Opinion – Global Cannabis Reform: Two Steps Forward, One Step Back

With so much of the current news focus on North American cannabis legalizations, one may need to be reminded that cannabis reform has been happening for a long time around the globe. The November 2020 U.S. election brought several new states under some form of expanded legal guidelines and Mexico has recently voted to begin the process of transforming into the world’s largest legalized cannabis economy, but what other parts of the world are seen as leaders in this space or emerging areas to focus on the challenges of reform?

No global discussion about the onset of cannabis reform would be complete without the inclusion of Israel. Starting in 1963 with Professor Raphael Mechoulam’s work at the Hebrew University of Jerusalem in isolating first cannabidiol (CBD) and later the psychoactive delta-9-tetrahydracannabidol (THC), Israel has always been a leader in both the science and efficacy of medical cannabis.

While the United States was engaged in the “War on Drugs” in the 1970’s, the Israeli Defense Force was clinically working with medical cannabis on the treatment of PTSD. Israel began work on true reform in 1995, however, it was not until 2018 before a fulsome program of cannabis reform was implemented including the authorization of cannabis exports. As North America began its reform, a large amount of the science, intellectual property and growing methodology were brought in from Israel to kick start the fledgling industry.

Israel is now at the forefront of the science and efficacy of medicinal psychedelics including psilocybin or “magic mushrooms”. While the ground-breaking decriminalization in Oregon and medical use of these drugs in Canada for palliative care has only begun, Israel had federally approved the compassionate use of MDMA in early 2019. As with cannabis, these reforms begin with medical use and eventual “de-stigmatization”, before bringing the leading scientists, clinicians, businesses, and industry together. This is something that Israel has led North America on for some time.

However, reform does not come without setbacks. The U.K. and many EU countries have had to temporarily hold or review their stance on importing cannabidiol (CBD) for health purposes, as creeping levels of Tetrahydrocannabinol (THC) have been tested on imports again and again. Cannabis and hemp after all are still plants and climate, soil, and the understanding and control of those tending to these crops have a dramatic effect on the outcome. Columbia and Uruguay are only in the infancy of setting the standards for the export of cannabis flower for commercial purposes and already the guidelines are in constant flux on where and to whom these commodities may ultimately ship to.

The hidden truth of the industry is that it is very difficult to get certain that every lot of cannabis tested and exported is identical to the next lot. Whether it’s from the same farm, greenhouse, or even the next plant. Cannabis by its very nature is temperamental and takes in all the impurities of the soil, air, and pests of its environment. Biological material sent for lab testing to establish a Certificate of Analysis (CoA) is tied to the lot it was produced, but there is no universal standard for the size of that lot, the number of labs you may send the material for testing, or the time at which those materials are ultimately shipped. Even with every good intention, a CoA can very quickly not be representative of a larger batch. This does not even account for the opportunity for the materials to be substituted or mixed with unregulated biomass by “grey market” participants. Additionally, the commercialization of cannabis legality not only affects producers, breeders, processors, and cannabis seeds retailers but also consumers.

With all the global progress of late 2020 from the United Nations and the World Health Organization (WHO) voting to update some of the technical controls on cannabis to Australia shipping their first cannabis products to Germany for use in clinics, the United States cannabis legalization reform still remains in sharp focus. A new President, Congress, and direction bring the International focus on the U.S. for two keys reasons: banking and the FDA.

Despite the legalization of cannabis in numerous countries around the world, the U.S. banking system is basically connected to all the world’s banking systems. With the federal U.S. government’s prohibition on the interstate and international cannabis business, U.S. banks are highly restricted in participating in the larger global market. This severely limits operational accounts and credit for many operators domestically and internationally. Capital markets and investment continue to pour into the sector, but the standard mechanisms of International trade are cumbersome at a minimum and impossible at others. This limits innovation, security, and progress needed for true reform.

The Food and Drug Administration (FDA) is technically not involved in the approvals or definitions of the safety or efficacy of medical cannabis under the current legal structure. It does however have discretion over the definition of CBD derived from hemp in consumer products. Large consumer product manufacturers are monitoring the reform process closely and will look to the FDA to set guidelines if and when federal cannabis reform is completed.

Pharmaceutical companies who are also tightly connected to the rules of the FDA are also poised to enter the market. The recent proposed acquisition by UK company Jazz Pharmaceuticals of GW Pharmaceuticals for over $7 billion dollars surrounds entirely the value of Jazz’s ability to take GW’s proprietary cannabinoid product platform, including its flagship product Epidiolex® to larger markets.

The global cannabis industry remains hopeful that the SAFE Banking Act proposed in Congress will open new opportunities in the US and around the world by relieving the legal pressure on larger US banks to enter the greater cannabis market. The FDA will continue to face the pressure of regulating a product that is medicine, food, and narcotic in years to come.

The global prospect of cannabis reform looks to remain an uneven process, with government, industry, and black-market participants all vying to influence the next phase of regulation and compliance. Anticipating consumers’ needs/requirements must be at the center of that discussion. The creation of a true traceable and transparent product supply chain will be a key element in providing customers with knowledge about the safety and quality of the products they will consume. This will require domestic and global collaboration between all parties to establish a commercial ecosystem that is fair and equitable to all participants.

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