Uruguay has become the first country in the world to legalize both the sale and production of marijuana. President Jose Mujica has championed the measure as a way of combatting the illegal drug industry that has decimated parts of Uruguay.

The country’s parliament passed the bill by a vote of 16 to 13 on Tuesday evening. Senator Alberto Couriel, a member of the ruling Broad Front left-wing coalition, called the passing of the bill "a historic day" for Uruguay.

Under the new legislation, the price of marijuana will be set at one dollar per gram, aiming to undercut the current price of $1.40 on the illegal market. The sale and production of the drug will be regulated by a specially-set-up government body which will administer a database of adult citizens registered to consume marijuana.

“This is an attempt to bring an end to the illegal drugs trade by identifying the market and bringing it into the light of day,” said President Mujica in a statement. Mujica added that the law does not promote the consumption of the drug; it merely identifies the consumer so that authorities may “intervene if [the consumer] overdoes it.”

Before the new legislation was passed, the consumption of marijuana in Uruguay was not penalized, but the sale and production of the drug was considered a criminal offense.

A number of conditions will govern the sale and production of the drug. Registered Uruguayans over the age of 18 will have the right to buy up to 40 grams of marijuana from pharmacies every month and cultivate a maximum of six plants on their property. The legislation will also allow for the creation of so-called cannabis clubs, composed of up to 45 members who will be able to grow a maximum of 100 plants.

Uruguay’s National Drug Board estimates that there are around 120,000 marijuana users in Uruguay from a population of 3.3 million. Consumer groups estimate a higher figure, putting the number of users at around 200,000.

The bill has triggered debate in Latin America over the issue of the illegal drugs trade and the problems it creates.

“I think it is unrealistic,” Paraguay's National Anti-drug Minister, Luis Rojas, told Spanish news agency Efe earlier this year. Despite the new law, Rojas said he believes Uruguay will continue to receive marijuana grown in Paraguay.

Moreover, president of the Brazilian Chamber of Deputies, Eduardo Alves, said that Brazil was not ready for the legalization of marijuana in neighboring Uruguay. According to police figures, around 80 percent of the marijuana cultivated in Paraguay is exported to Brazil where it feeds the illegal drug trade. Brazil is concerned that the legalization of the drug could lead to a similar system in Uruguay.