Medical Cannabis Value Chain.
Medical Cannabis Value Chain.
Business Model Description
Growing cannabis for medicinal purposes and processing its flower harvest to obtain oil to be used in the treatment of illnesses. Thus achieving agro-industrial growth, technological investment and the development of new sources of employment.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- San Juan Province
- Sarmiento City
Sector Classification
Health Care
Development needs
Argentina invests more than 9% of its GDP in health, one of the highest levels among Latin American and Caribbean countries. However, the country achieves lower health outcomes than would be expected for this level of investment and its level of per capita income (1). There is a need to ensure better access to health for all inhabitants.
Policy Priority
According to the Strategic Plan of the Province of San Juan and the challenges and goals defined therein, the most important policy priorities have focused on adapting the workforce to the expected changes in the health system and achieving an equitable distribution in accordance with the health needs of the population (2).
Gender inequalities and marginalisation
Rural and poor people do not have equal access to medical services and medication.
Investment opportunities
To deepen investment in research and development, it is essential to take a step forward to discover original products, with Argentine patents, the other major challenge has to do with improving the accessibility of these products to the entire population.
Bottlenecks
Although the entire population living in Argentina is formally covered by some health sub-system (public, social security or private), timely, continuous, comprehensive, safe and quality access is far from universal and shows significant disparities according to location and sub-system (1).
Biotechnology and Pharmaceuticals
Development needs
Argentina's pharmaceutical industry is characterised by a high import component. There is a need to strengthen the domestic pharmaceutical industry to guarantee supply and thus improve access to medicine in general.
Political Priority
The San Juan Government, by means of Law 1951- A, has supported the creation of Ca. Me. San Juan, an organisation that promotes cultivation, research and new financial instruments for the development of agro-industrial projects linked to medical cannabis (3).
Gender inequalities and marginalisation
Rural and poor people do not have equal access to medical services and medication.
Investment opportunities
There is a significant opportunity for growth in the cultivation and industrialisation of cannabis for medicinal purposes, as well as for the inputs used in the production process, as many of them have to be imported or purchased outside the Province of San Juan.
Bottlenecks
The area is still developing in our country, so the main obstacles are associated with the lack of current regulation that does not yet allow the commercialisation of locally grown and industrialised cannabis oil for medicinal purposes.
Biotechnology and Pharmaceuticals
Pipeline Opportunity
Medical Cannabis Value Chain.
Growing cannabis for medicinal purposes and processing its flower harvest to obtain oil to be used in the treatment of illnesses. Thus achieving agro-industrial growth, technological investment and the development of new sources of employment.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
In Argentina there are an estimated number of 5,274,654 potential medical cannabis users (5), who would have to pay an average of USD 80 per bottle of oil to cover one month of treatment.
The cannabis market in Argentina could reach USD 450 million (5).
The Bank of Toronto estimates a global market for medical cannabis of USD 194 billion by 2025. Other more modest projections such as BDS Analytics foresee a USD 47 billion market in North America by 2027.
Indicative Return
5% - 10%
Based on estimates from interviewed companies that are starting their projects in the province.
Investment Timeframe
Medium Term (5–10 years)
The cultivation method used allows for 3 to 4 harvests per year. This makes it possible to diversify the risks of the initial investment over several harvests.
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Market - Highly Regulated
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
In Argentina, 48.2% of people who use cannabis for medicinal purposes have to buy it. Either importing it at high costs or buying it in unregulated markets with dubious qualities (6).
The Province of San Juan has an economically active population of 41.8%, of which only 30.3% are fully employed (7).
Gender & Marginalisation
People with insufficient income find it difficult to afford medical cannabis treatments due to the high costs of acquiring them.
In San Juan Province less than half of the jobs are held by women (no official statistics).
Expected Development Outcome
Increasing the areas of cultivation of cannabis for medicinal purposes, thus ensuring better access and quality conditions for people who use it for medical indications.
Increasing full and productive employment.
Gender & Marginalisation
Increase local production of cannabis oil for medicinal use, thus improving the quality of life and health of users with insufficient income, as they will be able to access better conditions for purchasing medication (in terms of price and quality).
Increase the number of women in employment.
