3 Oct

Cannabis: Why Jamaica Has Associated with Harvard

WRITTEN BY Rajiv Nanjapla

In 1913, Jamaica prohibited cannabis by passing the Ganja Law of 1913, according to the Jamaica Observer. However, in 2015, the Dangerous Drug (Amendment) Act was passed to decriminalize cannabis possession in small quantities (less than two ounces) for personal use. It also allowed individuals to cultivate, process, and distribute marijuana for medical, scientific, and therapeutic usages under the licensing rule.

Growth in the Jamaican cannabis industry

Established in 2015, the Cannabis Licensing Authority focuses on regulating the cannabis and hemp businesses in Jamaica. In 2017, the agency implemented the Alternative Development Programme to bring traditional marijuana farmers to the formal economy from the illicit market. However, the higher licensing fees and expenses involved in meeting the authority’s standard have made it difficult for ordinary farmers to enter the legal industry, according to the Financial Post.

A Growth Op article published on July 3, 2019, indicated that Jamaica has the perfect weather conditions for the growth of marijuana and produces high-quality strains. These factors, along with low labor wages, have attracted the interest of Canadian cannabis players, according to the article. It added that Jamaican rule prohibits foreign companies from owning a majority stake in Jamaican marijuana companies, so Canadian companies are forming joint ventures with local partners to enter the Jamaican market.

Aphria (APHA) owns a 49% stake in Marigold Projects Jamaica. Marigold opened its first retail store, Sensi Medical Cannabis House, in August 2019, according to Loop. The company is also planning to open four more dispensaries in Jamaica. Marigold also owns a Tier 3 license, which allows the company to cultivate cannabis on more than five acres of land.

In October 2017, Canopy Growth (WEED) (CGC) formed a joint venture called Tweed Limited with Grow House JA. Canopy owns 49% of Tweed Limited.

Jamaica partners with Harvard

Last week, the Jamaica Observer reported that Jamaica would work with HIPI (Harvard International Phytomedicines and Medical Cannabis Institute) to drive the country’s cannabis industry.

At the opening of the CanEx Jamaica Business Conference & Expo, Jamaican Minister of Industry, Commerce, Agriculture, and Fisheries Audley Shaw said, “We will be partnering with HIPI, as the opportunity exists for clinical trials of cannabis products to be conducted, which will help in settling dosage issues, and of course, we will be involving our own universities in this initiative,” according to the Observer.

Will cannabis become a commodity like other crops?

In the US, 33 states have currently legalized medical cannabis, while 11 have legalized recreational marijuana. However, US federal law prohibits it. This prohibition means you can’t transport it across state lines—you can only consume marijuana grown in the state. However, the US government could soon legalize cannabis, which would allow for the movement of cannabis across the country.

More countries are also warming up to cannabis. All these factors could pave the way for its commoditization. Cannabis commoditization would lead the market to treat all products equally, irrespective of who produced them or how. It will follow the supply-demand phenomenon.

However, the pursuit of differentiation and quality control could be ways for cannabis players to avoid commoditization. For example, recent vaping-related deaths and illnesses were caused by substandard products. On September 27, the Centers for Disease Control and Prevention stated that in the majority of these cases, illegal THC-based vaping products were involved, according to Vox.

Weakness in the cannabis sector

The increase in operating expenses, the regulatory scandals, and the vaping-related deaths appear to have dented investors’ confidence in the sector, leading to a fall in marijuana companies’ stock prices. YTD (year-to-date), Canopy Growth, Aphria, and Aurora Cannabis (ACB) stocks are down 19.9%, 12.6%, and 18.0%, respectively.

On August 14, Canopy Growth reported lower-than-expected first-quarter earnings results, which led to a fall in its stock price. However, the company is getting ready for Cannabis 2.0. Read Canopy Growth: Getting Ready for Cannabis 2.0 to know more.

Aphria reported strong fourth-quarter earnings results on August 1. The company outperformed both analysts’ top and bottom line estimates. However, the weakness in the cannabis sector appears to have brought its stock down. For analysts’ recommendations on Aphria, read Aphria: Analysts’ Target Price and Ratings.

During its recently announced quarter, Aurora Cannabis missed its revenue guidance and analysts’ expectations. On September 27, MKM Partners initiated coverage on Aurora with a “sell” rating. All these factors appear to have caused Aurora stock to fall.

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