The young and reemergent cannabis industry is being held back by the big elephant in the room. Let’s look into the trust and credibility factor in cannabis.
The cannabis industry has become legal and regulated only recently. In many jurisdictions, the US Federal Government’s being the clearest case, regulation is confusing and often inconsistent. As a new legal industry, trust and credibility are critical for growth.
Trust and credibility are tough subjects in an industry that is booming at light speed. The cannabis industry is growing very quickly and is expected to be worth more than $30bn in the US alone by 2025. Cannabis crops are diverse and applied in many industries. Cannabis plants and their cannabinoids have also recently been studied more thoroughly for medical potential.
All things considered, the cannabis industry’s growth is outpacing its regulatory framework. Given regulations, public image and stigma, and (in some cases) the lack of traditional financial services, the cannabis industry must overcome these challenges and foster trust and credibility to thrive.
Fortunately, there are already many solutions to these issues being explored. Let’s look at those issues and the potential solutions.
Lack of payment solutions
In some places, the cannabis industry is stuck in an awkward corner. In the US, banking is a constant challenge. Cannabis is still illegal at the federal level. All the while, medicinal cannabis is legal in three dozen states and recreational cannabis is legal in 17. Despite most of the country allowing access to legal cannabis, banking services are usually unavailable to them.
The result of this situation is that most cannabis businesses in the US are relegated to cash alone. Cash-only businesses become increasingly difficult to manage the larger they grow. Many in the US cannabis industry believe that access to banking services can’t come soon enough.
While the lack of banking services in the US cannabis industry is very strange, it’s not a uniquely American issue. Many European businesses face a similar problem but under different regulatory circumstances.
The UK may not be the largest CBD market, but it’s still a rapidly growing one expected to reach £1bn per year in 2025. The problem is that while many CBD products have grown popular, many payment processors may force businesses to clear their stock.
Finding a reliable payment processing option is difficult for cannabis businesses worldwide. Unlike other businesses, cannabis businesses can be sent an ultimatum: clear their cannabis inventory or have payment processing halted.
This all leaves cannabis businesses in a difficult situation. First, cashless payments are a trend that is only increasing. Many people in countries around the world are already almost forgoing on cash altogether. Cannabis businesses, including CBD ones, rely on e-commerce online payments and deliveries. Some payment processors have been known to cease their payment processing suddenly.
When cannabis businesses are faced with the absence of payment processing, it hurts their reputation. The cannabis industry’s reputation has been carefully cultivated. But for a public that relies on cashless payment options, this threat to cannabis businesses is very real. So, some cannabis businesses must rush to find alternative payment service providers. In some cases, they rush to sub-par payment service providers. This can cause them to have difficulties providing adequate customer service.
It’s clear that the cannabis industry needs reliable payment solutions to grow and maintain trust. At Canxchange we are proud to host a payment solution operated by the conventional banking system that we provide our members.
There are a growing number of cannabis payment services. While these cannabis-industry-specific solutions do offer an alternative, many of them still miss out on credit card processing. This depends on your jurisdiction, of course. In the US, cannabis companies cannot legally accept credit card purchases.
Options that still work and are legal include ACH payments and eChecks. Also, there is the option of a dispensary credit card, essentially a merchant account for customers. They typically use P2P technology like Venmo to facilitate card transactions.
Of course, if possible, find a reliable processor that can accept major credit cards. Fortunately, the startup space for cannabis payment processing is very active. Legal solutions to the payment processing issue are quickly establishing themselves.
Shady and illegally operating companies
Unfortunately, this factor is beyond the control of most legal and honest cannabis businesses. The fact of the matter is that many illegal cannabis businesses have emerged alongside the businesses that operate legally. Of course, illegal cannabis dispensaries do not need to follow the same rules as their legal counterparts. This is not a good look for the cannabis industry. It’s even formed a wedge between the legal medicinal and recreational cannabis communities in some areas.
The cannabis industry has already produced several scandals. The confusion surrounding regulation has allowed some illegal businesses to thrive while maintaining the appearance of complete legality and legitimacy. It’s safe to say that many cannabis consumers have likely ordered cannabis from an illegally operating business while having no idea that they have been doing so.
Also, legal cannabis businesses face the challenge of shady payment solutions providers. Most are just looking for a legal and sustainable way to enable their customers to pay them the way they want to.
These issues have several solutions that all serve to promote transparency and promote confidence in legal and ethical businesses involved in any part of the cannabis industry. “Seed-to-Sale” POS systems are developed specifically for the cannabis industry.
They enable the tracing of all transactions and actions from the purchase of seeds by a grower to the sale of finished products by retailers and dispensaries. This removes much of the “shadiness” associated with the cannabis industry in the eyes of the regulators and the consumers.
Cannabis businesses can take part in promoting trust by making licensing and certifications public knowledge. They can also provide educational materials on these topics through handouts or on their websites.
The bottom line
Cannabis is becoming more accepted by society. Whether the plant’s cultivation is for medical, industrial, or recreational use, more people want it.
However, the industry must still confront the stigma stemming from a generation of illegality. Then there’s its past, sweeping association with psychoactive drug abuse. While regulators are often slower than the general public to react to these changes, there are steps that those in the cannabis industry can take to further build up trust and credibility with both regulators and consumers.
Panaxia to expand its Malta production plant with $6m investment
Panaxia’s investment in the country is a “milestone” for Malta’s medical cannabis industry, says Minister for the Environment, Energy and Enterprise.
