On August 7, 2023, the regulation of Law 27669 (Regulatory Framework for the Development of the Industry of Medicinal Cannabis and Industrial Hemp) was published in the Official Gazette of Argentina, thus becoming mandatory. This long-expected legislation was welcome by the sector involved, who had to wait 6 years from the publication of said law in May 2022, in line with the law passed in 2017. Why such a long wait? Basically because this new regulation approached several for-profit commercial uses.
The law created the Regulatory Agency for the Hemp and Medicinal Cannabis Industry (“ARICCAME” as per its Spanish acronym). This article is full of acronyms necessary for the comprehension of this new rule. The ARICCAME will control the storage, fractioning, transportation, distribution, traceability and use of cannabis plant seeds and its derivative products with medicinal or industrial purposes.
At the same time, the Federal Council for the Development of the Industry of Medicinal Cannabis and Industrial Hemp (hereafter the FEDERAL COUNCIL) is entitled to submit proposals to the ARICCAME to draft diagnosis tests over the application of rules on Medicinal Cannabis and to make recommendations for a smooth development of the industry in different regions. The FEDERAL COUNCIL is an independent body that works in cooperation with ARICCAME.
We will not develop the whole legal framework in this post but we would like to highlight that the ARICCAME will issue the different licenses and permits and will control and impose sanctions in case of non-compliance by licensees and/or authorized persons (who will be those individuals or legal persons having permits according to this new regulation) and will provide the general guidelines upon the application for permits for cultivation, investigation, commercialization, transportation and medicinal and industrial cannabis derivative products.
This said, let’s analyze the new law:
The first section of Resolution Nº 405/2023 stipulates that those projects and cultivations previously approved by a permit within the scope of Law 27350 (MEDICAL AND SCIENTIFIC INVESTIGATION ON THE MEDICINAL USE OF CANNABIS PLANT AND ITS DERIVATIVES) shall adapt such authorizations and licenses according to the simplified scheme provided for by the new law. Thereafter, (2) two definitions are given which shall be vital for the industry development and for the granting of permits and licenses as later explained:
– PSYCHOACTIVE CANNABIS: the cannabis plant with more than one per cent (1%) of Tetrahydrocannabinol (hereafter THC) in dry weight.
– HEMP: cannabis plants, its components, seeds and derivatives with a maximum concentration of one per cent (1%) of THC for industrial or vegetable growing purposes.
Besides, the ARICCAME shall define the scope of DERIVATIVE PRODUCT. Such definition is important for the industry development since it is the last link in the production chain, and everything included in this definition shall be available at shops.
Cannabis could be used for the following purposes: human medicine, veterinary medicine, nutritional, cosmetic, industrial, sanity and soil and plant fertility uses and any and all uses arising from scientific research and technologic and industrial development.
ARICCAME FINANCING: ARICCAME shall be entitled to issue its own resolutions related to the implementation of collection of licenses, permits, control fees and penalties as a source of financing pursuant to the provisions of Law 27669.
Even though the ARICCAME shall govern the criteria for the granting of licenses and authorizations, those projects complying with the following requirements shall have priority:
– Its capital stock (100% or mostly) must be of national origin
– It must be based within the same jurisdiction where the economic activity (as stated in the permit) is carried out (we understand this is an incentive to promote the registration of companies within the same jurisdiction they operate to enable tighter control over them).
– Companies must have 50% or more of the decision-making positions in charge of women or transgender people and 50% or more of the staff must be women or trans (this condition is somewhat contradictory, since any new startup will not have hired any working force; if it did, before getting the corresponding permits, such staff could be accused of producing, transporting, storing and / or distributing narcotics).
FEDERAL COUNCIL: The Administrative Secretariat shall be vested in one (1) representative from ARICCAME and state representation shall be vested in one (1) state officer from each province and from the Autonomous City of Buenos Aires. Their functions are broadly explained by legislation but this article is not intended to provide a detailed explanation of the Council’s operation.
Once these organizational issues have been clarified, chapter V of Law 27669 focuses on AUTHORIZATIONS through the creation of the SINGLE WINDOW FOR THE HEMP AND MEDICAL CANNABIS INDUSTRY (hereafter SINGLE WINDOW) which will be essential for the industry’s development. Its main functions are:
1. To achieve more efficiency in the administrative steps connected to the National Public Administration ;
2. To unify processes, standards and administrative steps for a smooth operation of the application mechanisms for the granting of licenses and authorizations;
3. To promote efficient and speedy administrative steps connected to the different state agencies in relation to Industrial hemp and Medicinal Cannabis;
4. To integrate and systematize data from state entities and state agencies;
5. To have an easy access to the information regarding administration procedures pursuant to applicable legal rules.
(This is a brief summary for general information purposes. For in-depth information enter the link.) Resolution Nº 405/2023.
This article will be updated upon the operation of the SINGLE ENTRY OFFICE with a successful outcome in terms of licenses and authorizations.
ON LICENSES AND AUTHORIZATIONS
The law makes a distinction between LICENSE and AUTHORIZATION. Whilst LICENSES are those permits granted for carrying out activities linked to the production chain of seeds, plants, cannabis and its derivatives excluding hemp (1% of THC or higher percentage), AUTHORIZATION is the permit granted for hemp- related activities (less than 1% of THC).
