Ecuador Cannabis Laws for Expats: A Guide to Hemp & Legal Risks

Ecuador's legal landscape regarding cannabis is currently in a state of flux, presenting both curious opportunities and potential for expatriates. While the country has made significant strides in regulating non-psychoactive cannabis (hemp) for medicinal and industrial purposes, the laws surrounding psychoactive cannabis remain ambiguous and fraught with risk. This blog post will provide an overview, by no means exhaustive, of the current situation, focusing on what expats need to know to navigate this complex environment safely and, for the enterprising, to even find new business opportunities.

We have to start by understanding that in the Ecuadorian cannabis law lies a distinction between two types of cannabis:

• Non-Psychoactive Cannabis (Hemp): This refers to cannabis with a THC content of less than 1% by dry weight. Hemp is legal in Ecuador for therapeutic, scientific, medicinal, and industrial purposes. The government has established (in "theory", but we know how that could play out in reality) a clear licensing framework for its cultivation, processing, and commercialization.

• Psychoactive Cannabis (Marijuana): This refers to cannabis with a THC content of 1% or more. The recreational use of marijuana is not permitted in Ecuador. While possession for personal use was previously decriminalized up to a certain amount, a recent presidential decree has eliminated the table of maximum quantities, creating a legal gray area that could expose individuals to prosecution.

For expats with an entrepreneurial spirit, Ecuador's burgeoning hemp industry offers a range of potential business ventures. The government issues licenses for various activities, including:

• Importing and producing seeds

• Sowing and cultivation

• Germplasm banks

• Processing and industrialization

• Exporting and commercializing biomass or oil

To obtain a license, applicants must present a solid business plan, demonstrate the legitimate origin of their funds, and clearly state the purpose of their production and target market. The Ministry of Agriculture, Livestock, and Fisheries has streamlined the process, providing clear guidelines and application forms on its website. Licenses are valid for 10 years and can be modified, offering long-term stability for investors.

By the end of 2023, Ecuador had already approved investment contracts worth approximately $40 million in the cannabis sector, with 169 licensed operators in the country. This demonstrates the significant economic potential of the industry and the government's commitment to its growth.

A note from the author: you might disagree, but in my experience trying to sell to the local market is very uphill. A business that tries to emulate a well-structured operations as those found abroad (efficiency in processes and procedures, innovation, excellent recruiting methods, etc.) is way too costly to only aim to sell locally. Sure, if you're marketing is solid, you could call it a business, but you should forget about actually pushing through higher markets.

Even if you could come in with the money to start operating in all of Ecuador, the market will always be pretty reduced. In the specific case of legal marihuana, I see that is still a strong social stigma against using drugs, almost in general, in Ecuador. Maybe these are due to strong feelings against a good chunk of the cannabis consumers end up having antisocial or non-ambitious behavior. Whether there are more examples of successful users or not, for a good amount of people making decisions, the use of marihuana must be categorized similarly as other more dangerous drugs, and therefore treated the same. So, even if they lose territory politically, the social rules will still be around for years.

On top of that the level of the economy makes it hard for a lot of people to fully access a product unless it is on the low end of what a low price range would be. So, your market would be reduced to mostly the people that can afford the social cost and/or the time cost of using cannabis.

So, in other words, a higher-cost-yet-higher-output configuration should be oriented towards producing something that can be sold internationally, and that doesn't necessarily need to refer only to tangible goods to sell. There are plenty of opportunities in selling services, too.

If you produce with the aim of being able to export it you'll actually make a real business. Without taking this as some kind of advice, you and I can see that as a real opportunity.

While the commercial hemp industry is taking off, the legal status of personal cannabis use remains a major concern for expats. The elimination of the drug quantity table has created a legal vacuum. While the National Court of Justice has clarified that the simple possession of drugs for personal use is not a crime, it also stated that it is up to the justice system to determine on a case-by-case basis whether possession is for personal consumption or for trafficking.

This ambiguity creates a significant risk for expats. An encounter with law enforcement could lead to arrest and prosecution, even for possessing a small amount of cannabis. The outcome of such a case would depend heavily on the interpretation of the law by the specific judge and prosecutor involved. It is crucial for expats to understand that even if personal consumption is not considered a crime, the burden of proof may fall on the individual to demonstrate that the possessed substance is for personal use and not for trafficking.

Although this ambiguity most likely won't affect you negatively, being in this ambiguous gray zone in countries where the justice system is famous for putting many of its judges in jail or kicked out of office, isn't a good idea. So, we certainly invite you to see how you can increase the pressure and participate for a change. Also, don't forget to avoid overconfidence in the lack of enforcement by the police and never walk around town with more than your personal consumption amount.

Proponents of cannabis regulation in Ecuador argue that a regulated market would lead to a significant decrease in crime. By taking the cannabis trade out of the hands of criminal organizations, the government could:

• Reduce crime: Legalization and regulation would eliminate the black market for cannabis, reducing the power and profits of criminal gangs.

• Improve public health: A regulated market would ensure product quality and safety, eliminating the risk of consuming cannabis mixed with dangerous substances.

• Generate tax revenue: The government could tax cannabis sales, generating revenue that could be used to fund public services.

• Free up law enforcement resources: Police could focus on more serious crimes instead of pursuing cannabis users.

A new citizen-led initiative for the comprehensive regulation of cannabis is currently being considered by the National Assembly. This proposal would allow adults to cultivate up to 30 plants at home, establish a framework for legal sales, and create a National Cannabis Institute to oversee the industry. The proposal also includes provisions for medical cannabis patients and regulations for cannabis clubs and dispensaries.

Ecuador has a well-regulated market for medicinal cannabis products. The Agency for Health Regulation and Control (ARCSA) oversees the production, importation, and commercialization of these products. Patients can access a variety of CBD-based products, including oils, sprays, and creams, with a THC content of less than 1%. These products are prescribed by authorized health professionals for a range of conditions, including epilepsy, chronic pain, and anxiety.

For patients with more severe conditions, the law allows for the prescription of cannabis-based medicines with a THC content of 1% or higher. These are strictly regulated and prescribed for conditions such as cancer-related pain, nausea from chemotherapy, and multiple sclerosis.

Ecuador's evolving cannabis laws present a mixed bag for expats. While the legal hemp industry offers new opportunities, the ambiguity surrounding personal use requires a cautious approach. Until the law is clarified, expats should be aware of the potential legal risks of possessing and consuming cannabis.

The ongoing debate in the National Assembly offers hope for a more rational and evidence-based approach to cannabis regulation in the future. A regulated market would not only benefit the country's economy and security but also provide a safer environment for both Ecuadorians and the growing expat community.

Sources:

• https://cannabismedicinalec.com

• https://www.agricultura.gob.ec/canamo

• https://bustamantefabara.com/cannabis-regulacion

• https://www.primicias.ec/politica/asamblea-proyecto-ley-cannabis-comision-cultivo-despenalizacion-104231