The cannabis market is transitioning from illegal to legal around the World right now. This is a truly seismic event as witnessing a well-established, deep, liquid market with millions of participants transition from illegal to legal is an extremely rare occurrence, with perhaps the end of alcohol prohibition c. 100 years ago being the only comparison. This makes it such an exciting prospect for all stakeholders in the industry. It’s an opportunity for millions of patients to improve their access to medicinal cannabis without the fear of criminalisation and, for those jurisdictions that implement correctly, significant economic development in the form of job creation and tax revenues.
After thousands of years of cannabis being used legally and for therapeutic purposes, an era of prohibition came in meaning that for many people alive today, cannabis has been illegal for most of their lives. The relatively recent shift in legal status started with a medical programme in California in the late 1990’s and has gradually been picking up pace since then with many countries legalising the use of cannabis for medicinal purposes during the last 5 years.
In 2021, new legislation was approved by the Isle of Man Government to allow the cultivation, extraction, manufacturing, importation and exportation of medical and industrial derived cannabis products. In allowing the Island to enter the global legal cannabis market, it exposes the jurisdiction to a global market valued at $17,8 billion in 2021, which has an expected compound annual growth rate of 25.3% from 2022 to 2030. (Grand View Research)
Prior to this change in legislation, the Isle of Man Government ran a public consultation for a cannabis regulatory reform in 2019 to gain an understanding of public support. The consultation resulted in 99% of respondents in favour of a cannabis regulatory reform, particularly strongly in the area of improving patient access to cannabis based medicine, which provided them with a clear indication to explore the sector further. This consultation also gained the second highest response of any public consultation which shows the overwhelming public support for change in this area.
Subsequently a further cannabis consultation took place on the licensing regime which underwent a series of assessments by multiple external parties to present a fair regulatory process and license fee structure. The idea being that by gaining 360 degree feedback, the island could establish a regulatory framework that is advantageous to businesses whilst remaining robust and credible. The feedback demonstrated strong demand from various industries, not just directly cannabis operators but also some ancillary service providers indicating economic potential. The response enabled the Government to mitigate risk and take into account suggestions. The overall response encouraged multiple separate licenses and fee structures, with the focus on increasing flexibility within the industry supply chain.
The emerging Cannabis sector has been identified as a strategically important new sector that could boost the Isle of Man economy by c. £3 million annually. There is target to generate 250 jobs within  years which will directly increase Treasury income via income tax and national insurance, as well as VAT on domestic expenditure by those employees. (Isle of Man Department of Enterprise) At the same time it will provide high-value economic diversification and generate revenue and employment in multiple related industries such as Medical, Nutrition, Agriculture, Construction and Transport. The sector will look to attract quality businesses and encourage the development of innovative and sustainable projects.
The regulator on the Isle of Man is the GSC Cannabis, which is part of the Gambling Supervision Commission (GSC). The GSC holds a reputation as arguably the leading e-gaming regulator in the world with a sophisticated regulatory framework. The GSC will provide the sector with a modern approach in multiple licensing pathways under the new legislation, which are categorised by the production phases and type of cannabis product intended to be developed on the Isle of Man.
The regulatory framework with multiple licenses enhances flexibility for interested parties from different areas of specialism and industries which encourages innovation across the sector. The variety of licences include; Industrial Hemp, High THC Cultivation, Import/Export, Manufacturing and Extraction, Analysis, Research and Development and Transport and Storage.
As an emerging market, the last year has been a critical time for interested parties to become first-movers in the sector. During that time there has been much activity in both the private and public sectors. Whilst the legislation passed in January 2021, the drafting of regulation had only been finalised in June 2022.
Since then, there have been developments in the sector including the first local pharmacy license to dispense cannabis being granted for a trial period of 12 months. The trial will also provide the Government with a body of real world evidence on efficacy in treating various medical conditions and pharmacovigilance on a smaller scale. (BBC News) Also, cannabis was featured in the recent ‘Isle of Man Economic Strategy’ paper prepared by KPMG as a target sector for economic growth and diversification.
More than 3 years have passed since the first public consultation on the island and many people are understandably frustrated at the pace of progress. However, being an optimist, I’d like to think that the foundations have been laid for faster progress in the years ahead. Could 2024 be the breakout year for the legal cannabis in the Isle of Man, UK and Europe? I’d like to think so…
In June 2022 the first conditional licence was granted to GrowLab Organics (GLO) granted by the GSC, to cultivate, extract, manufacture, import and export cannabis. GLO’s mission is help people live better through the power of cannabis. GLO intends to do this by to creating some of the highest quality cannabis in the world, thereby reducing the need for people to source cannabis from illicit sources for medicinal purposes.
Chief Executive of GrowLab Organics, Alex Fray, has lived on the Isle of Man for eight years and believed incorporating in the jurisdiction had many unique advantages to offer, such as flexible legislation, a proven supportive Government and a robust regulator that holds a transparent reputation.
As a company centred on ethical responsibility and a mission to be a positive force for change, Alex placed high significance on understanding the public’s response to the introduction of cannabis regulation in the Isle of Man.
The company established on the Isle of Man will directly contribute towards the Island’s economy through revenues in tax and employment, in addition to utilising local industries, such as construction and architecture.
In any regulated cannabis environment, a high level of security is critical which must involve detailed tracking at every stage of the supply chain to account for all of the cannabis produced. In this case, the company have implemented the blockchain technology, which they have titled the ‘Glochain’ which creates a permanent record of all the data from the cultivation stage to the exportation stage.
Affinity Group Services
As an experienced Corporate Service Provider on the Isle of Man in niche and emerging sectors, specifically eGaming and Fintech, our teams hold an integral understanding on the Isle of Man’s regulatory regime and licensing process.
Our established relationship with the Gambling Supervision Commission, the Government and network of intermediaries including banks and law firms, places us in an excellent position for the regulated cannabis sector on the Isle of Man.
In the last year, we have adopted a pro-active approach in developing our knowledge on the sector and networking within the community. We are developing key relationships to support our position as a leading Corporate Service Provider in the space.
We have been assisting clients in the eGaming sector since 2014 and provide a personal approach to corporate services. We hold a 100% licence application success rate within the eGaming sector, which demonstrates the standard of our applications that we form on behalf of the client.
Our services are bespoke and tailored to meet the needs of a unique business model, and include;
- Cannabis Consultancy
- Business plan assistance
- Licence application compilation
- Assistance with government grant applications
- Establishment of bank accounts
- Liaison with regulators, lawyers and auditors
- Local employment assistance and guidance
- Company incorporation and administration
- Provision of directorship services
- VAT registration
- Completion of VAT returns
- Provision of company Directors and Secretary
Visit our Cannabis page for more information, or contact our team for a discussion on your cannabis business model at email@example.com.