Advertisement

The cannabis industry

Font Size
Marvin A. Tort

Static

The cannabis industry

In March 2018, the United Kingdom was reported to be the largest world producer of “legal” cannabis, otherwise known as “medical” marijuana. This was based on 2017 data with the International Narcotics Control Board (INCB), which is the independent and quasi-judicial control organ for the implementation of the United Nations (UN) drug conventions.

The report is particularly interesting to me given the fact that UK is producing, and exporting, medicinal marijuana, despite the fact that its own laws make it illegal for its people to produce, possess, or use marijuana, even medically. This is also in light of efforts in our own Congress to legalize the use of medical marijuana in the Philippines.

The UK situation has been labeled by some British citizens as hypocritical, where the UK government prohibits the local use of medical marijuana but allows its production for export. To me, however, it indicates that one country can actually produce — and export — a product even while it is still deemed illegal in its own territory. In short, I perceive an opportunity here for us.

UK online publication The Independent reported in March 2018 that the UK was also the largest exporter of medical marijuana, with 2.1 tons exported in 2016, or roughly 70% of the world total. The report noted, quoting INCB data, that 95 tons of marijuana was also produced in the UK in 2016 for medicinal and scientific use, accounting for 44.9% of the world total.

However, other data seem to indicate that while the UK produced the most medical marijuana, it wasn’t exactly growing its own “weed.” This raises the possibility that marijuana plants are actually being grown elsewhere, and just processed in the UK to produce medical-grade cannabis, and then exported to countries that allow their use.

As of January 2018, or a year ago, it was estimated — using available data — that the top 10 marijuana producers in the world were reportedly the following countries: India, Nigeria, Canada, Jamaica, Paraguay, Colombia, Mexico, Afghanistan, Morocco, and the United States. The list did not include the UK. Other top marijuana producing countries listed were Mozambique, Ghana, Swaziland, Kyrgyzstan, Myanmar, Laos, Lebanon, Nepal, Netherlands, and Albania.

Now, if you think this is just a fad, a trend that will eventually die down, then maybe you may have to reconsider. In my opinion, the use of medical or medicinal marijuana is just the start of a major industry. In fact, some of the producers of medical marijuana have already found themselves listed in stock markets in other parts of the world.

After all, in the United States alone, online publication Market Watch reported that Marijuana Business Daily estimated the overall impact of cannabis products on the US economy to hit around $47.6 billion to $68.4 billion by 2021, based on sales of medical and recreational marijuana at the retail level, including flower, infused products, and concentrates.

To date, Uruguay and Canada have legalized the use of medical marijuana on a nationwide basis. In the United States, 29 states as well as the District of Columbia (where Washington DC, the White House, and the US Capitol are) have reportedly allowed possession and consumption of marijuana to some extent. Recreational marijuana use is now also reportedly legal in Alaska, California, Colorado, Massachusetts, Maine, Nevada, Oregon, Washington, and the District of Columbia.

And publicly listed companies are benefitting from these developments. According to a 2017 report by Market Watch, these listed companies include The Scotts Miracle-Gro Co. (NYSE, Market cap: $5.88 billion); Canopy Growth Corp. (TSX, Market cap: $4.18 billion); GW Pharmaceuticals PLC (NASDAQ, Market cap: $3.42 billion); Aurora Cannabis, Inc. (TSX, Market cap: $3.17 billion); and, Insys Therapeutics, Inc. (NASDAQ, Market cap: $515.4 million).

Market Watch noted that as of December 2017, five of the six Canadian firms on the top 10 list were involved with “cultivating and selling the plant,” and of the four US firms on the top 109 list, Scott’s Miracle-Gro was an “agricultural technology firm” while GW Pharmaceuticals, Insys Therapeutics and Cara Therapeutics were “biotech” firms.

cannabis marijuana

Market Watch also noted the first initial public offering, in 2016, of a real estate investment trust (REIT) focused on owning and managing indoor grow facilities reached the equities markets. “Innovative Industrial Properties Inc. (NYSE) even posted a share price gain of nearly 30% in 2017. The company’s market cap is nearly $82 million. Other marijuana-focused REITs have formed and at least one other is publicly traded,” it added.

Just recently, the Philippine Congress passed a bill that intended to legalize and regulate the use of medical marijuana or medical cannabis. A report by CNN Philippines noted that under the bill, doctors licensed by the Philippine Drug Enforcement Agency can prescribe the use of medical marijuana for qualified patients, and products can be accessed from accredited hospitals, as well as “Medical Cannabis Compassionate Centers” to be put up.

To date, the bill has no counterpart measure in the Senate. Senate President Vicente “Tito” Sotto III has argued that such a bill was unnecessary as Republic Act 9165 or the Dangerous Drugs Act of 2002 already allowed the use of regulated substances for “compassionate” reasons, subject to the approval of government regulators.

Legalizing the use of regulated substances, particularly in the Philippines, is not without precedent. As noted by historian Ambeth Ocampo, a decree signed by President Emilio Aguinaldo on Nov. 20, 1898 actually authorized the “limited and contained use” of opium in Binondo, Albay, and Sorsogon.

To limit opium use, which was then deemed a public menace, Aguinaldo had the practical sense 121 years ago to instead restrict and regulate the vice rather than, perhaps foolishly, to ban it completely. But, whether his government or his officials — or Aguinaldo himself — was “compensated” for this action is uncertain. The Aguinaldo decree, issued to local officials, read:

“The service of leasing opium-smoking establishments being in a state of neglect on account of the state of war in which this territory found itself, but which is now under a form of government, it is urgently necessary to establish same for the double purpose of restricting it as far as possible on account of the harm it causes hygiene and public health. With the concurrence of the treasury department, I hereby order the following:”

“1st. Provisionally and until the government shall have awarded definitely at public auction, the lease of aforesaid service, which shall be effected shortly, after the proper proceedings which the case requires, the same is awarded to the Chinese: Francisco Bonifacio, Nubla Lim Chico, and Felipe Lim, residents of the district of Binondo, Manila, for a term of one month extendible.”

“2nd. The same department shall authorize a provisional contract with aforesaid Chinese at the rate of P1,200 per month, limiting the same to the provinces of Albay and Sorsogon, district of Catanduanes.”

“3rd. A copy of this decree shall be forwarded to the military and provincial chiefs of the provinces mentioned.”

“I have the pleasure of referring the same to you for your information; you will immediately make the award to the Chinese contractors aforementioned and report to this office the date when it is effected; furthermore, you will please order the local chiefs of your jurisdiction to please publish this by posters in the local dialect and acknowledge receipt of the same.”

It was, in my opinion, a pragmatic approach to regulating a vice: regulation with taxation. In fact, I reckon the regulate-tax strategy would have remained if not for our colonization by the Americans after their defeat of Aguinaldo in 1899. Allow me to quote a portion of the World Drug Report of 2008, which stated:

“The topic of opium reform reacquired currency in the USA following the occupation of the Philippines in 1898, which included the acquisition of a large ethnic Chinese opium addict population. The US authorities found that Manila alone had some 190 opium dens retailing a total of 130 metric tons of opium per year.”

“Under Spanish rule, the opium trade in the Philippines had been farmed out to state-licensed opium monopolies. Taxes from the industry generated a substantial portion of the government’s revenue, and it had been proposed that the US maintain this system. The proposal was within two weeks of being adopted [by the US Congress] when it was derailed by a last-minute campaign by Manila’s missionaries.”

It is ironic that making opium illegal was recommended by an Opium Committee for the Philippines that was appointed in 1903, which included the Episcopal Bishop of Manila, the Reverend Charles Brent, who was a Canadian national. More than a century since, Canada itself has become the second country in the world to actually legalize the use of medical marijuana.

I am keeping an open mind regarding all of these developments. But, as long as backed by sufficient scientific and medical studies and economic research, I would go to the extent of even suggesting that the Senate consider not only a bill allowing the use of medical marijuana, but even the amendment of existing laws to possibly allow the cultivation of marijuana locally and the processing of the plant for the production of medicine for here and for export abroad.

 

Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.

matort@yahoo.com