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For a room full of potheads, with a ceiling wreathed in pale grey smoke, there is a surprising amount of bustle in Urugrow on a Tuesday afternoon.

This small shop in the heart of the Uruguayan capital is the premiere location for those seeking to grow their own marijuana, and the three young owners cannot import the big, boxy, vinyl grow kits fast enough.

But the store is also an informal clearinghouse of information on how to join a “cannabis club,” a meeting point for would-be foreign investors who want in on the new commercial cannabis market opening up here – and the first destination of hopeful tourists from other countries looking to score a bag of weed. (They can’t – under Uruguay’s new law, only citizens can buy, and only from the state.)

A man takes care of a group of marijuana plants and clones that he is preparing for a new club in Montevideo, Uruguay, Wednesday, Sept. 3, 2014. (Photo: Matilde Campodonico)

Urugrow, which Mr. Varela helped create, has been around for a couple of years. Until last December, it was a “gardening store,” where the products for sale were all geared for a specific kind of home cultivator, but discretion was required. Then Uruguay became the first country in the world to legalize marijuana and the country’s growers burst out of their brightly lit closets.

In complete reverse of the process that recently played out in several U.S. states, and that looms in the offing in Canada, Uruguay’s legalization came from the top.

President Jose Mujica pushed it in the face of strong disapproval from a majority of his citizens. He embraced legalization as the bold but obvious best way to neutralize drug traffickers, who had been growing in power in this small country in the south of the continent. But he sent Uruguay into uncharted territory, which lawmakers and enforcement are still muddling through, while their project is watched with a mixture of fascination and alarm by the rest of the world.

Uruguay's President Jose Mujica is seen after an interview in front of his house in the outskirts of Montevideo, Uruguay, Wednesday, Sept. 3, 2014. (Photo:Matilde Campodonico)

Mr. Mujica was a socialist guerrilla in his youth, and spent 14 years being tortured in prison for his political convictions, so he wasn’t likely to be dissuaded by the disapproval of the United States Drug Enforcement Agency or the United Nations.

And when his own people said they did not favour legalization, he urged them to trust him, and forged ahead. He directed a committee of legislators to study other models for legalization: the cannabis clubs of Barcelona, the cafés of Amsterdam, the homegrown recreational use in Colorado and medical marijuana in the U.S. and Canada. And then, to go further.

The law the Mujica administration came up with has three prongs. It legalizes home-growing (each adult who signs up in a national registry can have up to six plants), or growing through a registered club. It makes it legal for a person to purchase up to 40 grams a month of marijuana from the state through a pharmacy for personal consumption. And it legalizes cannabis production for medical and industrial purposes. (Technically, it’s been legal to smoke pot in Uruguay since 1970 – but it wasn’t legal to grow it, or buy and sell it, rendering the old law ridiculous.)

“The opposition was saying, ‘Marijuana is very bad for you physically and mentally, and must be banned,’” said Julio Bango, a Socialist Party member of the General Assembly who was one of the authors of the law. “We said, ‘Okay, but then ban alcohol and tobacco.’ We’re not disputing that it’s not beneficial for health, but we’re saying, treat it like alcohol and tobacco.”

Given the choice, he would have deregulated completely, handling pot like booze. But he understands the need for this very conservative style of liberalization. “It’s a new idea with the public and it’s a gradual road. The first thing is to show we’re not trying to promote it. Our law exists in a regional and global context, and given that, it’s brave but realistic.”

Supply shops in demand

Since the first part of that law, for home-growing, went into effect last December, shops selling supplies have sprouted all over the country.

At Urugrow, the typical customer is a middle-class man between the ages of 25 and 40. Now that it’s legal, they have more customers over 50 and more women, who today represent about 10 per cent of customers, and turnover at the shop has doubled, Mr. Varela said. “There is way more bureaucracy now, but I’m not living in fear of going to go to jail, so I’ll take it.”

