Investing in cannabis sector in Malta

The global industry of manufacturing and producing cannabis and other cannabisbased products has been growing in the past years

Alongside this there are the legal measures implemented by many countries to relax the limits on consumption and the penal convictions relating to such substance. Malta is no different. While cannabis as a recreational substance is still not fully legal, the laws concerning medical cannabis have been less stringent over time as government acknowledges the potential economic benefits that this growing industry may offer. The production of cannabis for medicinal and research purposes was legalised in Malta in 2018. The law allows approved entities to cultivate, process, distribute, import and any other activity related to cannabis for medicinal and/or research purposes. It also follows the amendment of the Drug Dependence Act concerning the prescription of medicinal preparations of cannabis.

The Malta Medicines Authority remains the primary regulatory body in providing guidance and consultation on scientific matters relating to research and development as well as the accessibility of quality medicinal cannabis. The Authority is also responsible for reviewing applications for importing and wholesale distributing cannabis-based products.

As for the recreational usage of such substance, it is still not fully legalised although the new law, signed in 2021, allows for more relaxed usage. As per the new Responsible Use of Cannabis Act, adults are now legally allowed to carry cannabis of up to 7g without the risk of being confiscated or arrested. Those who are caught with an amount between 7 and 28g will have to show up for tribunal rather than a criminal court.

Cultivation for private use is also allowed with up to four plants per household, not visible to the public, which means cannabis planted on balconies and terraces is not permissible.

“As for the recreational usage of such substance, it is still not fully legalised although the new law, signed in 2021, allows for more relaxed usage. As per the new Responsible Use of Cannabis Act, adults are now legally allowed to carry cannabis of up to 7g without the risk of being confiscated or arrested. Those who are caught with an amount between 7 and 28g will have to show up for tribunal rather than a criminal court.”

The law also permits the establishment of cannabis clubs in Malta where smokers can buy substance supplies. Clubs are permitted to grow cannabis and distribute it among members, up to 7g per day and 50g per month.

The cost of acquiring a licence and producing cannabis for medical and research purposes is also stipulated in the 2018 law. Applications to produce cannabis for medical and research purposes must be completed and the licence and EU-GMP (Good Manufacturing Practice) must be granted before carrying out any activities related to the manufacturing of such substance. A letter of intent should be submitted to Malta Enterprise and should be approved prior to submitting the documents to the Medicines Authority.. Firms involved in producing cannabis for medicinal purposes in Malta are subject to annual fees amounting to a maximum of €63,000 considering all the required activities while an initial application fee can go as high as €100,000.

The Maltese government has granted production licences for cannabis medicine products to Materia, Panaxia Pharmaceutical, ZenPharm, ASG Pharma and MPXI, with the first two businesses holding the majority of popularity. Materia Malta was the first company to export cannabis from Malta for sale in another country with a shipment to Germany. Its managing director believes that Malta has a central role in the global supply chain of cannabis.

Panaxia has been able to begin manufacturing in a local facility in Malta thanks to the adaptation of the European standard (EU-GMP). Panaxia is responsible for the production of more than 60 pharmaceuticals, many of which are based on cannabis plant extracts and are intended to cure ailments like anxiety, nausea and depression. The effectiveness of these products depends on the precise and repeatable dosage of cannabis medicine that is administered safely without smoking it. The Maltese facility intends to diversify in several product categories, including the manufacturing of extracts, tablets and oils, as well as clinical studies, stability experiments and other types of research and development. At the end of July, Panaxia completed a €6m investment in its Ħal Far plant with the intention of furthering the expansion in the future. Additionally, the Malta Medicine Authority provided stakeholders with guidance and educational initiatives which took place concurrently with the implementation of the legal framework for cannabis use to ensure responsible use and to mitigate the uphill trajectory for medical cannabis use to fully realize its potential.

While there is room for continued improvement and success in this sector in Malta, cautiousness is extremely important as such an industry is subject to risky schemes as happened with the JuicyFields’ alleged Ponzi scheme. JuicyFields, founded in 2020, provided a service that allowed investors, termed by the firm as "e-growers", to engage in the production, harvest and sale of cannabis plants, with monthly profits ranging from 6 to 14%. According to JuicyFields, their network had 500,000 members, the majority of which are from Europe and Latin America. Cryptocurrency and bank transfers are two ways to deposit and withdraw money. The company ceased operations in the middle of July, froze cash withdrawals, deleted profiles from social networking sites and vanished without a trace.

In the case of JuicyFields, this allegedly operated like a Ponzi scheme in which the business allegedly attracted investors by launching advertising campaigns through social media influencers, referral schemes and the publication of articles on numerous news media outlets, establishing a reputation that could draw more users to the platform. The cannabis industry giants that supposedly backed up the scheme denied having any relationship with the cannabis investment platform. High returns promised by the company to invest in cannabis cultivation, false agreements with top cannabis business operators, an unreliable business model and no compliance with anti-money laundering laws were the first signs that could indicate that a scam was round the corner.