WONDROUS PROPERTIES
With its growing de-stigmatization and comprehensive legal framework, the cannabis industry is gaining traction in Ecuador.
RECOGNIZED FOR ITS MEDICINAL PROPERTIES since ancient times, cannabis has seen impressive growth in the treatment of diverse diseases and symptoms from cancer, chronic pain, depression, and epilepsy to multiple sclerosis, acquired immunodeficiency syndrome (AIDS), and Alzheimer’s, to name but a few.
Globally the medicinal cannabis market scaled USD7.8 billion in 2020, and sector research by IMARC Group puts growth at a CAGR of 15.3% over 2021-2026. Narrowing the focus, the Latin American cannabis market is projected at USD12.7 billion alone by 2028, with USD8.5 billion accounted for by the medicinal variety. Ecuador, in the footsteps of pioneering Colombia, is well positioned to harvest some of the spoils.
PASSING THE LAW
The fundamental consideration for a nation to develop its cannabis industry is the legal footing. Aside from the US and Canada, legalization to varying degrees exists in South America, namely Argentina, Chile, Colombia, Peru, Uruguay (fully legal), and in September 2019, Ecuador, for medical purposes. Subsequent legal reform reflecting the sheer developmental pace of the industry has been swift.
Reform of the Criminal Law, enacted on June 21, 2020, heralded the development of the cannabis and hemp industry by decriminalizing possession of drugs containing cannabis or derivatives for therapeutic, palliative, or medicinal use and for alternative medicine. At the agro-industrial end of non-psychoactive cannabis and hemp, in late 2019 the imports of hemp seeds, and its production, marketing, and export were legalized, with the Agriculture Ministry issuing 46 10-year licenses across the hemp value chain.
Then on October 19, 2020, the Ministry of Agriculture issued Ministerial Agreement No. 109-2020, regulating the import, planting, growing, harvest, post-harvest, storage, transportation, processing, marketing, and export of non-psychoactive cannabis or hemp and hemp for industrial use. It stipulated the conditions for growers to obtain seven applicable licenses. These cover imports of non-psychoactive cannabis and hemp seeds for commercialization, their cultivation, breeding, and processing. It also required that cannabis products have less than 1% THC content.
On February 25, 2021 the Agency for Health Regulation, Control and Surveillance (ARCSA) issued Resolution No. ARCSA-DE-0022021-MAFG with the “Sanitary Technical Norm for the regulation and control of products for human use and consumption containing non-psychoactive cannabis or hemp, or its derivatives.” This covered the production, import, and commercialization of finished products with the concentration of THC specified at less than 1% for each category to cover processed foods and supplements, cosmetic products, medical devices, hygienic products for industrial use, pesticides for both household and industrial use, household hygiene products, and absorbent personal hygiene products. Pharmaceutical products with a THC concentration equal to or greater than 1% are regulated as drugs subject to control.
APPLIANCE OF SCIENCE
Ecuador’s foray into the cannabis industry has caught investor attention, and the nation could yet emerge as a cannabis and hemp R&D cluster. Enter multinational CannLiv, which set foot in Latin America through CannLiv Sur America in Colombia in 2018 followed by Ecuador in March 2021. In a TBY interview, founder & CEO John David Carrasco explained how, “One of the things we were able to do was establish a research agreement with Pontificia University Católica del Ecuador [possessed of] the only Level 3 lab in the country.” At the cutting edge, research teams collaborate on nanotechnology, where for example, “we have 12 products for a cosmetic line, after two years of R&D [and are] currently using nano-CBD.”
TRUE POTENTIAL
As its name implies, proximity to the equator gives Ecuador the advantage of consistent, year-round crop harvesting. Then, there is the advantage of coastal access to the vast North American market with its burgeoning demand for medicinal cannabis. Indeed, shining a bright green light on the sector, the US Food and Drug Administration (FDA) has approved the commercialization of numerous medicines of marijuana-based formulation. Notable, too, is a trend for clients to source product from several suppliers, supportive of the local industry.
SOWING THE SEEDS
Subsequent to the legal roadmap, faith in the industry’s potential has prompted a speculative shift away from traditional flower growing, notably roses, to hemp. Moreover, Ecuador saw an 8% YoY drop in flower exports in 2020, as demand tanked in the key US, European, and Russian markets amid COVID-19. Attention has turned to a niche market of hemp flowers offering a palliative effect when smoked, without psychotropic effects. Significantly hemp flowers, unlike cannabis, can be processed using existing flower sector infrastructure. In contrast, CBD oils need industrial machinery to separate oil from plant material. The notable export market for hemp is Switzerland (chocolate flavoring optional).
As the social stigma falls, and its applications become more widely accepted, Ecuador stands to develop a significant presence in the medical and cosmetic cannabis markets. And with relevant laws now covering the entire value chain, expectations are justifiably, and legally, high.