The Government published in the Official Gazette the Law No. 27.699, which sets forth the new regulatory framework for the development of the medical cannabis and industrial hemp industry in Argentina. This law complements the Medical Cannabis Law No. 27,350, enacted in 2017.
The law establishes the regulatory framework for the national production, commercialization, import and export of the cannabis plant, its seeds and derived products for medical use, scientific research and industrial purposes.
The activities regulated by this law will be subject to federal jurisdiction and any matter will be solved by the Federal Contentious-Administrative Courts.
It is worth mentioning that, as of this date, self-cultivation for medical purposes and import of cannabis products also for medicinal purposes through the Exception Access Regime are permitted (Regulatory Decrees 883/2020 and 654/2021). Recreational use is not allowed.
The main matters of the new law are the following:
Legalization and promotion of national production, commercialization, and export of cannabis for medical, scientific research and industrial purposes.
Traceability to guarantee good agricultural and production practices based on international guidelines.
Public and private investments throughout the production chain.
Development of the hemp industry (a variety of cannabis with low THC concentration – the percentage will be established by regulation), promoting its use for several productive sectors, such as textile fibers, clothing and footwear, cosmetics, construction materials, paper, etc.
Annual inspection and control fee, which shall not exceed 5 ‰ of the amounts invoiced.
The Ministry of Development will establish active financing policies for small and medium-sized enterprises (SMEs) and cooperatives.
Creation of the Regulatory Agency of the Hemp and Medical Cannabis Industry – ARICCAME (the “Agency”). The Agency will act under the Ministry of Productive Development, with technical, functional and financial autonomy and jurisdiction throughout the national territory. It will act in coordination with other Ministries, such as Health, Security, Agriculture, Science and Technology.
Creation of the Federal Council of the Medical Cannabis and Industrial Hemp Industry, which will meet monthly in ordinary sessions and will be composed of (1) representative of the Nation and (1) representative for each province and for the Autonomous City of Buenos Aires.
The Agency will issue the required regulations and control the production, commercialization and distribution of cannabis for medical and industrial use in the national territory, including but not limited to registration, control and traceability of seeds, critical inputs and products derived from cannabis.
All those human or legal persons whose activities fall within the scope of these regulations must have the prior authorization of the Agency. In the event of mergers, assignments and/or transfer of shares and/or goodwill, the prior and express authorization of said authority shall also be required.
ARRICAME will grant authorizations for imports, production, domestic marketing, and exports. With respect to hemp, the regulations will establish a simplified differential regime of authorizations considering the specific characteristics of this sector. The Agency shall grant authorizations for imports, production, domestic commercialization and exports. Particularly with respect to the hemp industry, the Agency shall establish a simplified and more flexible regime. The Agency will have special consideration to those applications aimed at contributing to the development of regional economies and projects with a gender and diversity perspective and the promotion of the activity of agricultural cooperatives and SMEs.
The Agency will also analyze and consider the characteristics of the project, the general and particular conditions of the market, the financial and commercial background of the applicant, the economic integrity and money laundering and terrorist financing prevention plans, the security measures, the experience in related activities, the type of legal structure under which the applicant will operate, among other requirements, in accordance with the conditions set forth in the regulations.
At the time of evaluating an application, the representative before the Federal Council of the respective jurisdiction must provide a technical report on the analysis of the impact that the project will have on the territory in question.
The Agency will have monitoring, control and sanctioning powers (warnings, fines, suspensions, expiration and disqualification). These will be in addition to the civil and criminal liability regime applicable for diversion of products to the illegal market.
Additionally, the Agency will enter into agreements with the financial regulators in Argentina (Central Bank, National Securities Commission, Federal Tax Authority (AFIP), Office of Companies (IGJ), Financial Intelligence Unit (UIF), among others) to minimize restrictions on access to financing.
Note that the new law does not contemplate any regulation regarding: (i) approvals for medical use, which continue to be under the jurisdiction of the National Administration of Medicines, Food and Medical Technology (ANMAT); (ii) self-cultivation, which is regulated by Law 27,350 and its regulatory decrees; and (iii) cannabis for recreational use, which is not allowed.
The complementary rules that allow the traceability of plant products will be issued by the National Seed Institute (INASE), as provided for in Decree 833 dated November 11, 2020. Likewise, it will create a special exceptional and extraordinary registration plan for the term to be duly established by the regulations, so that the holders of seeds, if they comply with the requirements established in the Law on Seeds and Phytogenetic Creations 20.247, may protect the ownership of the phytogenetic creations of their authorship.
Finally, the law gives the Executive Branch a term of 180 days to issue the regulations.
This report should not be considered as legal or any other type of advice by Allende & Brea. For any questions, do not hesitate to contact us.
