In October, the Ecuadorian Ministry of Agriculture (MAG) published hemp regulations in the form of Acuerdo Ministerial No. 109 (English). This follows the decriminalization of cannabis by the National Assembly in 2019 with THC levels below 1.0% THC (which was enforced on June 21, 2020).
The regulations differentiate between industrial hemp (cáñamo para uso industrial) and hemp (cáñamo), also known as non-psychoactive cannabis (Cannabis no psicoactivo). Both are legal, but their rules are slightly different. In all fairness the rules could be a bit clearer in defining both categories. Essentially, however, industrial hemp is used for activities like fiber production, while “normal” hemp is used for the manufacture of consumer goods.
According to the regulations, MAG is tasked with licensing companies wishing to participate in the hemp industry. These companies must either be registered in Ecuador or have their registered office.
MAG will issue seven types of licenses:
- License 1: import and marketing of hemp seeds and cuttings (including seeds for industrial purposes)
- License 2: sowing and producing hemp seeds and cuttings (including seeds for industrial purposes)
- License 3: Hemp cultivation
- License 4: Industrial hemp cultivation
- License 5: Hemp processing and manufacture of hemp derivatives
- License 6: Plant breeding and / or germplasm banks and research
- License 7: Acquisition of derivatives and / or biomass or hemp flowers (including biomass for industrial purposes) for export
The most permissive is license 3, with which holders can also carry out the activities permitted by license 1 and license 2. Additionally, License 3 holders can purchase hemp biomass or flowers from other License 3 holders and export those products. However, you cannot sell hemp derivatives for human or animal consumption unless you also have the license 5; This license is also required for the import of biomass or derivatives. Imported derivatives must meet the same requirements as derivatives made in Ecuador, including labeling requirements under Article 15 of the Regulations. The regulations prioritize domestic production by only allowing imports when domestic production is insufficient. However, domestic production is expected to be insufficient, which presents an opportunity for foreign producers.
It should be noted that the regulations differentiate between derivatives and finished products. Derivatives are defined as “oils, resins, tinctures, crude extracts … that are or should be used as raw materials for the manufacture of finished products”. The finished product, in turn, is defined as “a product that is obtained from hemp derivatives for human or animal consumption and that is duly approved for use under Ecuadorian law”. These products include “processed foods, dried flowers, beverages, food additives, dietary supplements, cosmetics, homeopathic products, pharmaceuticals, medical devices, processed natural products for medical use, and veterinary products”.
The regulations make it clear that finished products are outside of MAG’s remit. In other words, none of the licenses described above allow the import of ready-to-use hemp products. Additional official approval must be obtained.
Finally, the rules put restrictions on the number of licenses issued and the amount of hemp that can be grown. With this in mind, interested parties should move immediately in order to obtain their licenses. This applies in particular to foreign companies that first have to set up a branch in Ecuador in order to be able to use the opportunities created by the new legal framework.
We would like to thank the law firm Bustamante & Bustamante in Quito for providing us with an English version of the regulations.