The International Cannabis Corporation (ICC), will stop producing recreational marijuana for the Uruguayan market, having allowed its contract with Uruguay’s Institute for the Regulation and Control of Cannabis (IRCCA) to lapse without signing a new one.
ICC Labs, founded by Uruguayan businessman-turned-politician Sen. Juan Sartori, was bought by Aurora Cannabis ACB for C$290 million ($220 million) in 2018. While ICC produces nearly half of the cannabis sold in pharmacies in Uruguay, many consumers turn to legal grow “clubs” for better quality, since the cannabis offered in pharmacies is often not very potent.
Sources told the Montevideo Portal that the company has decided “to discontinue its recreational marijuana production project marijuana and for this reason has directed its employees to [apply for] unemployment insurance until a further resolution has been reached.”
Trade unions in Uruguay reported that ICC had begun layoffs last week in several of its greenhouses.
IRCCA president, Daniel Radío, said another cultivating company, Simbiosis, had also allowed its license to expire. ICC and Simbiosis are the only two companies providing cannabis to pharmacies right now in Uruguay.
ICC Labs has been producing cannabis in Uruguay since shortly after the South American country became the first in the world to legalize adult-use cannabis.
ICC clarified, however, that it will continue to produce medical cannabis from industrial hemp at its laboratories.
Why? Price Of Pot Too Low
Radío told the Montevideo Portal that he believes the ICC is intending to raise the price of the cannabis it provides to Uruguay’s pharmacies – a plan with which the government is in agreement, however the size of the price rise is in dispute.
The retail price, fixed at 53 Uruguayan pesos ($1.23) per gram of flower, was last updated by the government in February 2020. Producers receive about 70% of it and the rest goes mostly to the retail pharmacy with a small amount going to the regulator.
Radío agrees that the price increase would provide better returns for investors, especially when a variety with a higher percentage of THC is produced - a move that is right around the corner.
Stronger Weed Coming To A Pharmacy Near You If You Live In Uruguay
The IRCCA recently approved the development of a new variant of recreational cannabis to be sold in pharmacies in Uruguay.
The new genetics will have 10% THC, a moderate value for some international standards, but much higher than the variants currently available in Uruguay.
“We have more than 42,000 people registered to buy in pharmacies and they weren’t buying. I believe that with this we are going to try to recover this market, which could have gone to illicit traffic or other forms of access to the regulated market,” Radío told a local news outlet.
The new cultivar will be available for sale in 2022.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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