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The Challenge of the International Cannabis Market

Over the pa

st month, I’ve received an increased number of emails and phone calls from businessmen, businesswomen and entrepreneurs in Southern Europe, Central Asia, Latin America and the Asia Pacific region.

Two questions were most frequently asked. The first was typically about how to establish a cannabis business in their own country. The second question frequently focused on how to establish a business exporting cannabis and cannabis products from their country?”

 

My answer is generally the same for almost every inquiry of this nature that I receive. I typically respond by asking a two-part question: First, whether it is legal to grow cannabis in their country and legal to export cannabis or derivatives of cannabis from their country. Second, I ask where they intend to export cannabis or cannabis products.

 

Why have I received substantially more emails and calls over the past month or so? The upsurge in interest in cannabis as a business opportunity is significantly tied to the massive slowdown of many of the world’s economies.

 

The Organization for Economic Cooperation and Development (OECD), recently cut its global growth forecasts. The OECD warned that the economies of many countries, including the U.S., Germany and Brazil are slowing, and that many emerging markets are at risk of exchange-rate volatility. The OECD revised its estimate for global GDP this year downward to 3 percent, .3 percentage points less than they predicted in November of 2015.

 

As an example, Brazil, the largest economy in Latin America, is currently in recession. Brazil’s economy is anticipated to decrease 4 percent this year. This is devastating to a country of 200 million people.

 

It is no surprise that business and political leaders in dozens of countries have revised their views of the cannabis industry. The possibility of having a new growth industry, creating new jobs, and having new sources of taxes is enticing.

 

Business and government leaders have watched my home state of Colorado, with a population of only 5.36 million people, generate massive new revenues and taxes from recreational and medical cannabis. Total Colorado cannabis revenues for 2015 were almost one billion dollars. Last year, Colorado generated state and local taxes, and license fees totaling $135 million.

 

There is a huge obstacle that must be overcome if an emerging cannabis export market is to develop, and that is to revise the Single Convention on Narcotic Drugs of 1961. As of 2015, 185 countries were signatories to the Single Convention. Cannabis is currently considered a class I, narcotic and this international treaty prohibits the production and supply of narcotics. This Single Convention provides an exemption for medical treatment and research, but the onus is on the individual country to justify the exemption, and politically this is something that most countries have sought to avoid.

 

This Single Convention was supplemented by the 1971 Convention on Psychotropic Substances and the 1988 United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. It is worth noting that the Single Convention became the basis for the standardization of many countries’ drug-control laws, including the U.S. Controlled Substances Act of 1970.  

 

The Cannatech International Summit for Accelerating Cannabis Innovation is to be held in early March in Tel Aviv, Israel and I will be a participant in that summit. There will be attendees from many countries and laws and regulations, this will no doubt, be a major “sideline” discussion item.

 

 

It remains to be seen if is feasible to revise the Single Convention, or how creative individual countries will be in finding a way to circumvent the treaty.  My opinion is that the establishment of a viable international export cannabis industry requires a change in the Single Convention and other treaties that currently exist which classify cannabis as a narcotic and controlled substance. Until that time, it will virtually be impossible for business owners to export cannabis or products derived from the plant.

 

Author: Jeffrey Friedland


Copyright 2016 Jeffrey O. Friedland

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