Uruguay and Argentina build cannabis processing facilities joining the cannabis research conversation

South America is famous as a cannabis production region, and across the world, cannabis companies are flocking to the area to take advantage of the cheap production opportunities.

Latin American governments seek greater recognition, not just for their growing season, but also for science and innovation. Last November, Uruguay announced the first medical cannabis laboratory in South America, and Argentina is following suit by sponsoring a pharmaceutical research and processing plant in their cannabis growing region, Jujuy.

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Processing facilities, one of the most important, and most expensive, aspects of the medical cannabis business are essential in transforming the flower, which is illegal to consume in most places across the world, into medical grade oil.

Using science and advanced processing techniques, countries and companies can isolate different compounds and create standards for dose requirements.

The construction of processing facilities owned by the Uruguayan and Argentine governments put them at the forefront of establishing those standards.

Uruguay’s scientific focus

After legalizing cannabis in 2013, Uruguay announced that the next stage of the legitimization process would be research and exports to other countries.

Internally, Uruguay is struggling to meet medical cannabis demand from its registered medical users, which number in the thousands. Externally, their global research goals are advancing beyond their deregulated neighbors.

Since 2013, Uruguayan company ICC Labs (NASDAQOTH:ICCLF)  acquired about 70% of cannabis space within Uruguay. Most notably the government with ICC Labs began constructing an over eight million dollar research and testing lab in the national science park near Montevideo, the primary cannabis growing region in Uruguay.

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“Uruguay, as an exporter of raw materials adds with this endeavor the last stage … The development of Uruguay has a hub on the continent to produce scientifically proven, quality products,” reported the presidential secretary, Juan Andrés Roballo about the project.

Soon after the facility’s announcement, Aurora Cannabis (NYSE:ACB) acquired ICC Labs for CA$290 million, thereby purchasing a sizable amount of the Uruguayan cannabis market, including access to the processing facility, which Uruguay touts as the first of its kind in Latin America.

According to the leader of ICC Labs, Alejandro Antalich, this facility propel’s Uruguay’s legitimacy in the global cannabis market, indicating that they spent two years consulting experts before finalizing the plans.

He continued to say, “We know that we work with a product that requires research and controlled clinical studies so that its therapeutic potential can be extended and strengthened.”  

The facility has a “production capacity to supply almost the entire continent of South America.”

Uruguay seeks to become the top exporter of cannabis products. To achieve that, this facility must meet global standards of CBD purity and manufacturing.

Argentina steps up the competition

Argentina, a country which currently imports all medical cannabis supplies, announced it would open its first processing center for medical marijuana in Jujuy, Argentina.

Argentina’s state-owned cannabis Group, Cannava SE, and a subsidiary of Aphria (TSX:APHA, NYSE:APHA), ABP S.A., are partnering to fund and run the facility.

This announcement came in conjunction with a statement by the government that they would permit large scale cannabis cultivation for research only.

The plant, built in Finca El Pongo, an estate owned by the government for the facility’s protection, is in the cannabis growing region.

According to the Ministry of Security, “the establishment has the necessary security standards and that it complies with legal guidelines imposed at national and provincial levels.”

Security questions largely stalled Argentinian’s ability to access safe, affordable medical cannabis. This project, the governor of Jujuy, Gerardo Morales, indicated, aims to change that.

“The main objective is to overcome the contradiction and develop a process that permits reliable cannabis oil or any other medicinal derivative of cannabis that is of quality, affordable, and with known origin and production process.”

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Based on the industrial plan, safe and reliable cannabis for medical patients remains a future goal, as the first testing plants are in the cultivation stage.

After cultivation, the seeds and plants are tested in the facility, and experts determine which strains are viable for the industrial plan.

Unlike Uruguay, who welcomed medical cannabis innovation, not all in Jujuy feel that this project will benefit Argentina. Alejandro Cejas, a deputy in the province, registered a complaint with the region’s court with concerns that American companies would be cultivating in Jujuy for export. The law only permits medical research.

Cannabis processing across South America

Uruguay and Argentina occupy a unique niche in that their production facilities are state-owned with company sponsors.

Colombia has also joined the ranks of countries with processing facilities. PharmaCielo (TSX-V:PCLO) maintains cultivation and processing facilities there.

Without processing facilities, countries must import cannabis medicine from abroad and can’t become a part of the high tech cannabis conversation. Uruguay and Argentina join the ranks of cannabis researchers along with Canada and Israel, making a name for themselves on the international stage.