Canada can teach Germany about pitfalls of legalising recreational cannabis

The opinions within this article reflect those of Diane Scott and the Jamaica Medical Cannabis Corporation.

Germany should plan ahead to avoid problems which have plagued governments that have already legalised recreational cannabis on top of medical cannabis.

The European country has announced plans to work toward a legal recreational cannabis regime, but it could learn from issues that have already cropped up in places like Canada.

For example, Canada unexpectedly found itself short of medical cannabis supply when legal recreational sales began due to companies switching to supply more lucrative recreational purchasing. Some US states already attempted to learn from this by stipulating guarantees on medical supplies as conditions of licences for recreational sales.

“When we first legalised recreational cannabis in Canada, we had a period of time in which patients could no longer access medical cannabis because product was being diverted for recreational use,” said Diane Scott (pictured), CEO of Toronto-based Jamaica Medical Cannabis Corporation (JMCC).

But it is also important for any recreational legislation to be aware of hidden supply issues. For example, a lot of the bigger industry players have chosen to pull out of medical cannabis research and shift focus to the larger reactional market, Scott said.


Blurred lines can lead to trouble


Similarly, Germany should be aware of how regulatory boundaries between the two sectors can become blurred. This can be an issue in circumstances such as non-medical professionals working in recreational dispensaries advising people about medical treatments.

“Non-traditional cannabis users – such as the older generation with conditions such as arthritis – are now trying cannabis as a solution for various ailments,” Scott said. “This is fine if they’re getting their supply from a medical clinic and getting advice from a medical professional, but some of them are going down to their local dispensaries to get advice from staff who are not medical professionals.”

JMCC has a 100% focus on medical cannabis, but Scott said other blurring of regulations can end up hampering recreational sales. For example, labelling in Canada is one universal regulation encompassing both usages. This means recreational products must adhere to stricter medical labelling regulations – potentially creating issues.

“Health Canada has very strict regulations for medical cannabis, so the two products cannot be regulated in the same way. Take labelling for example. This should be very different for medical cannabis products, but the requirements are the same across both industries, and some of these regulations are even hindering the recreational side.”

JMCC is looking to expand its medical cannabis supply into Europe whatever happens with German recreational legislation, and believes it is in a prime place for doing so. It recently established a distribution hub in Jersey, for ease of access to markets in the EU and the UK.

“We’d always looked at Europe as a key market for us, and the distribution hub helped us immensely,” Scott said. “Jersey is a very business-friendly environment, and the government is really willing to support and promote a medical cannabis industry.”


Strategies of staying private and looking to Jamaica


JMCC also believes that remaining a private company will give it a boost in terms of funding as it looks to expand. This has resulted in a lower valuation and slower growth – meaning JMCC can continue to draw on private finance and has not wasted large sums on hasty decisions.

“Back in the heyday of the cannabis industry, our competitors went to the public markets to raise capital, and some of them had crazy valuations. But we chose to raise funds privately, and to do so as and when we needed them, so we built our business out slowly,” said Scott.

This was a point recently supported by Frank Colombo of Viridian Capital Advisors, who reported that private multi-state operators in the US have about USD1.9bn of untapped debt capacity while those on public markets have seen potential available capital fall due to dropping share prices – though this does put them in a position to buy back shares and consolidate some equity.

JMCC’s strategy was also unusual in that it chose Jamaica as the location for its cannabis cultivation – mainly because the country’s growing conditions are more sustainable, which also brings economic benefits.

Scott says Jamaica’s climate creates the ideal conditions for growing cannabis. Key factors are that there’s a lot of naturally occurring light and humidity all year round. Not only is this more sustainable, it means that money doesn’t have to be invested in artificially controlling these conditions.

“I do believe that it’s going to be hard for [US and Canadian] growers to compete with the economics of growing in Jamaica,” she said. “It’s not just about energy prices – look at the big players who’ve spent millions of dollars building cement warehouses and artificially creating the growing conditions which naturally occur in Jamaica.”


Ideal location, plenty of regulation


Another key benefit of growing on the island is that JMCC can draw on the skill set of the local people who have been growing cannabis for “hundreds of generations”, according to Scott.

“On the island we talk to our growers and ask them to recommend strains with the appropriate levels of cannabinoids to treat certain conditions, such as pain management, inflammation, insomnia, nausea, and so on,” she said.

Jamaican researchers have been developing legal cannabis medicines since the 1970s, but progress was halted by the War on Drugs.

Scientists Manley West, a professor of pharmacology, and ophthalmologist Albert Lockhart, for instance, patented treatments for glaucoma and asthma.

“It’s the ideal research and scientific environment and the governmental framework is stable and supportive,” said Scott.

The Jamaican government might be supportive, but it’s also highly regulated. Its Cannabis Licensing Authority was established in 2015, under the Dangerous Drugs Amendment Act, which made it the first Caribbean country to establish a legal regime for a domestic, medical, therapeutic and scientific cannabis industry.

Its regulations are as stringent as those of Health Canada or the Australian authorities, according to Scott.

“There’s an impression that Jamaica doesn’t have regulation, but there’s a very high bar that must be met if you’re developing a truly medicinal product,” she said. “It’s taken us four years to get the building blocks in place in terms of licensing, cultivation and genetics, but that’s as it should be because, as a medicine, our cannabis has to be consistent with global standards and GMP practices. Over time we’ll maybe see some regulations for psychedelics in Jamaica as well.”

– Lorraine Mullaney CBD-Intel staff

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