By Mario Andres Arroyo Unda
President of Cañamo Industrial Guatemala Association –CAÑIG-
One of cannabis’s subspecies, globally known as hemp, is arising as a commodity and a new industry around the world. Many countries have modified their legislation in order to be part of the supply chain of this new market, and others that have been rapidly growing their hemp industries for a long time now.
This crop is versatile and has many uses, such as dietary, medical and industrial. One of the most popular uses of the plant is the consumption of one of its main cannabinoids: cannabidiol (CBD). CBD also has many uses. From gummies and vaporizers to CBD infused drinks, there´s a product for any personal preference.
Hemp can also be suited to different products depending to the main purpose of its cultivation. It can be transformed into a plastic substitute, paper, hempcrete (construction material), car parts, fiber, and several other appliances. Its seed can also be used to extract its oil for cooking, eating or lighting.
Because of hemp’s economic potential, the cannabis industry has been under the watch of many investors and entrepreneurs for a long time now. There are many public companies in the industry now listed on stock exchanges in different countries. Many of the companies are Canadian, and others are from the United States. Outside of Canada and the United States, companies are forming in many countries around the world to be a part of the movement.
This crop has the potential to transform the economy in many countries, especially those that depend on agriculture as one of the main indicators of their Gross Domestic Products –GDP-, such as Guatemala.
Guatemala is a beautiful country, surrounded by the Atlantic Sea on the north, the Pacific on the south, and on the east and west by Mexico, El Salvador and Honduras respectively. It has a territory of 108,889 km2 and a population of approximately 16.5 million people.
Guatemala is a Presidential Republic. Its official independence day is on September 15, 1821. The State is by by the Executive, Legislative and Judiciary brances. It’s divided into 22 departments, each one lead by a Governor named by the President. It also has Municipal Governments too, which take care of the main services in the area, such as transport, energy, water and community matters.
Its GDP in 2018 was an estimated of U.S. $78,460,447.92 according to the World Bank. Approximately U.S. $8,318,200,000.00 came from agriculture, representing 10% of the total GDP, which means that agriculture signifies a very important part of its production.
According to the World Bank, Guatemala´s economy grew by 2.8% in 2017 and 3% in 2018. A growth of 3.3% is expected and projected in 2019.
According to the United States Agency for International Development –USAID-, 54% of the population in Guatemala lives in poverty and 13% lives in extreme poverty, representing a total of 63% of the population. Of all people living in poverty in the country, 52 percent are indigenous. Also, according to USAID, half of all children under five are chronically malnourished, the worst level of malnutrition in the Western Hemisphere.
It’s very important to note that Guatemala´s food security is of grave concern, as a result of many different factors. Many families lack resources to produce or buy nutritious food.
Guatemala has remarkable opportunities and potential for expanding, innovating and disrupting its agricultural production which would lead to rural economic growth, job creation, tax collection, infrastructure development, entrepreneurial projects, and local community businesses. As a result of all of the potential avenues for growth together,, poverty can be alleviated.
According to USAID, Guatemala is renowned as a leader in non-traditional agriculture exports in Central America. This includes snow peas, green beans, mini-vegetables, and fruits, which have grown exponentially over the years, benefitting small farmers.
The World Bank considers Guatemala to have the capacity for macroeconomic recovery and the years represent an opportunity to reduce poverty through more rapid economic growth. Law and policy reforms could yield marginal improvements for the poor and open new markets and opportunities for them, because investment would be drawn to the country. This would accelerate economic growth, which is crucial to achieving the country’s medium- and long-term social objectives.
Public investment is crucial to achieve Guatemala’s development, yet it remains constrained by corruption, bad administration, favoritism, nepotism, and other severe problems within the government and private sector. The election system has to be improved and election financing should become more transparent in order to recover a strong democracy. By elections we refer to Executive, Courts, Congress, Attorney General, Mayors, and high ranking governmental officers.
Additionally, the government tax collecting system does not work properly which causes a low-income level for the State to use to invest in public services and infrastructure. Besides this problem, Guatemala’s economic system is not based on a free market, but rather on a protected one for certain sectors. Tariffs vary from 0% to 40%, depending on the products or commodities imported. This causes less tax collection, job creation and investment.
Guatemala´s economic growth, developmental acceleration and life improvement for its population depends on constant and beneficial reforms to laws and policies to attract private investment and create a stable rule of law climate. By taking these steps, revenue and tax collection would increase to fund important pro-growth investments in infrastructure and human capital.
Hemp farming in Guatemala is a great opportunity to impact in the referred growth, because it’s a new rising market and the country has the climate and capability to cultivate this crop. According to several studies, this plant can be rotated up to 4 times in a year, which could help the communities that live in the ´Corredor Seco´ or “´Dry Corridro´ of the land. This area is being affected by “El Niño,” a climate pattern and phenomenon ´that describes the unusual warming of surface waters in the eastern tropical Pacific Ocean. El Nino is the “warm phase” of a larger phenomenon called the El Nino-Southern Oscillation (ENSO). La Nina, the “cool phase” of ENSO, is a pattern that describes the unusual cooling of the region’s surface waters. El Niño and La Niña are considered the ocean part of ENSO, while the Southern Oscillation is its atmospheric changes.´
Because the crop is so versatile and profitable, families could program their farming and harvesting seasons or create controlled crops, to avoiding the potential damage that ´El Niño´ causes to crops because of the warming temperatures and resulting lack of water. It’s important to note that the the existing crops are all perishable foods, such as corn. At the moment, the crops being used by farmers take too long to harvest, which increases waste due the effects of the phenomenon. This causes severe losses to farmers’ family´s economy, which leads to malnutrition, health problems, diseases, poverty, crime and other regrettable consequences.
