Market development of the cannabis in Peru

It has been three years since the incident which altered the perception and use of Cannabis in Peru. It is important to conduct an analysis of the current situation, both inside and outside of the country, in order to take a direct look at the use of cannabis for medicinal purposes and how society has responded to the inclusion of this product in the respective regulatory framework.

On February 8, 2017, a marijuana laboratory was found in an apartment in the district of San Miguel, Lima – Peru. This event was intended to be only a successful police intervention until the background of the case was uncovered: an asso-ciation, called Looking for Hope, cultivated this plant to use its oil in patients with disease that needed special treatment provided by this plant (El Comercio, 2017). As a result, multiple protests were generated in the capital demanding the legalization of cannabis for recreational and medicinal purposes.

Former President Pedro Pablo Kuczynski, enacted Law No. 30681 (El Peruano, 2020) regulating the medicinal and therapeutic use of cannabis. This generated expectations in many companies, who saw in the enacted law the possibility of obtaining substantial economic gains due to the nascent industry that would be generated.

What is cannabis?

Cannabis is a family of plants that is mainly subdivided in two: Cannabis Sativa and Cannabis Indica. Marijuana, as it is popularly known, can belong to both. However, hemp, used primarily for medicinal purposes, is only found in the Sativa family. This plant is mainly composed of Tetrahydrocannabinol (THC), and Cannabidiol (CBD).

THC is an intoxicating compound that produces a state of psychoneurotic disorder. As a general rule, marijuana that is consumed as a psychotropic is one that has high levels of this component. According to Rodríguez (Rodriguez, 2012), what is sought out when consuming marijuana is the balance between relaxation and euphoria. The higher the concentration, the greater the eupho- ria and duration of the effect. This use can be classified as recreational.

CBD, on the other hand, is the component characterized by its relationship with medicine. Its main characteristic is that it provides a state of relaxation without generating euphoria. Several studies indicate that its use brings great medical benefits for different types of patients. In the case of people with terminal diseases such as cancer, it has been shown to improve their quali- ty of life. It has also been effective for diseases that can trigger epileptic episodes, Parkinson’s and other similar conditions; supporting and even replacing traditional medicine.

How does this affect the peruvian market

According to media, the growth of marijuana consumption is on the rise (Sausa, 2017). Back in 2010 the recorded percentage of Peruvians who used marijuana was at 5.6%. In 2017, this percentage rose to 8.1%. The increase in users provides clear indication that the market will have new, active and fixed users. Therefore, the Peruvian market is one of the most sought after to invest in.

According to research, a bag of 4 grams is sold between 5 to 10 soles and a kilo can cost between 1500 to 2500 soles, generating large economic movements. On the other hand, the medicinal sale could reach 1,500 million dollars (El Comercio, 2019).

This figure is directly related to statistics that indicate that there will be a fixed base of 10,000 customers and with a tendency to increase. In that same aspect, it is expected that the creation of about 250 thousand jobs. For these reasons, large transnational entities seek to establish branches on national land, as they expect large profits and a great increase in their prestige with customers.

It is worth mentioning that, the only medicinal provider is DIGEMID, which is our national institutional pharmacy. The sale of medicinal oil is priced at approximately 50 soles, containing a mixture of 5% CBD and 0.4% THC in 10 milliliters. Which is mentioned that has amazing medical results that replace conventional medicine.

As we mentioned, the use of medical cannabis is related to medicinal aid against a large number of diseases and syndromes. For example, in psychiatric cases such as bulimia and depression, patients can be treated with cannabis, since it improves mood and appetite. Moreover, in terminal illnesses such as Cancer and AIDS, it can be observed that there are improvements in physical pain, prevention of nausea and vomiting induced by treatments. CANNA adds that in cases of Epilepsy and Parkinson’s where involuntary movements occur, cannabis has been shown to drastically reduce these episodes (Agirregoitia, 2017).

Even the official newspaper “El Peruano” indicates that approximately 40 thousand people could benefit from the legalization of the medicinal use of cannabis (Garay, 2019). These people could enjoy a better quality of life.

However, it has been shown that the current Law has not been very effective, since to date there is no entity with any type of sales and research license. Therefore, the only provider remains the General Directorate of Medicines, Supplies and Drugs (DIGEMID).

In addition, the concentration or percentage of necessary medicinal input for sale may not be effective for all cases. Some diseases require a higher degree of CBD. However, due to a lack of market and complementary provisions, the real need of consumers who need CBD cannot yet be met.

It is worth mentioning, this Peruvian regulation mentions that there should be a coordination with three ministries: health, agriculture and interior, however, there is no type of protocol between them.

We must take as an example, the neighboring country Colombia, where more than 200 licenses have been emitted, resulting in 1500 foreign companies seeking to be licensed, having an estimated investment of 60 million dollars, and also granting the opportunity for citizens to improve their quality of life (López, 2019).

From the aforementioned, it can be affirmed that Peru does not have completesatisfaction from all its customers, since it only sells a single mixture of oil proportion. There is a lack of coordination between the rele- vant ministries to regulate the delivery of licenses to companies. However, there is hope in Peruvian citizens who suffer from different medical conditions, that the state can begin to define and expedite different procedures so that those who need the product can access it safely.

• Nikolás Salazar, Jr. Associate
  nikolas.salazar@ecovis.com.pe
• Cindy Salvador, Tax & Legal Manager
  cindy.salvador@ecovis.com.pe