01.05.19

A Cure for the Canna-Biz?

Stephanie Ewbank
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A Cure for the Canna-Biz?

Medical cannabis has increasingly captivated legal, political and corporate interest on a global scale. More than 20 countries have moved towards legalization of cannabis for medicinal use, and even some towards recreational use. On the other end of the spectrum, the United Nations still classifies cannabis as a psychotropic drug with no established medicinal value, and the Federal Laws of the United States continue to prohibit cannabis. However, an article published by Forbes magazine on February 26, 2019 indicates that legal cannabis is now a US$12.2 billion business worldwide, and is expected to grow to US$31.3 billion by 2022.

In light of such optimistic predictions, the economic potential of the medical cannabis industry in Jamaica continues to be a source of great debate and intrigue. It is well-known that cannabis has been a longstanding feature of folk medicine, culture and religious practices, and Jamaican- grown cannabis is internationally renowned. The relatively new development, however, is the legislative and regulatory regime aiming to translate that brand popularity into a burgeoning and reputable industry.


The Licensing Regime

In order to operate in Jamaica’s medical cannabis industry, an individual or entity must first obtain a licence from the industry’s governing body, the Cannabis Licensing Authority (“CLA”). In 2016, the CLA issued interim licensing Regulations, which constitute the current legal framework for medical cannabis. There are five categories of licences available: cultivator, processing, transport, retail and research and development.

Based on statistics published by the Jamaica Information Service (“JIS”) in February 2019, the CLA has issued 29 licences and 202 conditional approvals, from a total of 563 applications since its inception. The disparity between the number of applications received and the number granted suggests that qualifying for a licence is not without difficulty.

 

Who can Apply for a Cannabis Licence?

Applications may be made by individuals, companies, or societies, and each applicant may apply for more than one type of licence. An individual applicant must be at least 18 years old and ordinarily resident in Jamaica for at least 3 years immediately preceding the application.

Applicant companies/businesses must be incorporated or registered under Jamaican law, and be substantially owned and controlled by persons ordinarily resident in Jamaica (“Jamaican residents”). Though the word “substantial” is not defined in the Regulations, the CLA has published that it requires that applicant companies to have greater than 50% ownership and control by Jamaican residents. Foreign investors interested in entering the industry must therefore partner with Jamaican residents in order to qualify for a licence. 

Societies must be either a co-operative society registered under the Co-operative Societies Act, or a society registered under the Friendly Societies Act.

 

Requirements to Obtain a Cannabis Licence

The Regulations include safeguards to prevent persons with certain types of criminal convictions from entering the industry. There is permanent disqualification for persons convicted of money laundering offences and criminal offences not subject to expungement, including murder, kidnapping, robbery, burglary, and certain sexual offences. For other criminal offences the disqualification period depends on the type of offence, spanning either 5 or 10 years from the completion of serving the sentence, or if sentenced to a fine, from the date of paying the fine. This is subject to whether the person has been convicted of an offence involving violence or dishonesty during that time. The CLA therefore scrutinizes police records of individuals, company directors, members of societies, and employees of the applicant.

The aforementioned criteria are just the preliminary hurdles, as an applicant must also satisfy a plethora of additional requirements specific to the type of licence being applied for. The CLA also conducts a ‘fit and proper’ assessment of each applicant, including an assessment of character and integrity, skills and experience, financial resources, and history of compliance with applicable legislation. For applications from companies or societies, this assessment is conducted on the persons in effective control of the applicant’s operations. 

The application process involves completing all relevant CLA application forms, providing all requested supporting documentation and due diligence information, in addition to paying the requisite fees. Once the application is made, the CLA will firstly assess whether to grant conditional approval subject to certain terms, which usually requires that the applicant satisfy certain preconditions within 6 months. Thereafter, the CLA will assess whether to grant a licence.

If granted, the licence is issued for a limited term, 1 year for a cultivator’s licence and 3 years for other types of licences, subject to applications for renewal. After the granting of the licence, the CLA retains the power to inspect and monitor the licensee’s operations, in order to ensure compliance with the terms and conditions of the licence and applicable legislation. In the event of non-compliance, the CLA may issue directions, revoke or suspend a licence.

 

Outlook

It is undisputed that a lot has changed in the local landscape for medical cannabis over the past few years. However, there are still areas that remain unchartered, such as the export of cannabis, and the provision of banking services for the cannabis industry. Notwithstanding these teething pains, the Government has expressed commitment to facilitating the development of medical cannabis in Jamaica, and there is a general buzz of optimism about the market’s potential.

JAMPRO recently publicized that the much-anticipated export regulations are expected to be finalized by the end of April this year, which would facilitate the legal trade of Jamaican-grown cannabis on the international medical cannabis market. This will likely lead to further growth of investment in the local market. As the market expands, it is even more crucial that prospective applicants for cannabis licences obtain thorough and reliable guidance on the process of entering and succeeding in the evolving medical cannabis industry.


Stephanie Ewbank is an Associate Attorney-at-Law at Myers, Fletcher & Gordon, and is a member of the firm's Litigation Department. Stephanie may be contacted via stephanie.ewbank@mfg.com.jm or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.