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All Eyes on Europe

After several US states and Canada blazed the trail, Europe has become a leader in opening up new cannabis markets. Germany – one of Europe’s largest economies – looks set to be the next domino piece to fall in this major global transition, and a number of eyes have now turned to the UK. Is it only a matter of time before legalization reaches British shores? 

Earlier this year, the UK government released a new drugs strategy. Immediately following its debut, detractors began to criticize the new policy, calling it “regurgitated tough-on-drugs rhetoric.” According to the critics, Britain is falling behind several EU countries (and others around the world) that are making more progressive moves towards legalization. Cannabis campaigners in the UK – led by Release, the national center of expertise on drugs and drug law – are calling for the government to make significant changes to the new strategy. For example, removing civil or criminal sanctions on the possession of cannabis, setting up cooperative models for distribution, and suggesting tax revenue be invested into communities that have been “over-policed and over-criminalized.” 

In their recent report, “Regulating Right, Repairing Wrongs,” Release also called for legal home cultivation of cannabis and the “automatic expungement” of previous cannabis-related convictions. Interestingly, the report highlights that cannabis “social club” models, like those seen in Malta, should be incorporated into any newly proposed regulatory system. Is there something to be learned from those countries, like Malta, that have gone before? 

Lessons from the trailblazers 
 

Malta has long been an important player in the European cannabis legalization conversation. In 2018, Malta allowed the production and licensing of both medical cannabis and research products, which included the ability to import medical-grade active pharmaceutical ingredients (APIs); cannabis products produced in Malta could then be exported into the wider European Union through EU-GMP facilities and licenses. In late 2021, Malta became the first European nation to legalize the personal use of cannabis.

Unsurprisingly, these regulatory moves didn’t go unnoticed – many companies have either worked with or explored production in Malta following the lifting of restrictions. And with Malta now expanding licenses for adult-use cannabis, this interest will only increase. Malta has laid the groundwork and demonstrated the obvious economic advantages to legalizing cannabis production, but this relatively small recreational market pales in comparison to the opportunity to access the larger medical market in the European Union. Recent moves by lawmakers in Luxembourg and the promise of the incoming German Government to provide legal adult-use cannabis serves to continue “normalizing” the consumption of cannabis products in Europe. When this is combined with a structure to provide a safer product and a taxable income opportunity, most analysts would say it’s only a matter of time before we see a safe and regulated EU cannabis market. 

But before these inroads were made in Europe, several US states and Canada blazed the legalization trail. Though California has had a medical cannabis law since the late ‘90s, Colorado “scooped” the sunshine state (so to speak) by being the first to legalize recreational use. The state was able to reap millions of dollars in tax revenue on recreational sales years before California could capitalize on opening up their legal market and setting a standard with regulations. Ever since, California has struggled to eliminate a thriving black market and now faces supply chain issues that threaten to sink their infant market by creating mammoth pricing and profitability issues. Meanwhile, Colorado raised eyebrows around the world when it reported a record $423 million in tax revenue from its well-regulated market in 2021. Regulators in the UK and EU should take this as a pertinent example of how competitive the cannabis industry is, how quickly it moves, and how late adopters can get left behind. 

So, act fast and act first. But don’t forget good management! Legalizing cannabis for adult use is a process, and when poorly managed it only increases the opportunity for a black market to succeed. Take the case of Canada – when the government decriminalized in 2018, they only allowed limited access to the product and no access to derivatives like beverages (shown to be the largest growth area and most approachable adult-use segment for new consumers). By making cannabis legal but not providing sufficient product, the black market flourished. With that came lower-quality products that were often laced with pesticides, no true quality control, and more dangers to consumers than before it was legalized. All important lessons for UK regulators and other EU countries.

When managed properly – high-quality production along with protected and smart distribution – the danger of the illicit or legacy market can be diminished (even eliminated) over time. The opportunity then for consumers to explore a safe and more holistic product that offers numerous benefits beyond THC (CBD for pain and inflammation, CBN for anxiety and sleep) can be safer than significant alcohol consumption and presents an opportunity for governments to move in new tax revenue as we recover from COVID-19.

Clinical horizons in the UK 
 

As of January 1, 2022, all insurance providers in Columbia are required to cover the cost to consumers of both high- and low-THC medical cannabis prescriptions. This is a major global development that has significant implications for Flora Growth – in 2021, we launched our Flora Pharma division led by Dr. Annabelle Manalo-Morgan. As part of this, we started global clinical trials on new therapeutics in partnership with the University of Manchester. A significant number of clinical trials are already being performed in the UK on cannabis and related cannabinoids to treat various medical conditions, and our intention is to work closely with government regulators as well as academic institutions to initiate studies to help identify efficacy, reduce costs, and efficiently move through drug development and commercialization activities on a global scale. The division intends to honor the traditional US FDA and UK NHS routes to ensure the consistency and quality of cannabinoids for specific disease conditions, with an initial focus on fibromyalgia, brain health, pain, and related research. 

This developing body of research should provide regulators in the UK and other countries with important medical evidence as they contemplate how and when to “jump in” and legalize cannabis – while reaping the rewards of an enormous economic advantage and increased tax revenue. There are indeed many lessons to be learned from the likes of the US and Canada, and I’m sure many will be eagerly anticipating the next move from across the pond. With the evidence already proving cannabis to be a safe and effective therapeutic – surely, it’s only a matter of time.

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About the Author
Luis Merchan

Luis Merchan is President and CEO of Flora Growth

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