The Paraguayan government is moving to ease regulations on the cannabis industry with plans to dramatically increase national revenue. The Paraguayan Industrial Cannabis Association (CCIP) estimates that if a bill to remove the tetrahydrocannabinol (THC) content limit on cannabis production is passed, it could generate up to $5 billion (approximately 6.85 trillion KRW) in additional annual tax revenue. This amount is larger than the combined profits of Paraguay's two major hydroelectric power plants, Itaipu and Yacyretá.

Currently, Paraguay only permits the cultivation, processing, and export of cannabis with a THC content of 0.5% or less. This strict regulation has limited the industry's potential. However, the new bill spearheaded by the CCIP aims to eliminate the THC content limit and allow the use of globally certified, high-quality seeds. Through this measure, Paraguay plans to enter the high-value cannabis market, boosting both farmer income and the national economy.

Increased Farmer Income and Job Creation 

According to the CCIP, the regulatory easing will lead to a sharp increase in farmer income. A farmer who cultivates 1 hectare (ha) of cannabis could earn 200 million guaranis (approximately 37 million KRW) every four months, totaling 400 million guaranis (approximately 74 million KRW) per year. This figure is significantly higher than the current average income for a Paraguayan farming household. The CCIP aims to cultivate 10,000 hectares annually and plans to support small-scale farmers by allocating 1 hectare per household, contributing to the revitalization of the rural economy.

Additionally, with the removal of the THC limit, cannabis can enter the recreational cannabis market in addition to existing product categories like cosmetics, food, and vaping products. The association plans to permit domestic sales to adults aged 21 and over, with strict tracking of consumption records and financial transactions. They also plan to impose a high consumption tax of 22%. This tax revenue is expected to be fully transparent, contributing to the nation's fiscal soundness.

Expected Role as a Bridge to the International Market 

If the bill passes, Paraguay could become a key supplier for countries where recreational cannabis markets are legal, such as Switzerland, Germany, the Netherlands, the United States, Canada, and Thailand. Furthermore, by leveraging neighboring Brazil's 'legalization of possession of up to 40g' rule, Paraguay could attract tourists specifically for cannabis purchases. The Paraguayan side stated that it could act as a 'legal supplier of cannabis up to 40g' by establishing a transparent transaction system, including electronic invoicing.

Currently, Paraguay's cannabis industry is already establishing its presence in the international market, exporting raw materials and finished products to Europe (Lithuania, UK, Austria, Czech Republic), North America (USA, Canada), and Australia. This regulatory easing is expected to be a turning point for Paraguay to emerge as a major player in the global cannabis market. The bill is targeted for parliamentary approval between September and October of this year, and if successfully enacted, it is expected to become a new engine for the Paraguayan economy.

[Copyright (c) Global Economic Times. All Rights Reserved.]