Juan Manuel Varela smokes a joint while he works in Urugrow, his grow shop, in Montevideo, Uruguay, Wednesday, Sept. 3, 2014. (Photo:Matilde Campodonico)

Growers are meant to enroll in a new national database of marijuana users, and 378 had done so as of Sept. 11, the most recent date on which figures were released.

“Many people don’t trust having the state have your information. Okay, today it’s fine, but what if tomorrow the government changes and your name is on what becomes the Black List?” asked Nicolas, a 24-year-old political-science student who is now growing six plants on his roof (where the smell drives his sister crazy).

The fact that the registry involves a thumbprint is a particular source of concern. “It’s the same way I need to identify myself to try to get into the United States,” one would-be grower pointed out.

Mr. Bango countered that the registry is held by the Health Ministry, governed by the national personal-data law and would be protected even should government change. (There is a national election in Uruguay in October, where the governing left-wing coalition of which he is a part may well lose control of parliament, the House of Representatives. Mr. Mujica will be leaving office after the mandatory single term.)

Mr. Bango also said he understands the stigma in coming out as a smoker today. But that will pass, he said, in the same way that people were embarrassed buying condoms when he was young, but no one thinks twice today.

Nicolas and others believe that the worst that will happen if they are caught with plants without registering is the loss of their stash and their garden.

Mr. Bango insisted that was not true: Drug-enforcement resources will now be directed at unregistered scofflaws, he said. But it is hard to imagine Uruguay’s already overstretched law enforcement will have a lot of time to spend on random spot checks of rooftops and gardens.

Other growers, meanwhile, are beginning to form clubs, which can grow a maximum of 99 plants each. Some clubs are high-end, and are paying an experienced grower to raise premium plants. Others are functioning more like co-operatives, operating out of basement rooms furnished in battered cast-offs, where everyone takes turns nurturing the notoriously temperamental plants.

The official registration process for clubs has not yet begun, although some already have plants in pots.

Hurdles of state production

The state production has proved more complicated. The government is finalizing the terms of a tender for the 20 tonnes it intends to see grown here each year, and hopes to have a first crop by December, Mr. Bango said.

Twenty-two companies have registered to bid: eight local, 10 foreign, the rest partnerships, according to the new Institute for the Regulation and Control of Cannabis. The marijuana will be grown on state land, Mr. Bango said – possibly army bases – to make it easy to secure.

The plan is for smokers to register, be given a buyer’s card and then make a monthly purchase of up to 40 grams from a local pharmacy. This route is intended to appeal to cannabis users who at present buy from an illegal dealer, and the marijuana will be sold at the same price as the black market. It offers users the dual advantage of getting a quality-controlled product, and of not breaking the law, Mr. Bango said. (Buying from dealers remains illegal.)

But there is still a fair bit to be worked out. Uruguay needs to reassure its neighbours and the United Nations that its homegrown pot is all being consumed domestically. That is easier said than done: The government has already considered and rejected a range of methods to make its product easily traceable, from the low tech (making the pot into prerolled cigarettes it sells in packs) to the very high (breeding a genetic marker into the strains it grows). None of these seem like they will fly.

Beyond that, the Uruguayan government, understandably, lacks expertise in how, exactly, to grow marijuana. For that, it has turned to the same people it spent years prosecuting for advice.

Juan Vaz, spokesman of the AECU, smokes a joint in his grow shop Planeta Ganja during an interview with The Globe and Mail in Montevideo, Uruguay, Wednesday, Sept. 3, 2014. (Photo: Matilde Campodonico)

On Aug. 27, when the registry was launched, for example, expectant would-be growers signed up and then asked for their seeds. “Seeds?” said the Institute. “We don’t have seeds.”

Bewildered, they referred the growers to Juan Vaz – a long-time campaigner for legalization who spent 11 months in jail, just six years ago, when he was caught with fewer flowering marijuana plants than is now permitted by law, and who was once arrested for possessing, yes, seeds he planned to give to friends.