If farmers used hemp as one of their principal crops, they could exploit it (depending on the kind they use) in different industries and avoid perishable crop waste as a result climate and other circumstances. This would benefit the economy and help stabilize their family´s wealth each harvest. Also, farmers could create community enterprises or individual entrepreneurial projects to transform hemp into many sorts of products. Investors could become interested in buying the harvest to convert it into any of the products mentioned above, which would create jobs, improve tax collection, and spur new opportunities for the population.
These steps can be taken nationwide, benefiting all Guatemalans with many new opportunities deriving from hemp cultivation. Nevertheless, hemp farming is not legal in Guatemala at the moment. Law reforms need to take place in order for hemp to be accepted as a legal crop.
Guatemalan law against drug dealing and enforcement (Ley contra la Narcoactividad –Decreto número 48-92 del Congreso de la República de Guatemala-) states that all schedules of substances have to be in accordance with international drug control conventions and the instruments ratified and accepted by the international agreements, such as the Single Convention on Narcotic Drugs of 1961 as amended by the 1972 Protocol, the Convention on Psychotropic Substances of 1971, and the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988 with final acts and resolutions. The substances schedules of these international instruments are subject to what the Expert Committee on Drug Dependence –ECDD- of the World Health Organization –WHO- considers for each substance they analyze and review.
Cannabidiol (CBD) is not listed in the schedules of the 1961, 1971 or 1988 United Nations International Drug Control Conventions. However, cannabidiol that is being produced as an extract of cannabis, if it is produced as an extract of cannabis, is currently included in Schedule I of the 1961 Convention. Hemp is a cannabis subspecies.
It’s important to mention that the ECDD made a Critical Review about cannabidiol (CBD) in 2018. As a result of the review, the WHO Director-General sent a letter to the United Nations (UN) Secretary-General to inform the UN that the Committee recommended that preparations considered to be “pure CBD” should not be scheduled within the International Drug Control Conventions.
If the UN modifies the international instruments, cannabidiol (CBD) would not be considered a scheduled substance and it could be free of use in many countries that have their legislation in accordance with the international requirements. Nevertheless, in Guatemala there are legal obstacles to the cultivation of the crop. The Guatemalan Health Code (Código de Salud –Decreto número 90-97 del Congreso de la República de Guatemala-) states that farming all forms of cannabis is prohibited, regardless of the crop’s chemical components.
The same legislation provisions state that the Guatemalan Health Ministry could authorize certain permits or licenses to individuals or enterprises to cultivate or use controlled substances (in this case cannabis –hemp-) but corruption and lack of administrative controls do not allow for these authorizations. Nevertheless, if the institution took interest in the matter, there is the potential to evolve the regulation of hemp in the country.
There have been two initiatives in Congress that proposed legalization for the use of cannabis (bot subspecies, marihuana and hemp) and its diverse uses: recreational, medicinal and industrial. The law initiatives identify as the 5053 of 2016 and 5224 of 2017. Nevertheless, many conservative and religious groups opposed the initiatives’ passage because of the perceived marihuana implications in society, in their point of view, which caused that Congressmen and women to vote against the initiatives.
We believe that Guatemala is not ready to create an infrastructure that supports marihuana´s use, because of the psychoactive effects of the crop and its perceived consequences and health implications over the population. A strong control mechanism would need to be implemented with legalization, but there’s currently no budget for that.
If a new law initiative is presented, it should be similar to the one the United States of America passed into law on 2018 known as the ´Hemp Farming Act of 2018´´that was approved within the ´2018 Farm Bill´ or ´Agriculture Improvement Act of 2018´ and included only hemp as a legal cannabis crop and regulated the conditions of cultivation. If Guatemalan legislation is changed for hemp cultivation as an alternative crop, millions of lives could be changed and development, leading to freedom and economical independence for far more people.
It’s important to mention at this point, that the migration crisis in the US is a result of the lack of opportunities in different countries in Central America, including Guatemala. A new and alternative crop would impact directly on reducing this crisis because it would create many business prospects that could lead to wealth and job creation for the Guatemalan people.
We believe in this vision and that’s why we formed an association named Cañamo Industrial Guatemala -CAÑIG- or ´Hemp Guatemala Association´ to promote this disruptive and alternative crop in benefit of the country and its people. We are going to propose a bill that regulates hemp as a legal crop, and all the conditions to farm it. Also, we will create a platform to help people obtain information, orientation, financing (investors), and to create a business infrastructure through the association such as the ´Hemp Roundtable´ in the US.
Hemp in Guatemala could be the real big thing of its future.