Panama Approves New Law Regulating Hemp Industry

Published on Feb 28, 2025

Jorge Ortega, attorney in Panama and expert in sanitary regulatory law, shares this article on the recently approved bill that seeks to establish a legal framework in Panama to carry out various industrial activities related to hemp, such as its cultivation, transformation, commercialization and research.  

 

On January 28, 2025, the National Assembly approved Bill No. 26, which regulates the production, commercialization, and export of hemp in the Republic of Panama. The objective is to develop a regulatory framework for managing various activities, including the planting, cultivation, harvesting, processing, export, storage, transportation, commercialization, distribution, use, and possession of industrial cannabis plant seeds, known as hemp, as well as its derivatives for industrial use. This is permitted if tetrahydrocannabinol (THC) concentrations comply with the legally established limits. 

 

Overview and Uses of Industrial Hemp 

 

Before analyzing the most relevant provisions of this new bill, it is essential to clarify what hemp is, its relevance, and its industrial applications. Industrial hemp is one of the fastest growing and most versatile plants on Earth. Despite belonging to the cannabis family, hemp is a non-intoxicating crop that can be used to manufacture a wide variety of products, ranging from biofuels and textiles to automobiles, fiberboards, insulation, carpets, fiberglass substitutes, cement blocks, and concrete. 

 

Additionally, hemp is relevant in the food industry, as it can be consumed in various forms, including whole seeds, hulled seeds, protein powder or bars, and seed-extracted oil. Likewise, in the personal hygiene industry, hemp is used in soaps, shampoos, lotions, lip balms, bath oils, personal lubricants, and other products. 

 

A 2024 study published by the United Nations Conference on Trade and Development (UNCTAD) concluded that the recorded value of hemp product exports more than quadrupled, reaching $213 million in 2022, with high annual growth projections since then. 

 

Regulation in Panama 

 

The recently approved Bill No. 26 aims to establish a legal framework within the Republic of Panama for the overall management of various industrial activities that use hemp as raw material. The law ensures that derived products comply with the legal limits of tetrahydrocannabinol (THC), set at a maximum of 1% dry weight, meaning the remaining material after extracting all possible moisture. 

 

The legislation seeks to strengthen the economic and social development of the agricultural sector through the industrialization and commercialization of hemp, promoting its sustainable cultivation and encouraging research into its applications. At the same time, it aims to promote initiatives that ensure that the raw material, its derivatives, and finished national products meet the quality standards required by both national and international markets regarding biosafety regulations, traceability, and oversight. 

 

To successfully implement the objectives set forth in this new legislation, various government entities will oversee the enforcement of these regulations, including: 

  • Ministry of Agricultural Development (MIDA): Responsible for issuing cultivation authorizations. 

  • Ministry of Health (MINSA): Issues technical reports on the "non-psychoactivity” of products and verifies regulatory compliance for human consumption. 

  • Ministry of Commerce and Industries (MICI): Grants authorizations for companies involved in hemp processing and manufacturing, both for finished products and for commercialization, distribution, and export. 

  • Ministry of Public Security: Implements control and oversight mechanisms to prevent the illicit use of permits granted for these activities. 

  • Agricultural Innovation Institute: Supports producers in research and technology to maximize the benefits of hemp cultivation. 

 

Regarding market participants, the bill establishes that producers and companies wishing to participate in this industry must register with MIDA’s Integrated Agricultural Management System and comply with supervision controls. Additionally, two types of authorizations will be created: one for cultivation and another for processing and manufacturing finished products. Every harvest and its derivatives must undergo analysis to verify that THC content remains within permitted limits. 

 

Regarding the use of discarded plant material, the regulation allows its recycling and reuse as fertilizer or compost. Furthermore, the law does not impose restrictions on the types of finished hemp-derived products, if they comply with applicable health regulations. Lastly, one of the key objectives of this legislation is to attract local and foreign investment to develop a strong and sustainable industry. Initiatives will be promoted in rural communities and producer associations, alongside the implementation of the best agricultural and technological practices. 

 

Conclusion  

 

Although the bill still requires Executive approval and publication, its passage sends a clear message that Panama is at the forefront and continuously seeking to diversify its economic activities. The country aims to foster investment opportunities that can be leveraged by both national and international companies. 

 

If you require additional information or wish to stay updated on this topic, please do not hesitate to contact us through your designated contacts at Arias or directly at the following email address: RegistroSanitario-Arias-PA@ariaslaw.com 

 

The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.