What does COVID-19 mean for the future of Cannabis?
COVID-19 continues to dominate world news and touch every aspect of our daily lives. From this global financial and psychological reset the IMF and UN analysts anticipate that a slowdown of economic activity and widespread job losses will inevitably follow. Whilst various governments, including Cyprus, have released fiscal stimulus packages they will more than likely be offset in future via increased taxation.
The aim of this paper is to demonstrate and strongly advocate ways in which Cannabis could play a significant role in redefining our new global landscape going forward by, inter alia: providing new jobs; attracting taxes; reviving the agricultural sector; improving the environment; alleviating human pain and suffering; and improving our quality of life.
It sounds like an ambitious plan – perhaps though only to those with misconceived perceptions; pre-conceived notions as well as inaccurate and /or unsound knowledge of Cannabis developments, both locally in Cyprus and internationally.
So, what is Cannabis?
For a significant portion of modern human history Cannabis had environmental; medicinal; spiritual, and recreational uses that date back at least 5,000 years. Archaeologists have found evidence of cannabis paraphernalia as far back as the first millennium BC in India, China, Africa, and Assyria.
During the early 1930’s for various reasons (primarily political and racially driven) Cannabis ended up across the world in the category of drugs deemed ‘most dangerous’ with all the criminal repercussions that followed.
Fast forward to the 21st century the ‘stigma’ of Cannabis is being eroded with public opinion becoming pro-legalisation leading to many countries changing their legislation to accommodate a rapidly growing Cannabis sector which is predicted to reach €123 billion by 2028. Cannabis presents a tremendous opportunity which could now be leveraged by governments and entrepreneurs globally.
Markets that harness the economic power of the Cannabis industry have demonstrated the significant societal and infrastructural benefits. Colorado and Washington reported US$303 million and US$400 million, respectively in cannabis-related sales taxes in 2019. In the UK, it is estimated that the legal cannabis industry could be worth as much as £3 billion to the UK by 2024.
Cannabis is a plant of three main species; Sativa L; Ruderalis and Indica. The main difference between the species is the cannabinoid contents and depending on the variety of each species the purpose for growing the plant. Cannabis is perhaps best understood if we separate it into three main categories; Recreational Cannabis; Industrial Cannabis (hemp) and Medicinal Cannabis:
Recreational Cannabis: is any Cannabis used for non-medical purposes (including black-market products) and usually involves smoking or inhaling it or consumption via edibles. Ordinarily it has a higher concentration of Tetrahydrocannabinol or ‘THC’ which is the psychoactive and intoxicating compound of the cannabis plant. Whilst support is growing for adult use it remains illegal in many countries, including Cyprus. For the purposes of this article reference to Cannabis hereinafter excludes recreational cannabis.
Industrial Cannabis (Hemp): refers to Cannabis plants cultivated for high yields of materials like seeds; fibre and oil with low concentrations of psychoactive compounds usually of the Species Sativa L. Materials derived from hemp have a wide range of uses as constituents in consumer goods, including paper, textiles, biodegradable plastics, building materials and fuel. Industrial Cannabis can also be used to produce Cannabidiol (‘CBD’) products such as oils, tinctures and food, as well as health food products. CBD is one of the two main active cannabinoids in Cannabis (THC being the other). It is one of the fastest growing agricultural crops requiring little or no pesticides less industrial processing post-harvest, and low overall environmental impact. See here for ‘The Hemp Manifesto’
CBD exhibits wide-ranging medicinal properties, including anti-anxiety; anti-inflammatory; anti-pain; anti-arthritic and neuroprotective effects. CBD is indicated for treatment of conditions such as epilepsy and is commonly used for conditions such as pain and insomnia. There is an emergent market for CBD-infused oils, consumer goods and capsules. The broader public interest towards the Cannabis industry is driving an increased demand for CBD impacting mainstream industries from pharmaceuticals to food and is seen as the acceptable side of Cannabis. Consumers are seeking a natural, wellness product which is both sustainable and non-psychoactive.
Medicinal Cannabis: is an amalgamation of Pharmaceutical and Medical Cannabis
Pharmaceutical Cannabis: products are formulated or processed using cannabinoids (either plant-extracted or synthetic) that have been through full clinical trials and are licensed as a medicine with marketing authorisation. Examples include Sativex, Epidyolex (Epidiolex in the US), Cesamet, and Dronabinol (e.g. Marinol and Syndros).
Scientific evidence suggests that THC exhibits medicinal properties that are useful in treating: nausea; pain; spasticity; loss of appetite and neurological conditions such as anxiety; depression; ADHD; PTSD; Tourette’s and psychosis.
