Estimated reading time: 8 minutes
Flora Growth CEO Luis Merchan spoke to Cannabis Wealth about how governments can benefit from the significant economic growth that can come from the cannabis industry.
In Europe, a number of countries including Malta, Germany, Sweden and Luxembourg all made announcements in 2021 that they would be taking a more progressive approach on cannabis policy. Malta was the first country on the continent to legalise recreational use.
Other countries across the globe including Canada, Uruguay, Mexico and the US have also made progressive changes to cannabis policy in recent years.
Whilst the globe strides ahead on cannabis policy, the UK is lagging behind with the announcement of a new ten-year crackdown on drugs and its Beating Crime Plan, in which Prime Minister Boris Johnson commented that “Drugs are a scourge on society.”
Campaigners have highlighted that a regulated industry could create hundreds of thousands of jobs in the UK and generate large amounts of tax revenue.
Understanding the cannabis market
Flora Growth CEO Luis Merchan has almost two decades in Consumer Packaged Goods (CPG) and retail in the United States, having worked for companies such as Target and Macy’s. Since joining Flora Growth, an all outdoor producer of cannabis operating out of Colombia, the company has seen rapid progression in the cannabis space.
Colombia is known for a number of agricultural commodities and is the number one producer of cannabis flowers in the world due to its suitable climate and conditions which translate to low production costs.
Flora Growth has seen the benefits of legal cannabis markets. The company went public on NASDAQ under the ticker FLGC on 11 May, 2021, and since then, has expanded its operations – generating revenue of USD$911m in sales and expecting to deliver between $35 and $45bn this year.
Read more: Malta officially legalises cannabis in historic first for Europe
Merchan highlights that the outcomes in the US and Canada highlight the benefits of taking a progressive approach to cannabis legalisation.
Merchan commented: “Flora Growth is a global cannabis company positioning itself as a global market leader in cannabis. North America leads the space in terms of their regulatory and legal environment.
“In the United States alone, there are 17 states that allow for recreational cannabis to be available for consumers. There’s also two reforms that would help pave the way for federal legalisation which will dramatically change the regulatory landscape globally – the Safe Banking Act and the MORE Act in Canada.
“Canada led the lead this space in terms of regulatory and recreational medicinal and the movement in those two countries have helped pave the way for what is now becoming an international trade community.
“There’s about a million and a half medical cannabis patients in the UK. Clearly, there’s a need for regulatory change, not only from an economic growth perspective. This is an industry that will provide meaningful economic growth as we have seen in Canada in terms of employment, tax revenues, but also for the benefit of consumers and patients.
“The UK has the opportunity to start becoming more aligned with other first world countries that are making significant changes such as the US Canada, and of course, Germany that announced changes a couple of months ago.”
Merchan suggests the lack of progress in the UK is a personal conservative view from government bodies that have not realised they are carrying a stigma around cannabis.
“They have not realised that cannabis carries a tremendous wealth of medical benefits for patients and also provides a safer alternative to other entertainment substances such as alcohol and tobacco. That stigma I believe needs to be and will be, removed as constituencies continue to talk to the government officials about their change of mind around cannabis.
“We have started to see that happening in the United States. It started of course in states that have more liberal views, such as California and New York, but we will continue to see that change as conservative movements the medical benefits, and also the business benefits in terms of economic growth from cannabis. There will be a transition to a more streamlined, regulated and open cannabis industry.”
The importance of regulation, equity and corporate responsibility
Merchan highlights that having a robust regulatory framework around any legal cannabis market is vital and that the responsibility of cannabis companies to be compliant can provide governments with the security they need to enable legal markets.
“It is important that there is a very robust regulatory framework around the cannabis industry. Without a doubt, there are a number of actors that are not good actors that that come from illegal trade or the black market trade,” said Merchan.
“It is also important that cannabis companies be safe, incredibly responsible, and that they are very transparent – that they open up their doors in terms of quality manufacturing and access to certificates of analysis, the companies that they trade with, the businesses that they work with, so they can provide government officials with the comfort that they need in order to to create more meaningful cannabis reform.
“It is the responsibility of companies such as mine to ensure that we are providing the information that government officials need.”
Merchan highlighted other factors that would make a significant impact for informed regulation of a legal cannabis market, including access to financial services – an issue that has plagued the North American and US cannabis industry.
“The first is ensuring that there is a strong, reliable regulatory oversight to ensure that cannabis companies and players have very clear and transparent operational practices, including finances and quality standards of the products that they are manufacturing,” he commented.
Read more: New report lays out cannabis social equity principles for UK
“The second is access to financial services – the more access to traditional financial methods, the more transparent these companies are going to be and the more likely that that the local and state governments are going to be able to benefit from the significant economic growth that can that can come from the cannabis industry, including employment and tax revenues.”
Merchan also pressed the importance of social justice as a vital component of creating properly regulated markets – an issue that is consistently raised by reformist campaigners in the UK.
The UK’s national centre of expertise on drugs and drugs law, Release, recently published a report stating that the UK must repair the harms and historical injustices done by cannabis prohibition. Building on its former research highlighting the disproportionate impact of drug prohibition on minority communities, the report sets out 14 equity principles to integrate into the UK’s future legal market to ensure a “just, fair and equitable cannabis market in the UK”.
This includes regulations such as cannabis social clubs and a regulatory system that allows for non-commercial domestic cultivation.
“It is very clear that that cannabis law as it exists today, dramatically and disproportionately affects minorities including Black and Asian communities,” said Merchan.
“Decriminalising cannabis will ensure that these communities are less affected, which would dramatically improve the standard of living and quality of living of these communities in the United Kingdom.”
The importance of scientific research
Empirical evidence of the potential benefits or harms of cannabis is also vital for a properly regulated market and informed policy decisions, highlights Merchan, and private companies have a role in providing this evidence about their products.
“On the scientific front it is incredibly important that private companies, as well as governments, invest in scientific research, so they can prove and verify that medical benefits become, in fact, academic research and peer reviewed research, so cannabis can be safely used by the medical community as well.
“I think it is incredibly important that the majority of the of the potential benefits of cannabis and cannabinoids that are found in the cannabis plant are reviewed by consumers and patients.”
Read more: UK’s NCRI endorses research into cannabis for treating cancer pain
Flora Growth is carrying out its own scientific research by partnering up with The University of Manchester to study the effects of cannabinoids on fibromyalgia.
“Our number one priority is to investigate the potential benefits of cannabis molecules to treat many ailments and we have a number of efforts that are in place globally. One of them is with the University of Manchester where we are presenting some formulations for clinical trials for the treatment of fibromyalgia,” says Merchan.
“We are doing this with a very robust scientific team both inside and outside our company – global leaders in the scientific industry, led by Dr Annabelle Manalo-Morgan. Our expectation is that these types of clinical trials supported by the University of Manchester by the NHS will allow us to get data on the potential benefits for treatments such as fibromyalgia, which many people worldwide could have.
“From a recreational standpoint, it is also important to document the effects that cannabis have on humans and the long-term effects that they can have as compared to other substances, such as once again, alcohol and tobacco, to understand that this could be potentially a safer recreational alternative to other substances that are already broadly available in the market.”
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