When Uruguay became not only the first Latin-American country, but also the first country worldwide to legalize the use of cannabis (both medicinal and recreational) just seven years ago, in DEC13, it triggered a wave of similar national legalizations and a global industry now worth an estimated USD 344 billion. Over the past couple of years, MVD Free Airport, together with key industry players, has been pushing for the approval of a decree to enable it to become an international logistics service provider for this particular commodity. That decree was finally approved on 15OCT20.
Hans Guiscardo, Senior Manager, Global Accounts at MVD Free Airport, told CFG “To push for this decree, we alongside other private players and medicinal cannabis companies, illustrated to the government the importance for Uruguay, a small country focused on medicinal cannabis exports, to be able to also provide logistics services. After approximately 2 years of conversations, all the actors were able to push this through.”
The country is poised to become a cannabis logistics hub
A translation of the original decree states that it aims to regulate “the conditions for carrying out operations logistics with cannabis-based products, cannabis derivatives, and cannabinoids in Customs warehouses, for distribution to countries in the region” by establishing Uruguay “as a logistics center for the regional distribution of different products, and that it has specific regulations for such purposes.” This enables the country to benefit from the growing trend in “international trade in products for medicinal purposes or therapeutic drugs containing cannabis or cannabis derivatives” while at the same time ensuring unified logistics processes for these products, and being “committed to compliance of international regulations on the control and supervision of narcotic drugs and with the prevention and combat of illicit drug trafficking.”
The start of something big
“The business is potentially huge,” Hans Guiscardo stated. “The demand is still uncertain given today this is not something that the average user can have access to, though this decree changes that.”
According to a BizLatinCom article from 03MAY19, “Uruguay can become the first country to reach $1 billion in annual exports of medical cannabis products in as soon as five years with government-backed regulations,” and points to growing interest in investments that can yield similar boosts in the industry as seen in U.S. and Canada, once “Latin American cannabis producers start to consider Uruguay as a destination.”
The article forecasts that “serious money from the cannabis industry in Uruguay is starting to surface.” This was before the passing of the decree, and those predictions, along with the facts that an estimated 1.2 billion people worldwide use medical cannabis treatments, and that Latin America has ideal climate conditions for cannabis production, means that Uruguay is certainly on to a winner here. “Today, we have over 8 global players looking at Uruguay to start operations,” Hans Guiscardo disclosed last week.
So, how does it work?
Hans Guiscardo explains that the decree not only largely simplifies the logistics process, it also renders it less costly, given that once Uruguay issues an import permit, the origin issues an export permit and sends products to be stored within MVD Free Airport’s bonded warehouse. From there, single units can be reexported on a pick-pack-shipment basis to individual patients, without customs duties having to be paid. Previously, these “compassionate-use” shipments required costly export permits and logistics was time-consuming and unviable. “Individual units are subtracted from the lots allowed via the import permit, and all documentation is provided to the Ministry of Health in Uruguay to ensure an accurate handling of stocks,” Hans Guiscardo summarizes. This solution is particularly attractive to neighboring Brazil as the region’s largest market when it comes to medical cannabis, and completely reliant on imports.
MVD is a key player in Pharma.Aero’s Project Sunrays
The foundation, therefore, is laid, for Uruguay to become Latin America’s cannabis logistics hub. Another of MVD’s strengths, is handling pharmaceuticals, so CFG asked how ready MVD is with regard to the COVID-19 vaccine transports expected to start in the next months. “We are part of Project Sunrays, as founding members of Pharma.Aero, in which we are working towards standardized protocols and approaches to those challenges that the vaccine distribution will bring from a warehousing, logistics, airfreight and cold chain perspective,” Hans Guiscardo elaborates, pointing out that the airport’s second pharma warehouse is under construction and now due to be finalized in APR21. Perfect timing. High-five, MVD!