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Things are heating up in South America. Uruguay has recently been a hot topic in media coverage for becoming the first country to, nationally, legalize the cultivation, sale and consumption of marijuana. President José Mujica is quite unique in terms of heads of state, and not just because of his crime filled background. After being elected, he chose to pass on a government provided mansion to, instead, reside in his own farm house, and he is never afraid to speak his mind. The social and political environment in Uruguay has made their approach to legalization much different than comparable medicinal and recreational markets in America. President Mujica has appointed Julio Calzada as the head of Uruguay’s national drug agency. He has developed the plan for legal marijuana regulation and taxation.

1. Here Come The Taxes

Uruguay’s taxation plan is much friendlier to consumers than current recreational tax rates in Colorado and Washington. In Uruguay, marijuana will be sold to the public completely tax free. The tax burden will fall on growing and cultivation companies. These companies will be charged a variable fee that can escalate based on the black market price of the crop.

“There are taxes. Sure there are taxes!” he said. “There’s a tax that the growers will be subject to, and that will be variable.”

He elaborated: “The central objective of this variable fee is competing with the black market. So, if marijuana is selling on the street for 25 pesos ($1 a gram), the fee, which is a percentage, must allow companies to sell legal cannabis at 25 pesos a gram.”

The reasoning behind not taxing consumers, is to be able to compete with marijuana being sold on the black market. If a consumer can purchase it cheaper from non-regulated drug dealers, why would they pay more to purchase from a regulated source? This is all a plan to fight crime and take the marijuana drug market from the cartels. It is not a plan to make money from the sale of marijuana.

2. High Business Demand

Uruguay’s government is offering only three licenses for growing and cultivating the government regulated marijuana that will be sold, legally, in pharmacies. There are far more applicants than there are available licenses. There are over twenty applicants. The majority of those applying are residents of Uruguay, however, there are a few international applicants.

These applicants are all aware of the price point for the marijuana they are applying to cultivate. According to Calzada, this is evidence that it is possible to grow and sell this product at the price point equal to about $1 per gram.

3. $1 a gram? Prove it

Uruguay’s government claims to have a study about marijuana cultivation, packaging, and sales that proves it is possible to grow for $1 per gram or less. Calzada will not allow anyone to read it, however. This study proving this price point has not been released to the people of Uruguay, nor anyone else.

Drug Chief, Calzada, told the Global Post that no one will read the top-secret document except for the three applicants that will be awarded the positions of government marijuana cultivator.

4. No International Pressure

Uruguayan government officials have reported that the country has not been attacked, bullied, or even talked down to by the United States government, nor any other country’s government, in light of the new plan for government legalization and regulation of cannabis. Phew! It would been quite hypocritical if the United States government had pressured Uruguay to eradicate the new policies, considering two of the United States have legalized recreational marijuana, and twenty-three states have legalized medical marijuana.

Uruguay did receive warnings, however, from the United Nations’ International Narcotics Control Board. The UN reached out because legalized marijuana throughout the entire country does go against the policies of the International Narcotics Control Board, of which Uruguay is a signed member. The UN seems to hold the stand point that Uruguay should either resign from the UN, or continue to uphold the policies associated.

President Jose Mujica, did not receive this outreach from the United Nations well. President Mujica feels strongly that he is making decisions in the best interest of his country, Uruguay.

5. No Puff, Just Pass

Julio Calzado just says no to smoking marijuana. He does not ingest the plant in any form, but he understands that the people of Uruguay do consume cannabis. According to the National Drug Council, at least 120,000 of the over three million people in Uruguay, consume marijuana on a yearly basis, and at least 20,000 people are daily users of cannabis. This head of agency hears those numbers loud and clear.

photo credit: Steve Wilhelm

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