Medical Cannabis: refers to plant-based or plant-derived cannabis products prescribed by a medical practitioner for the treatment of a specific condition or disease (e.g. epilepsy, pain, multiple sclerosis). Medical cannabis uses the whole unprocessed plant or the processed plant. It can include both main cannabinoid contents of the plant (CBD and THC) in different dosages depending on the purpose, though CBD products may also appear as consumer goods, which are sold without prescription. Medical cannabis products are currently prepared in formats such as plant materials; oils; tinctures; edibles or capsules and do not necessarily require marketing authorisation.
Scientific interest in Cannabis began in the 1940-1960’s with extraction of its active principles like THC, CBD, cannabinol and ‘terpenes’. Initial research revealed an interesting fact that the human body naturally produces its cannabinoids and uses them to regulate homeostasis (a process by which biological systems tend to maintain internal stability and balance). The human body actively regulates variables related to appetite, immune response, memory, mood, pain, sleep and other functions naturally creating compounds as ‘endocannabinoids’ and delivering them to these receptors.
How can Cyprus benefit from this potentially huge Cannabis opportunity?
The numerous tax planning and other benefits of doing business and living in Cyprus are well-documented. The country’s impressive achievements in attracting high quality professionals, foreign investors and businesses are commendable and apparent – see Invest Cyprus. Inter alia, the ideal weather conditions, strategic location and favourable tax regime allow Cyprus to retain its long-standing position as a premier ranking international financial centre.
Surely then it was not without careful forethought and planning that in 2016 the government passed the ‘Production and Trade of Industrial Hemp Law 2016’ - which allows for the licensed production and export of Industrial Cannabis. In line with the ‘European Green Deal’, Industrial Cannabis can play a crucial role in a new greener and more sustainable society by providing concrete solutions for ensuring nutritious food; environmentally friendly non-food products; clean air and soils. By repatriating manufacturing processes, (textiles in particular) and fostering innovative value chains (construction materials, food production, cannabinoids extraction) the Industrial Cannabis sector could deliver long term sustainable growth and create highly skilled jobs across the EU rural economies. In short, combining locally sourced raw materials with global know-how.
In February 2019 with implementation of the ‘Drugs and Psychotropic Substances (Cannabis Pharmaceuticals) Regulations of 2019’ Cyprus further positioned itself to maximise the opportunities that will inevitably flow from cultivation and export of Medicinal Cannabis. A tender process for selection of (initially three) suitable licensees is expected to be published soon.
Few would argue that the financial impact of post COVID-19 lockdown will affect governments worldwide. Since the pandemic we have seen various articles published in Cyprus which, quite rightly, aim to reinforce the attractive range of products and services offered successfully for several decades now by the highly qualified, experienced and skilled local professionals, including though not limited to shipping; corporate, tax and advisory services, investment funds and the Cyprus Investment Program.
None of them mention the unlimited potential of Cannabis. Cyprus has a massive opportunity to position itself as a centre of excellence in production, research, genetics, and intellectual property in the Cannabis sector which, combined with a transparent regulatory and compliance framework make it an attractive country for the legal Cannabis industry to flourish.
In October 2019 a group of leading local professionals and entrepreneurs, in conjunction and with the full support of Cyprus Chamber of Commerce & Industry, came together to form the Cyprus Cannabis Association (‘CYCA’). CYCA is helping to build a responsible and effective European platform to educate and advance this emerging market - education, access and regulatory clarity are vital components.
CYCA is ready, willing and able to assist the Cyprus government and local business community monitor, navigate and where necessary suggest improvements to the current legislative framework to further promote and enhance Cyprus’ prospects in the Cannabis sector. Learning from how other regions have ironed out the ‘grey areas’ means CYCA is well equipped to help the Cyprus government fast track its legislation by using wording that has already been tried and tested, thus avoiding any pitfalls going forward. Setting up a dedicated cannabis agency is now recognised globally as being a key element in facilitating a successful Cannabis programme – the agency could simplify processes and adapt systems to allow for patients and consumers (crying out for) access to licensed and authorised Cannabis products.
In recent years the increasing public demand for Cannabis has been growing rapidly and governments around the world are steadily moving to full legalization. A report from the Green Fund stated that ‘…. public support for cannabis legalization continues to increase; the industry is already a multibillion-dollar juggernaut that looks primed for continued expansion…’
Indeed, the global legal Cannabis market size in 2018 was USD10.60 billion and is projected to reach USD153,689.9 billion by 2027. The market is estimated to grow with a CAGR of 34.5% from 2019-2027 - see also here for the foremost source of independent data, intelligence and strategy for the Cannabis industry.
As global recognition of the benefits of Cannabis increases, and the end of the 'prohibition era' for Cannabis beckons, there is a burgeoning need for high-quality products with known components; cultivated at large scale for consistent, reliable supply to users.
It would be safe to say that the Cannabis industry will soon become the most lucrative and thriving industrial sector in the world. Cyprus is primely positioned to maximise this massive opportunity.