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North Macedonia’s Major Cannabis Play Aims To Boost Economy By €250m Annually

Increasing numbers of medical cannabis cultivators are being attracted to North Macedonia. But what is it that makes the Balkan state so attractive? Jane Hall reports. 

AMERICAN football may not register as one of North Macedonia’s most popular sports, but that didn’t stop three former US Chicago Bears stars recently being courted by the Balkan nation’s prime minister, Zoran Zaev.

But Lance Briggs, Turk McBride and Donnie Caldwell weren’t in the landlocked country sandwiched between Greece, Kosovo, Serbia, Bulgaria and Albania, to discuss the finer points of the NFL with Mr Zaev.

The trio were invited to sit around the ministerial conference table as potential investors in what is one of NMK’s – the abbreviation for North Macedonia – newest and potentially most lucrative industries: cannabis cultivation.

Also at the meeting held in NMK’s political, cultural and economic capital, Skopje, was the director and founder of Serbia’s well-known Exit music festival, Dusan Kovacevic.

Attractive Government Support

The former footballers are already successful cannabis growers in the United States and headed for NMK after Kovacevic pitched the idea to them of investing in the republic. 

Speaking following the high profile meeting, Kovacevic explained to the online Balkan Insight daily news service: “We met through mutual friends; I heard that they have a developed business growing medical cannabis and are planning to invest in South Africa.

“I conveyed to them the advantages of making North Macedonia a country of particular interest in this business and invited them to this year’s Exit.

“After that we scheduled a meeting with PM Zoran Zaev.”

According to Kovacevic, an as yet unnamed location has already been earmarked for a state-of-the-art growing facility with construction scheduled to begin in the autumn.

A post-meeting government press office release stated that: “PM Zaev presented the opportunities for opening factories for medical cannabis in North Macedonia, the investment and taxing conditions and the favourable climate.”

The latter wasn’t referring to NMK’s unique microclimate, which ranges from temperate in the north to subtropical in the south, but the country’s state offered economic incentives and tax exemptions aimed at attracting foreign investors.

And among those currently being welcomed with open arms are cannabis investors as NMK looks to advance its fragile economy by an estimated  €250m annually and become a European cannabis dynamo.

64 Cultivation Licences Granted

The country, which added North to its name in 2019 after a near 20 year dispute with neighbour Greece over the use of the word ‘Macedonia’, legalised medical cannabis production in 2016 in a surprise decision by the then conservative government led by the disgraced Nikola Gruevski, who fled a corruption conviction three years ago and is currently living in Hungary.

Since then 64 companies have been granted licences by NMK’s Ministry of Health to grow cannabis, although at present it is still illegal to cultivate and use it recreationally.

Among them are UK-based AltoVerde and Panacea Farm, and NYSK Holdings, which was the first North Macedonian company to be granted a licence for the cultivation of cannabis for medical purposes in February 2017.

In June this year NYSK became the first company to obtain a licence to export dried cannabis flowers, which was needed for it to start distribution to Poland, where its parent company, PHCann International, is headquartered.

In July the NMK government endorsed a draft law on the control of narcotic drugs and psychotropic substances, which regulates the export of dried cannabis flowers in line with EU rules.

Whilst the use of medical cannabis had been legalised, the law didn’t allow for the export of cannabis flowers. Now it can take place in accordance with international conventions and EU legislation.

Free Market Approach

A new agency for the control of cultivation and extraction of cannabis and its associated products for medical and scientific purposes, is also on the cards with the aim of not only protecting investors and the state’s interests in the sector but hopefully preventing the drug from ending up on the black market – a move designed to tackle the widespread corruption and inefficient bureaucracy which has blighted NMK’s reputation.

As one of the few countries in the world to not only sanction the legal growth and export of cannabis and enjoy strong public, political and legal support for the drug’s decriminalisation and legalisation, it’s easy to see why investors and entrepreneurs are increasingly being drawn there.