Primary SDGs addressed
3.8.1 Coverage of essential health services
64% of the population is covered by social or private health insurance. Thirty-six per cent of the population receives care in public health services. Despite this, access to health care is far from universal and shows significant disparities according to location and sub-system.
That 100% of health system users can access the health system under more favourable conditions and at lower costs.
8.5.2 Unemployment rate, by sex, age and persons with disabilities
The province's unemployment rate is low (4%) in relation to other provinces, but full employment and consideration of more women employed in relation to men must be achieved (8).
It is expected that 50% of the jobs will be filled by women.
Secondary SDGs addressed
Directly impacted stakeholders
People
Corporates
Planet
Public sector
Indirectly impacted stakeholders
People
Corporates
Public sector
Outcome Risks
Changes in the regulations enabling the production of cannabis/hemp in the province, taking into account that the authorisation of companies and establishments must be approved in advance.
Difficulties in obtaining skilled labour in the area of cultivation (Ca.Me. premises, the only place authorised by provincial regulations to develop cannabis and hemp cultivation).
Lack of resources and/or inputs or limited access to them on the local or international market.
Impact Risks
Evidence risk: Lack of research that provides quality data, lack of statistics and measurement of the sector.
Participation risk: Lack of knowledge in the medical field of the medicinal benefits of cannabis for certain pathologies.
Risk of unexpected impact: Adverse weather conditions complicate crops and put the industry at risk.
External Risk: There may be international competitors who are more knowledgeable and take better advantage of the opportunities offered by the market, with a lower price for consumers.
Impact Classification
What
Improve access to medical coverage, allowing users more favourable conditions, at lower prices and guaranteed quality, thus improving their health and quality of life.
Risk
Impossibilities of access to medical cannabis, thus impairing people's health and quality of life.
Enabling Environment
Policy Environment
The Government of the Province of San Juan has included cannabis cultivation in its strategic plan, with programmes and projects that promote its industrial development.
Financial Environment
From the Ministry of Production and Economic Development of the Province, incentives are granted for the installation of new companies that take into account sustainable development models, under the modality of Non-Refundable Contributions and credits with very competitive rates.
Tax incentives: Gross Income Tax reductions and exemptions for agricultural activities. In addition to tax incentive programmes such as those managed by the San Juan Investment Agency with tax bonds to encourage sustainable investment projects.
Regulatory Environment
Provincial regulation: Law 1951 that creates the State Company called Ca. Me, in order to guarantee equal access to medical cannabis oil to patients who need it and to promote the training of health professionals in the medical use of cannabis.
National Regulation: Law 27.350 that endorses medical and scientific research into the medicinal use of the cannabis plant. It proposes the creation of a National Register of patients undergoing treatment with cannabis under the responsibility of the Ministry of Health.
National Regulations Law 27669 establishes the regulatory framework for the production and commercialisation chain of the cannabis plant and its derivatives for both medicinal and industrial use.
International Regulations: There are three bodies that decide on the UN international conventions on narcotic drugs: Commission on Narcotic Drugs CND, National Narcotics Control Board INCB, World Health Organisation WHO.
Marketplace Participants
Government
Government sector with the following organisations and companies: Canme, INTA, SENASA, INASE, ANMAT, National Ministry of Security, National Ministry of Health.
Private Sector
Business chambers and companies such as Mediplant, Cann 4.0 and Green Health, are already installed in the enabled venue with their investment projects underway.
Target Locations
San Juan Province
Sarmiento City
References
- (1) Document: Argentina - Programme for the integration of the Argentinean health system. conditional credit line for investment projects - IDB
- (2) Strategic Plan of the Province of San Juan - 2019
- (3) www.canmesanjuan.com.ar
- (4) https://www.greenhealth.ar
- (5) According to analysis year 2021 based on number of cases according to prevalence - "Cannabis and Argentina" state of play, industry and trade projection - Cámara Argentina de Cannabis.
- (6) First National Survey of people who use cannabis in Argentina 2022- Centro de Estudios de la cultura cannábica - Universidad de Quilmes - THC Magazine
- (7) INDEC Technical Report, Vol. 6, No. 237. Third Quarter 2022
- (8) Source INDEC report 1st quarter 2022.