Millions of dollars are on the table in an industry which, up until quite recently, was illegal. Ganja is big business but the organisations created to regulate the industry is moving too slowly for the liking of stakeholders and costing big bucks in the interim. According to The Gleaner, those regulators need to buck up.

Don’t miss global ganja boat

LAST MONTH’S destruction of hundreds of a licensed grower’s marijuana plants because his recertification could not be completed in time rekindles concerns about the regulatory environment in which the industry exists and the promise of its top regulator, LeVaughn Flynn, for a business friendlier sector.

Indeed, industry operators believe that they overregulated and suggest that Jamaica risks not only falling further behind industry leaders like the United States and Canada, but being overtaken by Eastern Caribbean market entrants like Barbados and St Vincent and the Grenadines.

Even though the drug was illegal, Jamaica long had the reputation as a country where marijuana was plentiful and of the best quality – an image associated with reggae music and Rastafarians. But beyond whatever may have been perception and myth, there was also the reality of Jamaica’s serious research into the medicinal properties of cannabis, going back to the 1970s. It produced drugs for glaucoma and asthma. Then, for years the research work came to a standstill, until the burst of interest in the United States in the 2000s in the medical value of ganja, and a move by a slew of states to legalise the drug.

It was partially a riding of this wave, and Jamaica’s wish to leverage its reputation, that the Government in 2015 decriminalised the public use of the drug and made it legal for individuals to grow a few plants for personal use. The commercial cultivation and sale of marijuana at approved dispensaries and for medical research were also regulated.

MARIJUANA DESTROYED

However, complaints about the regulatory bureaucracy were seemingly exemplified by what happened a week ago to Epican, a company that grows marijuana for sale in its own dispensary.

Its licence to cultivate having expired, Epican was given a three-month extension while its application and documentation for renewal were processed. But according to Epican’s CEO Karibe McKenzie, the procedure was slowed because of complications and delays associated with the COVID-19 protocols. With the renewal not having been done in time, the regulations of the Cannabis Licensing Authority (CLA) required that marijuana cultivated during the three-month window be destroyed. That is despite there being no objections within the CLA to the renewal of the licence. Neither, apparently, were there claims of dithering or apathy against Epican.

The prevention of these kinds of developments seemed precisely the mandate that Mr Flynn set for himself and his board when he became the CLA’s chairman in February. “If I were a licensee, some of the things I would want are a regulator that offers an efficient process so that routine requirements such as applications for licences are done efficiently,” he said at the time. His other priority was to set the CLA as a “regulator that creates an environment that promotes the growth of commercial activity”.

How much of this has been achieved in the past six months is not clear. The Epican development, though, is not good advertisement for Mr Flynn’s effectiveness. The CLA chairman is nonetheless right about potential global opportunities for Jamaica’s marijuana industry – if it can get its act together. Which also involves reasserting the mystique surrounding Jamaica’s ganja. Several factors have moved in Jamaica’s favour. One was the vote by the United Nations Commission on Narcotic Drugs early in the year to remove marijuana from the strictest control schedule, making the drug’s use in medically related situations far less problematic. Jamaica can accelerate pharmacological research and development of ganja without worrying whether it is in breach of international obligations, or being fearful of sanctions.

More important, though, is what is happening in the United States, the world’s largest producer and consumer of marijuana products. The drug remains illegal at the federal level. However, its use and sale are legal in some form in all 50 US states. In 14 of them, there are no restrictions. In the other 36 states, the medical use of marijuana is permitted; but in some that use is limited to cannabidiol (CDB), a natural non-psychoactive substance found in the plant. Next door in Canada, the use of the drug is legal and the industry regulated.

PAY CLOSE ATTENTION

What Jamaica should pay close attention to is the fast market growth for ganja and its derivatives. Last year, US sales reached US$17.5 billion, according to the American business publication Forbes, quoting data from an industry sales information platform, BDSA. That was an increase of 36 per cent on the previous year. California is the US industry’s largest segment, worth US$3.5 billion, having added US$586 million in 2020. BDSA projects sales to reach U$$41 billion by 2026, which Forbes noted will be the same size as the market for craft beer.

Yet, the regulated cannabis market is still only a fraction of the size of the illegal one, which is estimated to be worth over US$100 billion. In Canada, the market for recreational ganja was CDN$2.6 billion last year, as against CDN$1.2 billion in 2019. It is expected to reach over eight and half billion dollars by 2026.

Another significant development in the United States is the passage by the House in April of the Safe Banking Act, which, if it becomes law, will allow banks to provide financial services to ganja-related enterprises without fear of federal sanctions. The bill is now in the Senate’s Banking and Urban Affairs committees, where, unfortunately, work on it has been slow.

Its approval would have an impact beyond America. It is a potential boon for Jamaica, allowing domestic banks to provide banking services to the local ganja businesses without worrying about being blacklisted by American regulators. All of this points to an evolving global ganja industry in which Jamaica can be a major player – if we get our house in order. 

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