PABLO BIELLI / AFP / Getty Images Marijuana supporters sit outside Uruguay's parliament building during a debate on a marijuana-legalization bill in Montevideo on July 31, 2013

Freddy gets on his knees and points excitedly at the bright green sprout growing discreetly in the shade under a bench in the middle of Sarandí Street, the exclusive pedestrian walkway lined with art galleries and expensive shops in the old colonial sector of Montevideo. “That’s my baby,” he says, smiling broadly behind his dark glasses and crinkly beard at the sight of the tiny marijuana plant raising its fronds between the cobblestones, unnoticed by the hundreds of tourists strolling past.

Sitting behind his stall on the downtown tourist walk on a cold southern-hemispheric winter’s day, Freddy sells ornate cannabis pipes that he carves out of swordfish bone and wood to passers-by. “I like to grow my own marijuana for my own use, but when the police catch me with it I have to lie and say it dropped into my hands from a palm tree,” he says, laughing.

Soon, Freddy and all other marijuana smokers in Uruguay won’t have to lie or hide any longer. Uruguay is about to become the first country in the world to fully legalize the production and sale of marijuana, after a decadelong grassroots movement headed by mostly middle-class consumers finally won the day in what is an atypically liberal South American nation.

“The movement started with people like myself who preferred to grow our own instead of exposing ourselves to the danger of buying from drug dealers,” says 46-year-old Juan Vaz, head of AECU (the Uruguayan Cannabis Studies Association), the NGO that has battled the longest for a law legalizing marijuana production, which was approved by the country’s lower house of congress last week.

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Although private consumption of drugs of any kind, including heroin and cocaine, was never banned by law in Uruguay, the production and sale of marijuana was prohibited, as Vaz painfully discovered one afternoon in 2007 when eight armed drug-squad troopers kicked down the door at his home. “We were watching television with my wife and three kids, and they crashed in screaming at us to get down on the floor or they would shoot, like a SWAT team in the movies.” After a year in jail because of the five plants found in his home, Vaz emerged determined to see the law changed in Uruguay, and went from being a computer programmer to a near full-time marijuana activist.

After countless marches and open-air concerts by Uruguayan reggae bands, the liberal government of Uruguayan President José Mujica finally embraced the cause of Vaz and other marijuana advocates last year. Although 78-year-old Mujica claims to have never smoked marijuana, he has said he is convinced legalization is the only solution in a continent that is ravaged by drug-related violence from the narcos, as the drug barons are colloquially called in Spanish.

“I’m scared by the drug trafficking, not by the drug,” Mujica told the BBC in an interview when he presented the bill for legalization last November. Mujica’s draft bill was changed considerably in congress. Although it originally proposed that marijuana might be produced by the Uruguayan state, the approved version creates a government institution that will grant licenses to private growers whose production will be sold only through pharmacies to registered users.

“The government will control the whole chain of production, with quality and price controls from the grower to the pharmacies,” says Sebastián Sabini, the young congressman who drafted the final bill. “The law will go into force once it is approved by the Senate in the next couple of months,” says Sabini, whose office at congress is adorned with a large poster of the revolutionary Che Guevara. Mujica’s Broad Front party enjoys a comfortable majority in the Senate, and the bill is expected to fly through without any major changes.

(MORE: Uruguay’s Marijuana-Legalization Bid Opens New Chapter in Global Pot Debate)

Although liberal drug laws tend to be associated more with certain countries in Europe or parts of North America, it is actually tiny Uruguay, with its population of 3.3 million, wedged between the two South American giants of Brazil and Argentina, which has long been ahead of the curve regarding the recreational use of drugs.

“Uruguay has done it quietly,” says Hannah Hetzer, the representative in Uruguay for the Drug Policy Alliance, a U.S.-based drug-reform organization that counts billionaires such as George Soros and Richard Branson and celebrities like Sting on its board of directors. “It has to do with Uruguayans being so traditionally liberal in a country with a wide separation of church and state,” says Hetzer. “Uruguay officially changed the name of Christmas to Family Day and Easter Week to Tourism Week almost 100 years ago. Unlike other South American nations, Uruguay has been a pioneer in women’s rights, divorce, abortion and same-sex-marriage laws, so this new law regarding marijuana has to be seen as a continuation of that liberal tradition.”

Marijuana use is notably widespread in the capital city of Montevideo. “To see kids smoking in the park doesn’t raise any eyebrows here,” says Marco Moscardi, a 35-year-old language-school manager. Despite this, support for the bill has been lukewarm from the public at large, with polls showing 63% against the reform. “I voted against the law,” says Congressman Javier García, who feels that Uruguay is being used as a testing ground by first-world NGOs like the Drug Policy Alliance. “It raises the risk of drug tourism, and consumption is already legal, so what’s the basis for it?”

(MORE: OAS to White House and Hemisphere: It’s High Time to Consider Legalizing Pot)

A great deal of negotiation and a massive media campaign, with television ads funded partly by Soros’ Open Society Foundations group, were required to convince opponents of legalization. The final package includes stiffer penalties for unauthorized sales, especially to minors, a ban on advertising for marijuana products and a ban against smoking in public places, as well as a sales tax for the prevention of the use of harder drugs like cocaine paste, which is a growing problem in Uruguay.

Expectations are nonetheless mixed. Some of the details of the new law are not to everyone’s liking, especially the monopoly granted to pharmacies and the requirement to register with a government database to buy marijuana.

“I’m not going to sign up my name anywhere,” Freddy complains at his stall on Sarandí Street. “Go buy at a pharmacy? No way!”

But the head of AECU is more optimistic. “When consumers realize that they can get better-quality marijuana for a lower price at a pharmacy, they’re going to sign up despite their qualms,” says Vaz. “In any case, the law also permits consumers to grow their own — up to six plants — at home. The important thing is it takes the drug traffickers out of the equation, and that can be nothing other than a really good thing.”