New Bill to Develop the Medicinal Cannabis and Hemp Production Industry

The Bill aims to provide the regulatory framework for the national manufacture chain and commercialization and/or export of the cannabis plant, its seeds, and by-products for medicinal purposes and scientific research. The Bill aims to enable the creation of public, private or hybrid investment projects that would develop the different segments of the national medicinal cannabis value chain (cultivation, harvesting, processing, marketing, etc.).

 

The Bill does not intend to repeal current statute but to supplement Law No. 27,350 on Medical and Scientific Research on the Medicinal Use of the Cannabis Plant and its Derivatives, its Regulatory Decree  No. 883/2020, and other related provisions (more information and analysis available here)

 

Hemp is a cannabis sativa species that contains very low addictive substances and is harvested for its industrial uses in several countries. Thus, the Project also seeks to legalize and develop the use of hemp in the textile, footwear, cosmetics, food, wood, and car industries, among others. At the moment, industrial hemp is forbidden under criminal laws applicable to recreational cannabis in Argentina.

 

The Bill has a six-chapter structure and was prepared with the support, guidance and collaboration of cabinet ministries, congressional representatives, scholars and scientists, provincial governors, business sector representatives, and civil society associations. The Bill has also been drafted consistently with international regulations and the experience of other global leading countries in the industry.

 

 

1. Purpose and considerations

 

The Bill’s objectives include:

 

1. Iimproving access to cannabis-derived products for medicinal use, under better quality conditions.
2. Regulating traceability in the manufacture chain and preventing authorized producers from detouring to the illegal market.
3. Boosting employment and job creation.
4. Increasing exports and foreign exchange earnings.
5. Promoting knowledge and technology industries (e.g., research and development in seed genetics).
6. Developing regional economies and diversifying the industry.
7. Providing sanctions in case of non-compliance with the regulatory framework set forth by the Bill.

 

2. Creation of the Regulatory Agency of the Hemp and Medicinal Cannabis Industry (ARICCAME)

 

The Bill also aims to create the National Regulatory Agency of the Hemp and Medicinal Cannabis Industry (“ARICCAME,” after its acronym in Spanish), as a decentralized body within the Ministry of Productive Development. The Agency will have the power to take all necessary measures to ensure the purposes and fulfillment of the Project and, among its assigned functions, the following stand out:

 

1. Regulating, managing and supervising the manufacture chain.
2. Granting authorizations to import, cultivate, manufacture, commercialize, export, and acquire seeds of the cannabis plant, cannabis and its derived products for medicinal purposes.
3. Coordinating governmental actions and issuing joint regulations with other regulatory state agencies on technology, health, agriculture, finance and capital markets, prevention of money laundering, corporate activities, customs and tax.
4. Verifying compliance with current regulations and conducting audits and inspections of authorization holders.
5. Executing agreements with public or private organizations and/or institutions for cooperation purposes, expert advice and/or financial assistance.

 

3. Authorizations

 

Highlights of ARICCAME authorizations include the following:

 

1. The Bill prioritizes requests for authorizations that promote provincial economies and that will stimulate activities carried out by employee-owned companies and/or small or medium-sized enterprises (SMEs). Authorizations must take into account gender and diversity perspectives.
2. Any merger, assignment or transfer of shares or goodwill by authorized parties will also require prior authorization.
3. Authorization holders will have to comply with an information regime to be fixed in due course for product control and traceability.
4. In the case of industrial and/or horticultural hemp not intended for medicinal use, ARICCAME will have to apply a differential and more flexible authorization regime.

 

4. Compliance and penalties

 

A monitoring, compliance and sanction regime is foreseen to guarantee best practices and quality and to prevent authorized producers from detouring to the illegal market.

 

All penalties will be applied by ARICCAME and may consist of a warning, fine, suspension or expiration of the authorization and disqualification to operate. Those will be ranked according to the nature and severity of the breach and any damage caused, without prejudice to any applicable civil and/or criminal liabilities.

 

5. Closing remarks

 

The submitted Bill does not apply to:

 

1. The recreational use of the cannabis plant.
2. Self-cultivation (which will continue to be governed by Law No. 27,350).

 

Lastly, Congress is expected to discuss the Bill over the next weeks. Once the Bill is approved, the Argentine Executive will have to determine the specific terms and conditions and mechanisms for its implementation. Investors in Research and Development (R&D) and in the local cannabis industry are on tenterhooks about this new regulatory framework.