Exporting cannabis for beauty and medical markets

Cannabis has undergone a normalising process, given its wide adoption, social tolerance and, generally speaking, a wider cultural acceptance.

It has gone from being branded as a gateway drug to being used as a therapeutic alternative to conventional medicine and its legalisation for medicinal use represents a golden opportunity for licensed producers seeking to position themselves at the forefront of this emerging industry. In fact, the legal cannabis industry is attracting more and more investors who want to diversify their portfolios, since it is considered to be one of the most promising industries. For example, the cannabis-producing industry in Canada was worth $3 billion in 2017.

Many countries are now realising the potential of this growing industry and have moved to legalise cannabis for medical use. Uruguay was the first country in the world to legalise cannabis, followed by Canada in 2018, and eight US states have now authorised recreational cannabis. Looking at the European context, cannabis production has been decriminalised in Spain, Germany, Belgium, The Netherlands, Italy, Switzerland, Portugal and the Czech Republic.

Given the ever-expanding medicinal capabilities of cannabis, Malta has followed pioneering countries such as Canada and in March 2018 it officially legalised the production and use of medicinal cannabis. The Maltese Parliament has approved ‘The Production of Cannabis for Medicinal Use Act’, which is an all-encompassing Act regulating the entities that are eligible to produce and distribute cannabis under strict supervision.

The new law also allows all registered doctors to prescribe medical cannabis – which is available from local pharmacies – for their patients. In order to produce cannabis, entities must first obtain a Letter of Intent from Malta Enterprise and also a licence from the regulatory authority. Local media reports state that of the 46 applications received, 20 entities have been issued with a letter of intent for the production of medical cannabis.

Prime Minister Joseph Muscat further stated that the approved projects are expected to create local capital expenditure of more than €110 million and 700 full-time jobs. Moreover, Malta’s exports are also projected to reach up to €900 million by 2020.

This legislation gives our country an edge over other countries, as some countries still do not permit the production and supply of medical cannabis. For example, the use

of medical cannabis is allowed in Germany but it is still at the stage of granting its first licences and thus the first harvest is not expected until 2020.

On the other hand, Malta Enterprise has already approved an area measuring 4,000 square metres for the cultivation of cannabis. Security systems must be in place to prevent the unauthorised movement of cannabis material and only authorised personnel may be allowed to access specific designated areas. Any waste material must be stored in a lockable container.

The production and use of medicinal cannabis may not only provide a new-found relief for those suffering from illnesses, but may also introduce a wide range of economic opportunities and positive spillover effects. Naturally, cultivation requires a sizeable number of professional staff to allow a smooth and orderly process. An increase in the number of companies operating from Malta to cultivate cannabis will result in additional tax revenue for the Government, as well as increasing the amount of research and development. Cannabis production is also expected to increase the amount of exports, resulting in an injection of funds into our local economy.

All these factors are expected to contribute to a continued increase in our country’s economic growth. This is particularly important, as the latest forecast from the European Commission indicates that whilst the growth momentum for the Maltese economy is expected to remain solid, GDP growth is forecast to moderate in 2019 and 2020 to 5.3 per cent and 4.8 per cent respectively. However, the net impact on the number of jobs – and output – created by this emerging sector needs to be studied more deeply in the years to come.

Another social aspect is the lack of information on the use of medicinal cannabis. Patients often mention the limited knowledge on the part of medical practitioners, particularly as they are sometimes reluctant to prescribe cannabis as a form of treatment. In addition, the cost of medicinal cannabis is quite high for patients, some of whom have expressed their dismay at discovering that some forms of cannabis cost as much as €17 a gram. This has given rise to a number of concerns regarding the affordability of this medicine by the general public. Whilst progress on the part of the Government has been made in this arena, the affordability issues of this effective medicine on the part of the general public must not be ignored. It is worth exploring the possibility of offering it to patients at a subsidised price.

Furthermore, one cannot separate the use of cannabis from its long history as an illegal substance that is frequently abused. Stigmatisation of the use of this drug is a strong deterrent for many healthcare providers and this uncertainty will only slow down the use of cannabis for medical purposes. Indeed, the public’s perception needs to be changed, perhaps by the introduction of frank discussions on the use of cannabis. In addition, continuous educational programmes for medical practitioners are also a necessity in order to remove the general stigma concerning its use.

The opportunities for using cannabis go beyond medical reasons. The beauty industry is also jumping on the bandwagon, and at the moment Cannabidiol (CBD) is one of the most used buzz-words in the beauty business. In fact, CBD oil is being used in a number of high-end creams, oils and even make-up products.

Given this potential, the cultivation of cannabis in Malta provides an added opportunity for local production to also produce this oil for use by the beauty industry, thus enhancing the range of exports generated by the same industry. It could be argued that the drive to attract foreign investors in this sector has not been thwarted by an adverse reaction on the part of local banks which so far have shown a lukewarm approach to onboard applications from licensed producers of cannabis.