Canada launch of legal marijuana leaves Caribbean at starting line

Going big: A marijuana farm in Canada

As of Wednesday, Canada, not known traditionally for a liberal official policy on drugs, launched its own legal marijuana marketplace marking what a Jamaica Gleaner article calls “a profound social shift” though the article argues that what has pushed Canada in this direction is a “fervent desire to rein in an unregulated and continually growing black market for the widely popular substance and to bring it into a regulated tax system.”

The move is even more significant when account is taken of the fact that by placing a tag of legalization of the commercialization of marijuana, Canada outflanks its historically more liberal neighbour, the United States, where still only some states allow recreational and medicinal use of marijuana among people aged 21 and older.

Canada’s marijuana commercialization regime allows for major investments in what can now  be described as a potentially highly profitable industry.

The news is more than sufficient to cause us in the Caribbean to break out in a collective rendition of Bob Marley’s famous lyrical urging, ‘legalize it’ though with Jamaica already having launched into major investments in marijuana cultivation and medical marijuana regional contemplation is probably more likely to focus on how, with markets in developed countries now steadily emerging, it can  ‘cash in’ on an industry which, globally, is believed to be heading for a worth of around US$150 billion by 2020 and annual spending on marijuana likely to amount to around US$57 billion by 2027. In the immediate future recreational marijuana is expected to cover 67% of spending while medical marijuana will take up the remaining 33%.

 On the South American continent the provision of marijuana for medical use is driven largely by Brazil, Argentina, Peru and Uruguay. The South American medical cannabis market is likely to grow from US$125 million this year to  US$776 million in 2027.

 Canada is reportedly among a mere handful of countries where investors now evince confidence in the future of the cannabis industry and are pumping billions of dollars into public equity investments. The Canadian approach, the Gleaner writes, “has allowed for unfettered industry banking, inter-province shipments of cannabis, online ordering, postal delivery and billions of dollars in investment…” This, it says, is in contrast to the United States, where “greater industry expansion” has been “stifled.”

Canada joins a group of more than twenty countries that have now legalized the medical use of marijuana and, as well, has moved to decriminalize possession of small amounts of the substance. Watchers of recent developments in Canada believe that what has happened will significantly shift the global debate on drug policy.

With just two days having gone since Wednesday’s profound shift in Canada’s legal posture towards Marijuana, more than one hundred ‘pot shops’ are set to open in the short term while several more are expected to begin trading in the near future. For now, their product inventory will comprise “dried flower, capsules, tinctures and seeds,” the Gleaner article says.” Marijuana-linked foods are expected to make an entry into the market in 2019.

With the legal framework now firmly in place it is the responsibility of the various Canadian provinces to  manage the process of monitoring the distribution of marijuana, a process that reportedly involves purchasing from licensed producers, storing it in local warehouses then moving it to retail customers and on-line shops. In other instances, marijuana will be mailed directly to commercial outlets.

Then there is the ‘business end’ of the trade. Canadian federal taxes of one (Canadian) dollar per gramme or 10% will be applied with the authorities holding on to 25% of that amount and the remainder going to the provinces.

While some provinces will operate their own stores others are satisfied with private outlets, the Gleaner reports, adding that most provinces are allowing residents to grow up to four plants at home.

Legalization will reportedly come at a cost to Canada’s various “illicit but tolerated” outlets. The authorities reportedly plan to close those possessing no licences. The authorities are reportedly already poised to clamp down on the black market which, not surprisingly, is likely to remain larger than the legitimate market for some time. With the licensing of more than 100 growers by the federal government in Canada, investment patterns in the cultivation of marijuana have already witnessed the significant involvement of well-known businesses and the infusion of billions of dollars into the acquisition of production space and planting. Long-time tomato growers in parts of Canada are reportedly now opting for marijuana. Reports indicate that the burgeoning of the ‘big players’ in the cultivation end of the trade could push smaller illegal growers to one side given uncertainties over whether or not the new dispensation will grant them licences to permit them to continue with cultivation.

All of this, of course, is unlikely to go unnoticed where the growing use of medical marijuana in North America coupled with the increasing legalization of the drug is opening up opportunities in Caribbean countries where the crop has traditionally been cultivated.

There are hurdles to be crossed, however, not least what remains the conservative posture of some Caribbean territories to the full-blown legalization of marijuana. Observers, however, point to what they say is the gathering pace of legalization, its implications for increased personal use of the drug and the eventual emergence of a $50 billion industry.

Not only has Jamaica assumed an up-front posture on the legalization of marijuana but local investors there have been following the trail ‘commissioned’ by the government which has made no secret of its desire to position the country to benefit from what, globally, is believed to have become a US$438 billion medical tourism industry. Unlike in Canada, however, official discourse on legalization focuses almost entirely on medical marijuana (with some exceptions seemingly being contemplated for the religious practices of Rastafarians), so that personal and recreational use is, in the majority of the region, still not even remotely on the cards.

Still, in a region where poverty still persists, the economic argument for a more ‘progressive’ official posture on legalizing and commercializing marijuana is not going away. In St. Vincent and the Grenadines where illegal production of marijuana is believed to exceed US$40 million annually, more than the country’s key official agricultural product, bananas, the government is believed to be on the side of the legalization of cannabis for medical purposes but has, at least in the immediate term, ruled out the possibility of throwing open the industry to legalized recreational use.

Not so in Jamaica – the largest illicit producer and exporter of marijuana in the Caribbean and Central America according to the International Narcotics Control Board – where recent reports point to multi-million dollar investments in the medical marijuana sector. Powered by a regulatory framework that includes a Cannabis Licensing Board that issued its first set of business licences last year , Jamaica has already thrown up the Kingston-based Medicanja , the first registered medical marijuana company in the region and the recipient of a US$10 million grant from the Development Bank of Jamaica to fund  research.

That leaves Jamaica way ahead of the rest of the Caribbean, where, seemingly, law enforcement challenges with the proliferation of drugs has created a generous measure of official caution about the legalization of marijuana.  Still, given what these days is persuasive evidence of the medical value of marijuana coupled with its potential as a major money-earner for poor countries, both public and official discourse on the legalization of marijuana and its transformation into a significant material asset is unlikely to go away. On Wednesday, however, Canada led the Caribbean out of the blocks on the race to turn cannabis into a major economic asset.

 

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