The government’s free market approach to cannabis cultivation, distribution and sale – mirroring Canada’s line – that has avoided setting up production under a state monopoly, has been another investment carrot. 

Mitesh Makwana is the director of cannabis start-up AltoVerde, which has recently announced two partnerships with manufacturing operations in NMK – medical cannabis producer A&J Green House and Marijupharma D.O.O – as it looks to open up new avenues and make its market presence felt.

Mitesh Makwana

He says moving into NMK was a conscious decision – and not just because of its status as one of the few places with the legal right to grow and export medical cannabis.

He told BusinessCann: “Following Brexit, there has been a shift in investment into continental Europe, with North Macedonia becoming a hot spot for cannabis cultivators. 

“Given the UK’s strong trade partnership with North Macedonia – their largest trading partner in the western Balkans – companies looking to expand in the region can benefit from trading on largely the same terms as secured in the EU-North Macedonia Stabilisation and Association Agreement (the first in the region and in force since 2004), to which the UK is currently party.

“This is true even following the regulatory changes triggered by Brexit.”

But it’s not just NMK’s progressive legislative attitude that cannabis enterprises like AltoVerde find attractive. 

Mr Makwana added: “The climate and favourable agriculture conditions in North Macedonia create a great growing environment for cannabis plants. With cost-effective land, labour, electricity and water, North Macedonia is a prime location for a cannabis boom.

“Having legalised the cultivation of medicinal cannabis in 2016, the country has spearheaded the blossoming of a licensed cultivation industry. This does not only grant North Macedonia an advantage in positioning itself in the market but enables companies flocking to the country to enjoy the business potential.

“This free-market approach is essentially why we forged a partnership with A&J Green House and Marijupharma D.O.O., and as the country looks to expand its exports beyond medicinal cannabis oil, it’s likely we will see many more companies produce and profit there.”

Second UK Company Active

Dominic John is project manager at Panacea Farm, which in 2019 went into partnership with NMK-based King Fild (the North Macedonian spelling of field), and has a state-of-the-art facility at Novo Selo near the Greek and Bulgarian borders, where it has been establishing early revenue streams using existing stock of GACP compliant THC flower and CBD crude oil.

The goal in the next 12 months is to move to supplying medical grade cannabis into the German market and other EU countries.

Panacea’s Operations

Panacea Farm already has four greenhouses that were awarded GACP accreditation in April 2020 and received a GACP extension certificate in November last year, allowing the business to cultivate and harvest GACP-compliant product which can be sold into any jurisdiction permitting the import of medical cannabis.

It hopes to receive EU-GMP accreditation by the end of 2021 as it looks to become one of Europe’s leading suppliers of high quality medical cannabis.

In total Panacea Farm and King Fild have approval for 37 greenhouses covering 27,000m² – making it one of the biggest cannabis cultivation operations in NMK.

Mr John admits moving into the North Macedonian market was a leap of faith, but said the government’s flexible approach and willingness to work with investors and entrepreneurs like themselves, has been a big selling point.

Whilst the law facilitating the export of dried flower hasn’t yet been officially passed, John says thanks to the country’s progressive political nature a work around was speedily found. 

“You have quite a progressive political set-up. This is a government trying to pass a law to make the export of dried flower happen, and when it wasn’t happening fast enough they quickly figured out a work around on it.

“It is nice to have a supportive and progressive political structure. Compare it to the UK where it is a lot harder to get things off the ground.”

Country Needs Foreign Currency

Prime Minister Zaev – who supports legalisation – believes cannabis can play a major part in bringing hard currency into NMK, helping turn around the economic fortunes of a country where nearly a third of citizens are poor.

With a population of just over two million (roughly the number living in and around Yorkshire’s unofficial capital, Leeds), and much of the country largely mountainous, NMK is far from being an industrial powerhouse.