Legislation establishes that both licenses and authorizations are non-transferable (which is logical) and that licensees and/or authorized persons filing bankruptcy proceedings shall give immediate notice to the ARICCAME to enable it to act accordingly.
Legislation provides that licenses and/or authorizations SHALL HAVE A MINIMUM VALIDITY TERM OF 5 YEARS. In my opinion it is quite positive since medium and long-term projects deserve legal safety for a suitable development. On the contrary, yearly-renewable permits would discourage investments and long-term projects.
At the same time, ARICCAME shall be entitled to act as control, inspection and evaluation authority for compliance purposes.
Licenses and authorizations are divided into 3 main groups:
– First-time application
– Renewal application
– Modification or change application
Each group shall be governed by ARICCAME at its sole discretion
As regards licenses and authorizations, each one of them shall be divided into different groups:
Types of licenses (1% of THC or more)
1. Cultivation facility license
The scope of this license is the purchase, handling, ownership, planting, cultivation, development, spread, phytogenetic creation, drying, packaging and waste disposal of seeds, cuttings and plants.
2. Logistics services license
This license covers transportation, distribution, storage, preservation, packaging and final disposal services and any and all logistics services of the production chain.
3. Derivatives production license
This license covers Cannabis and Cannabis Plants derivatives production under the terms and within the scope of the granted license.
4. Commercialization license (Subdivided into 2):
– Of seeds, seedings and cuttings
It covers for-profit possession and care as well as commercialization of seeds, seedings and cuttings of registered genetic varieties.
– Of Cannabis and its derivatives
It covers for-profit possession and care as well as commercialization of Cannabis and its derivatives.
5. Research and analytical testing license
This license covers analysis and analytical testing in authorized facilities as well as complementary activities such as reception, possession and transportation of Cannabis samples for analytical testing, material import for analytical and final waste disposal purposes of seeds, Cannabis plants, cannabis and its derivatives.
Types of Authorizations (below 1% of THC)
1. Authorization for the harvesting and commercialization of hemp seeds or hemp plants, in whole or fractioned, for industrial and/or horticultural use.
2. Authorization for the processing of Industrial and/or Horticultural Hemp and for derivatives production.
3. Authorization for logistics, transportation, distribution, storage, preservation, packaging and final disposal services and all logistics services related to the production chain of the Industrial and/or Horticultural Hemp.
4. Authorization for the foreign trade of Industrial and/or Horticultural Hemp seeds and plants, in whole or fractioned, derivatives and/or biomass.
From the above, it can be noted that the authorization for Hemp COMMERCIALIZATION is not regulated pursuant to this law. We assume a new legislation focused on hemp is likely to be passed soon.
Regulation then turns to the internal procedures for the of granting of licenses and authorizations. Such permits are basically based upon expert opinions from those entities encompassed within Law 27669 which ARICCAME may deem convenient according to the project involved, considering as well the reports presented before the Federal Council by the representative of the jurisdiction where the activity will be carried out. Technical reports shall be submitted within 15 working days, subject to an extension of 10 additional days upon the representative’s request. The fact of having a deadline for the submission of reports is quite positive to ensure dynamic and legally safe steps.
ON CIVIL ASSOCIATIONS
In my opinion, this chapter lacks clarity and I believe some further legislation will be passed for a broader comprehension. The text of Law 27669 only establishes that ARICCAME shall coordinate with INAES (National Institute of Cooperatives and Social Economy) the design of cooperation and technical assistance plans and that shall issue complementary rules for those civil associations seeking to be included within the framework of cooperatives and mutual associations of the cannabis production chain.
OBLIGATIONS AND SANCTIONING REGIME
Finally, legislation rules on the obligations for licensees and/or authorized persons and a brief sanctioning regime as follows:
Licenses’ holders obligations
– To comply with the provisions of Law 27669, its regulation and resolutions adopted by ARICCAME
– To request the presentation of licenses and/or authorizations to third parties pretending to trade with cannabis
– To report ARICCAME of unusual or suspicious transactions
– To be available for visits of ARICCAME or other control agencies
– To have updated data as required by the regulatory framework
– To provide information as required by control agencies
– To take steps for license change or modification as required by the activity involved
– To comply with ARICCAME provisions as regards destination of the raw materials or products held
(This is a brief summary for general information purposes)
Upon lack of compliance as stipulated above, a summary proceeding will be filed in the same record granting the license or authorization involved. ARICCAME shall be entitled to suspend temporarily such license and/or authorization stipulating the destination of seeds, plants and/or derivatives held by the suspended person. Thereafter, in order to ensure the right to defense, sanctions included in Law 27669 shall be determined consisting of warnings, suspensions and fines.
After such a long time, we finally have a legislation governing a revolutionary industry expected to create job opportunities in the near future, providing an insight of permitted activities and products. Even though the SINGLE ENTRY OFFICE operation and other details remain to be seen, Argentina has moved forward towards a promising future for the medicinal and industrial Cannabis market.