what personal use meant, nor what quantity was allowed.
Furthermore, the cultivation and distribution of cannabis were still illegal under Uruguayan law, and punishable by jail sentences anywhere between three and fifteen years. In 1999, lawmakers amended the severity of punishment for cultivation and distribution and changed “minimum quantity” to “reasonable quantity.”
It was at this time, according to the Centre For Public Impact, that pressure began to build to go a step further and fully legalize marijuana. A grassroots movement began to take shape whose efforts would span more than a decade and eventually lead to Uruguay’s former president, Jose Mujica introducing marijuana legalization and decriminalization.
The 2012 marijuana legislation was formally proposed as part of Mujica’s 15-point plan to address insecurity in Uruguay, and was called Strategy for Life and Coexistence. The bill was not popular at first and was heavily amended before gaining support from legislators and human rights advocates.
After much debate, the bill was signed into law on Dec. 24, 2013, followed by a public announcement of the new drug regulations on May 2, 2014. The monumental move of legalizing the production and sale of recreational marijuana made Uruguay stand out as the first country to legalize each element of the cannabis supply chain.
“We moved the frontier of what is possible,” Martin Rodriguez, director of Uruguay’s cannabis regulatory authority, said during a 2018 Washington Office on Latin America (WOLA) event in Washington, D.C.
What are the Uruguay Marijuana Laws?
Uruguay marijuana laws allow permanent residents over the age of 18 to purchase marijuana from a local pharmacy and consume cannabis in outdoor public spaces. Adult Uruguay residents are also permitted to cultivate up to six marijuana plants for personal use. No separate medical marijuana licenses are available.
Cannabis consumers must choose from three forms of legal access home cultivation, cannabis clubs, or commercial purchase—and must register with the Institute for the Regulation and Control of Cannabis (IRCCA).
In order to make a marijuana purchase, adults must first sign up for a national registry. According to Uruguay’s marijuana law, purchasers can select from four different cannabis strains, each varying in cannabinoid content but none with exceptionally high tetrahydrocannabinol (THC) content compared to those found in the United States.
At least one of the available strains contains lower levels of THC and higher levels of cannabidiol (CBD). Customers are also limited to buying no more than 10 grams of cannabis a week.
Uruguay authorities established a secure database system that allows cannabis buyers to scan their fingerprints at pharmacies. The prints are cleared through the IRCCA’s registry of individuals signed up to purchase.
If buying some local Uruguay marijuana makes you want to hop a plane to South America, beware that selling cannabis products to foreign tourists, even adults over 18, is illegal under the country’s law. Uruguay residents, however, can also participate in Cannabis Clubs, small groups that grow and distribute cannabis to members.
What Happened After Uruguay Marijuana Legalization?
Uruguay’s government legalized cannabis with the hope that it would reduce crime rates by limiting the reach of drug cartels. Turns out, in the years since sales launched, crime rates overall have declined. A 2018 report from Latin American news service Telesur shows that following Uruguay decriminalization of marijuana in 2017, crime rates have fallen by 20 percent.
While Uruguay has stepped up to the plate to show the world how to launch an adult-use market, it didn’t do so without challenges. One of the primary areas Uruguay struggles with in its recreational market is access.
In 2018, the (WOLA) and the Center for Effective Public Management at Brookings released a paper analyzing Uruguay’s progress in implementing its pioneering cannabis reform law, “Uruguay’s cannabis law: Pioneering a new paradigm.”
In the analysis, WOLA’s John Walsh and Brookings’ John Hudak, two of the paper’s authors, discussed the challenges and opportunities Uruguay faces five years after legalization.
Pharmacies are the only places allowed to sell recreational cannabis in Uruguay and According to a 2019 BBC report, due partly to the restrictions facing banks, there are only 17 pharmacies permitted to sell cannabis in the entire country.
Most pharmacies are routed through U.S. banks, which have been federally forbidden to serve accounts that “involve the manufacture, importation, sale, or distribution of a controlled substance.” According to the WOLA analysis, the big American banks cited the USA PATRIOT Act as a basis for their claim and demand to close accounts.
“The big US-based banks sent a memo to their Uruguayan counterparts, telling them they’d have to close their accounts if they proceeded,” Walsh told CNN.
Uruguay lawmakers are looking to find solutions for the banking restrictions to allow more access to cannabis. According to Walsh, the most popular solution is to set up dispensaries independently of pharmacies.
However, that solution leads to the next challenge Uruguay has been facing, supply shortage. Currently, only two companies have been licensed to produce commercial cannabis in Uruguay and more than 22,000 Uruguayans have registered as purchasers.
The duopoly was an effort by Uruguay’s government to keep strict control of the Uruguay marijuana market but it also caused problems.
“This limited production meant that pharmacies were undersupplied—not given the maximum product allowed monthly—and that pharmacies sold product so quickly that there would be days of shortages before the next cannabis shipment,” the WOLA author’s wrote.
As a result, the IRCCA looked to issue four or five new licenses to grow recreational marijuana.
Overall, Uruguay’s historic marijuana legalization experiment is off to a good start. Hannah Hetzer, senior international policy manager at the Drug Policy Alliance, commented on the progress in a CNN report.
“It’s too early to make any concrete evaluations,” she told CNN, “but the sky hasn’t fallen.”
Uruguay’s legal marijuana market seems to have hindered the illegal market, which was one of the main aims of legalization. According to IRCCA’s May 2018 figures, around 55 percent percent of marijuana users are participating in the regulated system.
“It takes a while for the illicit market to reduce,” Hetzer noted.
A study titled “Uruguay’s Middle-Ground Approach to Cannabis Legalization” indicates Uruguay’s system will balance out.
“As supply grows, access to cannabis at a competitive price and potency through pharmacies may displace the illicit market, which is largely supplied from Paraguay. It is also likely that many cannabis users will find the 40 grams monthly purchase limit excessive, possibly generating a surplus of supply that can flow into to the grey market,” the study’s author’s wrote.
Cannabis Reform Spreads in Latin America
In the years since Uruguay marijuana legalization, other Latin American countries have moved toward ending cannabis prohibition.
Argentina legalized medical marijuana earlier this year and will soon distribute products to patients free of charge. In Brazil, legal medicinal marijuana products are available to import.
Colombia, Puerto Rico, and Chile have also recently legalized cannabis products for medical purposes. Mexico lawmakers are poised to legalize recreational cannabis legislation by the end of April.
Marijuana Legalization Beyond Uruguay
Since the passage of Uruguay marijuana legalization, Canada became the second country in the world to end prohibition and legalize cannabis nationwide. Read our analysis of what’s happened in Canada since legalization.
Stay up to date with the latest developments in cannabis policy, business, and scientific research by visiting our cannabis news page.