The boat drove through the canal along the dam amidst the richness of the forest.

Circulation of cannabis for industrial purposes

8 Jan 2021
Subject Tax Alert
Categories Law
Jurisdictions Uzbekistan

Recently, Law on Narcotic Drugs and Psychotropic Substances No. 813-I dated 19 August 1999 and List of Activities Requiring Licenses No. 222-II dated 12 May 2001 were amended to demonopolize the cultivation and circulation of cannabis plants in Uzbekistan.

Previously, the main activities related to the turnover of narcotic drugs, including the cultivation of narcotic plants (including cannabis), were under the state monopoly. Cultivation of narcotic plants was allowed exclusively to state-owned enterprises for scientific purposes.

In accordance with the recent legislative amendments, legal entities are now allowed, subject to obtaining a license, to cultivate, import (export), process, store, sell, purchase and transport cannabis with a tetrahydrocannabinol (THC)1 content of up to 0.2%. However, the activities described above are permissible only for industrial purposes that are not related to the production or manufacturing of narcotic drugs and psychotropic substances. Below we detail more on the related legislative changes.

The Cabinet of Ministers adopted a Resolution on Measures to Streamline Activities for the Cultivation and Use of Cannabis for Industrial Purposes not Related to the Production or Manufacturing of Narcotic Drugs and Psychotropic Substances No. 770 dated 7 December 2020 (hereinafter, the “Resolution”), which approved:

  • Regulation on the Procedure for Licensing Activities for the Cultivation and Use of Cannabis for Industrial Purposes not Related to the Production or Manufacturing of Narcotic Drugs and Psychotropic Substances” (hereinafter, the “Regulation”);
  • Requirements for the Licensing Procedure for the Cultivation and Use of Cannabis for Industrial Purposes not Related to the Production or Manufacture of Narcotic Drugs and Psychotropic Substances (hereinafter, the “Requirements”).

In accordance with the Regulation, the Ministry of Agriculture is the licensing authority in relation to the activities on the cultivation and use of cannabis for industrial purposes, and also:

  • allocates land plots withdrawn from agricultural use for the cultivation of cannabis;
  • ensures the prevention of the sowing of the third and subsequent reproductions of seeds for industrial production.

The license may be issued only to legal entities for the following activities involving cannabis (fibers and seeds):

  • cultivation (the annual fee is 3,000 specified base values (hereinafter, the “SBV”)2);
  • import (export) (annual fee is 200 SBV); 
  • recycling (annual fee is 200 SBV);
  • storage (annual fee is 200 SBV);
  • sale (annual fee is 200 SBV);
  • purchase (annual fee is 200 SBV);
  • transportation (annual fee is 200 SBV).

The license is issued for a period of 5 (five) years and can be issued for several types of activities simultaneously. A fee in the amount of 50% of the SBV is charged for processing the application.

Mandatory conditions for obtaining a license include:

  • presence of at least 3 (three) qualified specialists;
  • suitability of the equipment and other technical means for the chosen type of activity;
  • organization of a continuous video surveillance system on land plots, buildings and structures used for such activities;
  • a license for conducting chemical analyses of narcotic drugs, psychotropic substances and precursors in laboratories;
  • export of at least 50% of the end-product. 

The Regulation also includes:

  • a list of documents required to obtain a license;
  • the procedure for considering an application and making a decision on the issuance of or refusal to issue a license;
  • procedures for monitoring compliance with the licensing requirements and conditions;
  • procedure for suspension and revocation of a license.

In accordance with the Requirements, 6 (six) varieties of cannabis (Cannabis Sativa L.) are currently allowed for cultivation and turnover for industrial purposes:

  • Uso 31;
  • Felina 32;
  • Fedora 17;
  • Ferimon;
  • Santhica 27;
  • Santhica 70.
 

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1 The active narcotic component of cannabis.

2 Specified base value is equivalent to 223,000 Uzbekistan soum (approximately USD 22 as per the official exchange rate of the Central Bank as of the date of this Alert).