Near-fatal levels of irony notwithstanding, Mr. Vaz and other colleagues from the growers’ movement have graciously agreed to advise the government, biting their tongues at some of the crazier schemes such as radioactive markers on the leaves. “This is what happens when people who have never seen a fish write a book about fishing,” Mr. Vaz said, his tone both rueful and affectionate.

Fast-talking pot-trepreneurs

The commercial cannabis-products industry here, meanwhile, remains in its infancy, but has drawn a wave of fast-talking pot-trepeneurs.

Julian Strauss, a 36-year-old former stockbroker from Toronto, reborn as a cannabis-oil producer based in Togo, Sask. (where hemp is used as a rotational crop), is among those who have moved to Montevideo in recent months looking for a piece of a still uncertain market. He has rented a farm on the edge of the city and is converting the barn into a lab.

“Uruguay is our best chance as a staging ground to use science, to gather facts and evidence on the chemical and applied benefits of the plant,” he said.

Mr. Strauss believes the payoff for this country of 3.3 million, where the main industry is still beef cattle, could be big. “It’s rare to have a whole new industry open up.”

Juan Manuel Varela smokes a joint in Urugrow in Montevideo, Uruguay,Wednesday, Sept. 3, 2014. (Photo: Matilde Campodonico)

But Uruguay will have to act fast to establish itself as the market leader, he said, because other countries, including Morocco and Jamaica, are already looking at legalizing some industrial uses of the cannabis plant.

Mr. Varela, the co-owner of Urugrow, says that the store has built up a list of people with epilepsy, chronic pain and cancer who have come in seeking medicinal cannabis products. “At the moment, I have nothing to sell them,” he said. “But I want to see it: This country always makes exports. We need to do value-added. I want to see us making something here with Uruguayan hands.”

Mr. Mujica doesn’t talk about job creation when he talks about pot. He said that a key driver for legalization was to be able to identify problem pot smokers. “When users are underground, you can’t detect that they are addicts, and if you can’t do that, you can’t treat them,” he said in an interview at his farm outside the capital. Eight per cent of Uruguayans, ages 15 to 69, say they smoked marijuana at least once in the past year.

The other motive Mr. Mujica cites – and this one is perhaps more plausible – is to try to undermine the drug market. Sixty per cent of cases in Uruguay’s courts are related to drug trafficking, according to the Institute for the Regulation and Control of Cannabis, while 33 per cent of people in prison were convicted of drug-related crime.

Marijuana users, Mr. Mujica acknowledged, are not drivers of violent crime. (That, in Uruguay, tends to come from users of a cheap and highly addictive drug called pasta base, a sticky brown byproduct of cocaine production.) But marijuana is the drug most sold by traffickers and the one with the highest profit margin, the government says.

“The marijuana industry makes $50-million [U.S.] a year in Uruguay and they don’t give it to charity,” Mr. Vaz said. “What do they do? They buy cars and guns and telecommunications equipment and it pays criminals. The best way to close down that industry is to chop $50-million from its bottom line.”

Mr. Bango, the legislator, noted that 64 per cent of Uruguayans currently say they oppose the legalization. But if, in the same conversation, you ask them if a user should buy from an illegal dealer or the state, 80 per cent say the state, he said. And that gives the government an opportunity to change minds – while legalization gives them a space to figure out new solutions.

“We’re not dogmatic: The law has to go through a reality test and if it has to change, we’ll change it,” he said.

Today, he and his fellow authors of the legislation find themselves in high demand. Just recently, they have been invited to Mexico, France and Cuba to discuss their experience with legalization.

Mr. Vaz, the long-time grower, rolls his bloodshot eyes at the idea of Uruguayan officials as the new pot experts, but he also gets it.

“The rest of the world knows even less than our politicians, so this is the best [legalization] project in the world. It’s not the best model, but it’s the one we have. And if you have nothing, you have nothing to improve.”