Its wealth is currently built on textiles and clothing, agriculture, food processing, ICT, automotive parts, pharmaceuticals, wine, and a slowly growing tourism sector mainly based around the lakeside town of Ohrid, which enjoys UNESCO World Heritage Site status.

But with EU membership unlikely to be approved until after 2025, the NMK government has been desperate to find alternative ways to boost its national wealth long-term.

Hence the government’s interest in cannabis and all it can offer – even on the tourism front.

NMK’s progressive politicians are said to be looking to develop a cannabis tourism industry akin to Amsterdam.

Minister of Health, Venko Filipce, has predicted the cannabis industry could generate as much as 1% of national output. 

With the global legal cannabis market predicted to be worth $70.6bn by 2028, NKM understandably wants a cut and investors can see long-term potential in a country desperate to court them.

There are other attractions. Panacea Farm and King Fild is based near the four million year old Lake Ohrid nestled amongst NMK’s spectacular mountains. This too could be a draw for companies, John said: “It is the sort of place that will attract international talent and retain it. Once people visit and see what a beautiful area it is and a nice environment it is to work in, it is genuinely very appealing.

“A lot of people think ‘ooh, Macedonia,’ in a disparaging way, but that is a really unfair preconception to have. The place is beautiful and the people are warm and welcoming.”

He added: “I appreciate that there are preconceptions surrounding corruption in North Macedonia. The biggest thing we are going to have to overcome is the stigma attached to us being in Macedonia. You can’t get away from the fact that a lot of people associate Macedonia with corruption. All we can do is try and mitigate that.”

Law Change 2016

The cultivation of cannabis for medicinal purposes has been permitted by law in North Macedonia since 2016.

The legislation was introduced through amendments to the existing law on the control of narcotic drugs and psychotropic substances.

Only licensed cannabis cultivators are allowed to grow and sell cannabis oil or finished products.

Recreational cannabis is still prohibited, with those found in possession of even the smallest amount liable to prosecution and even imprisonment.

Permits for cannabis cultivation and the production of hemp extracts, are issued by the Ministry of Health only with prior consent from the NMK government.

Hemp cultivated in NMK can only be processed in the country from a legal entity that has a license for the production of cannabis extracts.

Exports licences are granted and cover food below 0.001% THC; border line product between 0.001% and 0/2% THC; and medicine above 0.2%.are allowed. 

Further innovations introduced in the summer now also allow the export of dry flower obtained by cultivating cannabis for medical purposes.

This permits cannabis cultivating enterprises to place their manufactured quantities of a dry herbal product on the European markets and beyond while complying with international UN conventions and EU legislation.

As one of the few countries globally that allows the export of dry cannabis flower it puts NMK in a unique position.

Due to the rapidly increasing prices of dry cannabis flower and oil on the global market, there is expected to be major interest going forward in investing in North Macedonia.

It can be a lengthy – and expensive – process obtaining a cannabis cultivation licence, however. Some reports suggest growers need to invest up to $1m before even paying for the licence and becoming a registered entity.

Companies looking to set up cannabis cultivation operations in the country have to meet a number of stringent conditions.

They include:

  • Providing adequate premises, areas or land for cultivating, drying and storing, and being properly equipped to cultivate and process.
  • The space to be protected with a fence of at least four metres in height, with razor wire in front coiled in three rows and barbed wired above the paling.
  • 24-hour video surveillance covering the entire facility.
  • 24-hour physical security.
  • The cultivator to employ at least four people.
  • At least one employee to be a graduate pharmacist and another an agronomist, both with at least three years’ experience working in their respective fields.

Cultivation companies are also obliged before sowing or planting to submit an application for approval to the Ministry of Agriculture, Forestry and Water Economy.

Once cultivation is complete, the total dried weight obtained must also be reported to the Ministry of Agriculture, Forestry and Water Economy as well as the Agency for Medicinal Products and Medical Devices.

Main image: Skopje, capital of North Macedonia

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