Uruguay is about to legalize marijuana, and its government will reap the rewards

Government grown.
Government grown.
Image: Reuters/Andres Stapff
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Uruguay’s senate is set to pass an historic bill (link in Spanish) today that will make the country the world’s first to legalize marijuana.

The new law will let locals join marijuana social clubs, which will be allowed to grow the drug for their own collective consumption. It will also let individuals grow marijuana at home with a six plant limit. Neither individuals nor clubs, however, will be allowed to sell what they grow. The only entity allowed to deal the drug will be the government.

Under the new law, Uruguayans registered with the government will be allowed to buy up to 40 grams (1.4 ounces) of marijuana from government-licensed pharmacies. Private companies roped in to help produce enough weed to meet local demand will have to sell their crop to the government for distribution.

The hope is that legalizing marijuana’s production and sale (it’s already legal to consume it) will kill off the black market, which has driven up local drug prices and regional drug-related violence. Legalizing marijuana trade, according to Uruguay’s president José Mujica, will also free up the country’s police forces to tackle more serious illicit drugs, like cocaine, which soak up more government resources.

The government will rake in some extra cash in the process. The black market for marijuana is worth some $40 million. The government won’t earn as much; it plans to sell the drug for about $1 a gram, roughly 30% less than the black market price. But it can count on a lot of customers; Uruguay has a relatively high percentage of pot smokers for the region—third only to Argentina and Chile.