Signup for our free newsletter:

How to Play Uruguay's Marijuana Legalization

Written By Brian Hicks

Posted December 16, 2013

You don’t often hear much out of Uruguay, but it sure has made headlines lately. The nation has announced its legalization of marijuana. And it isn’t just for medical marijuana or small marijuana purchases; this is for selling, buying, and using.

Surprised? Don’t be – it’s the future of the world.

marijuana moneyUruguay’s motivation to legalize marijuana mostly has to do with the government’s frustrations with the “war on drugs.” It has taken the “if you can’t beat them, join them” approach. By legalizing marijuana, it takes it out of the black market, especially since the government plans to sell it for less.

In the next 120 days, the government will work on specific rules and regulations for the new law. But in its current state, the law will allow pharmacies to sell 40 grams of marijuana each month. All users must be at least 18 years old as well.

Uruguay marijuana growers will be allowed up to six plants each year. They should not produce more than 480 grams, or 17 ounces, of marijuana.

Smoking clubs will also be allowed. They will be limited to 15 to 45 members who can grow up to 99 plants each year.

Critics are convinced Uruguay will be opening the door to increased consumption of marijuana. They also believe it will be more of a gateway drug than it already is now. As of now, approximately 8 percent of Uruguayans use marijuana regularly.

What the Government Wants

As mentioned previously, the government will sell marijuana for less than the black market. The drug makes $40 million underground now. When the government starts pushing it out, it plans to sell it for $1 a gram – about 30% less than the black market cost.

It’s no surprised at all that while Uruguay is finding the fight against marijuana is no longer worth it, the government also wants the revenue it’s going to produce. More money from marijuana means more money for the economy.

Investing in Uruguay’s Marijuana Legalization

Now that you know all about the new legalization of marijuana, let’s get to the important part: investing in it.

Now, it’s probable companies producing marijuana in Uruguay won’t be beneficial for investors because they’ll be required to give all of their production to the government. However, if you think through it, you’ll see there are many ways to invest in marijuana legalization indirectly.

With more money being poured into the marijuana industry, it will surely lead to a boost in the economy, which will mostly help residents. There will be much more money to be made and spend.

Real estate is a good idea at this time before the economy picks up, and so are small businesses related to tourism. As you can imagine, many people will start to visit the nation just to enjoy a marijuana-legal vacation.

What Uruguay’s Marijuana Industry Means for the United States

While there aren’t many investments available for the marijuana industry in Uruguay, you can use the information to prepare yourself for what’s ahead. The full legalization of marijuana is just a stepping stone for the rest of the world, particularly in the United States. Colorado and Washington are already on board, but the more the U.S. government watches what happens there and in Uruguay, the more it will start to see its benefits.

As more states begin the full legalization of marijuana, more companies will invest in it. The U.S. won’t restrict companies as Uruguay has done, so there’s only profits to be made from those that can grow and sell it.

Of course, as it becomes mainstream, the price of marijuana will fluctuate with the demand and supply. The more demand there is – especially at first – the more marijuana will cost. As the hype dies down, you’ll start to see the price dip as supply grows with less demand.

That’s why you should get yourself ready now. It’s not going to be next month, and maybe not even 2014, but in 2015, there will likely be at least one other state on the road to full legalization of marijuana. The companies that start out in Colorado and Washington will start to grow more with every legalization passed. They may even move down to Uruguay before then.

It’s just important to keep your eyes and ears open during this time. If you aren’t sure about the nation’s real estate or tourism, focus on what it means for the United States. Things are changing, and those changes will produce nice returns someday.


If you liked this article, you may also enjoy: