THE Fair Trading Commission (FTC) is recommending that the Government create a funding facility for entrepreneurs and small farmers in the cannabis industry.
The recommendation follows the completion of a market study of the cannabis industry which revealed that funding is one of the major impediments in the industry.
The FTC report, which was released in August, stated "policymakers should consider establishing [a] source of funding to encourage easier entry/expansion of the legitimate trade of cannabis".
The agency said this is crucial as potential entrants may encounter difficulties accessing loans through local financial institutions given global efforts to limit the illegal trade of cannabis.
The recommendation was also made in light of the fact that access of legally produced cannabis to international markets is likely to be frustrated by numerous treaties established to curtail the illegal trade of cannabis.
Accordingly, the FTC is advising that "deliberate efforts should be made to develop the domestic trade", pointing out that the most efficient way of doing this is through a competitively organised industry.
Jamaican scientist Dr Henry Lowe, who has made several groundbreaking discoveries in the medical cannabis sphere, has indicated that he also struggles to find funding for his research. He told the Jamaica Observer that a lot of his funding came out of his own pocket.
He explains that local banks are afraid to do business with companies whose operations are related to cannabis, citing de-risking fears. This despite the fact that the firms seeking funding have been duly licensed and vetted by the regulator.
State minister in the Ministry of Industry, Investment and Commerce, Norman Dunn has said that discussions are taking place at various levels to resolve these issues. However, local banks have stressed that until further amendments are made to the SAFE Banking Act in the United States, doing business with cannabis-related firms jeopardises correspondent banking relationships.
In the United States the SAFE Banking Act has been passed in the House of Representatives six times. However, it has never passed the Senate.
The SAFE Banking Act aims to protect banking institutions — as well as their insurers — that choose to offer services to legitimate, cannabis-related businesses operating in accordance within their respective state laws.
In the meantime, the FTC highlighted there's still much work to be done on the legislative side, which the market study found to be restrictive.
"Legislation (including rules and regulations) that set up a requirement for the obtaining of licences, permits, or other authorisations as a prerequisite to entry or participation in a particular industry or sector, automatically raise impediments to entry, thus limiting the potential range of suppliers."
The conclusion echoes the sentiments of small cannabis farmers who continue to complain that there are too many bureaucratic hoops to jump through in order to start a legitimate cannabis business.
With that said, there's a recommendation for policymakers to limit the duration of programmes designed to protect small farmers from exiting.
"Otherwise, such programmes are likely to reduce the incentives of small farmers to compete through the adoption or more efficient business practices in the long run," the FTC noted.
In the same vein, policymakers are being encouraged to expand the customer base for the industry by expanding the purposes for which cannabis products may be used, in line with international best practices.
The FTC report concluded that "restricting the products firms can produce limits opportunities for firms to compete, and the consequent growth of the cannabis industry. These requirements can be stricter than necessary and can unnecessarily reduce consumer choices."
The agency stressed that fixing this problem will lead to greater consumer and producer surplus in the industry.
- We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper; email addresses will not be published.
- Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.
- We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.
- Please do not write in block capitals since this makes your comment hard to read.
- Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed: firstname.lastname@example.org.
- If readers wish to report offensive comments, suggest a correction or share a story then please email: email@example.com.