Israel-based Panaxia is set to expand its medical cannabis production facility in Malta and will export its first products to Germany in the coming weeks.
Panaxia is set to deepen its connection with Malta as it plans a further expansion to its local production plant now the company has obtained its EU-GMP licence.
The company received an official license from the health authorities in Malta to manufacture finished medical cannabis products in May, 2022.
The news of Panaxia’s $6m (~£4.95m) investment was announced during a visit to Panaxia’s Ħal Far plant by Malta’s Minister for the Environment, Energy and Enterprise Miriam Dalli.
Panaxia aims to enrich the Maltese production portfolio with products aimed for both Europe and Latin American markets. To do this, its Malta facility will diversify into an array of products ranging from the production of tablets, oil and extracts, as well as carrying out clinical trials, stability experiments and research and development.
Minister Miriam Dalli described Panaxia as an early success story for one of Malta’s newest economic niches.
Minister Dalli commented: “Malta Enterprise has been in discussions with Panaxia since the early days after the enacted legislation in 2018. Today, Panaxia is only marking the start of its actual production, but it is already planning an expansion in its facilities.
“This is another milestone reached for our medical cannabis industry – an industry which further enriches our wider pharmaceutical sector. Malta is the ideal location for such operations, whereby specialised products are developed for the global healthcare supply chain.”
CEO of Panaxia, Dadi Segal, commented: “I am impressed with the role of Malta Enterprise in their support to our Malta team at Panaxia on various levels, not just the financial assistance but also the constant communication and facilitation.
“We had to build this facility from scratch and the process was long but soothed through Malta Enterprise’s constant guidance.”
Panaxia also operates from locations within the United States, Canada and South Africa, and is currently in the process of registering products in Portugal, Greece, Poland and Brazil amongst others. Its range of pharmaceutical products, over 60 in all, are mainly based on cannabis plant extracts and treat a variety of ailments including nausea, anxiety and depression.
Cannabis extract registered in Poland by Curaleaf International
The landmark registration signifies Curaleaf’s continued expansion into Europe.
Curaleaf International has registered its cannabis-based medical extract in Poland with local partner CanPoland SA.
Curaleaf International’s product registration in Poland will help to meet increasing demand for cannabis medicine in the country. According to Prohibition Partners, Poland is currently one of Europe’s largest medical cannabis markets by patient size. Its market is expected to reach €2bn (~£1.69bn) by 20282.
The licensed product, which is 100 per cent European sourced from plant to manufacture, is part of Curaleaf International’s proprietary product range that has now launched in five key European markets, including the UK and Germany.
Curaleaf International president, Miles Worne, stated: “This licence in Poland is another sign of Curaleaf International’s strong momentum in Europe. The medical cannabis market in Europe continues to expand rapidly, as regulation opens up and access for patients improves.
“Since the legalisation of medical cannabis in 2017, Poland has become one of the largest European importers of dried flower and is an excellent addition to Curaleaf International’s expansion, given its fast-growing patient numbers and significant addressable market.
“Curaleaf International is driving growth in existing key markets, with the UK in particular witnessing a huge increase in patient numbers, whilst continuing to drive expansion into new markets across Europe.”
Curaleaf International has also recently announced registrations of products in Malta, and was the first company to register a THC cannabis extract Active Pharmaceutical Ingredient in Italy.
The company has stated that this news, along with the opening of the Swiss medical cannabis market and Curaleaf International’s renewing of its GDP licence in Switzerland, is an example of where the company is ideally positioned to capitalise on positive market movements across Europe.
Medcolcanna signs European medical cannabis sales agreements
The company has entered into sales agreements with German company, Greenstein, and Cantourage.
Canada-based globally integrated medicinal cannabis company with operations in Colombia, Medcolcanna, has signed two EU sales agreements for EU-GMP and CUMS-IMC certified dried flower.
Medcolcanna has signed agreements with German-based Greenstein, as well as Berlin-based Cantourage.
The sales agreement with German-based Greenstein has a three-year term, with the possibility of extension, and establishes a minimum purchase of 1200 kg during the first year, 2000 kg during the second year and 2,500 kgs during the third year.
Its sales agreement with Cantourage for Germany and the UK has a five-year term, with the possibility of extension. The initial forecast presented by Cantourage establishes approximately 800 – 1000 Kgs for the first year.
Cantourage will distribute the flower through its proprietary clinics and distribution in the UK and through its network of pharmacies in Germany. Medcolcanna has developed a new brand for distribution with Cantourage in UK and Germany, followed by Poland within the next few months.
Six Medcolcanna proprietary strains have been already registered with the German Narcotics agency, and the production will be based on supply from the Medcolcanna farm located near Bogota. Additionally, THC quotas have been granted by the Colombian Government and are in place with the first exports expected by October to November 2022.
CEO Felipe de la Vega commented: “It has being a long and difficult journey since we created the company. A market that we were trying to understand and anticipate but that was being created. Therefore, making decisions was more complex.
“CBD market for extracts and isolates became very competitive with the US hemp farm bill affecting projections. The market for THC extracts is highly regulated, requires multiple certifications and a lot of investment, and still is a very small market compared with flower.
“Now the approval of flower export has allowed us to really gain traction in Colombia supply, as a high quality, low-cost producer, and the result of it is the multiple contracts we have now in place and we continue to negotiate. Starting November 2022, we expect recurrent revenue with high margins and good profitability.
“This combined with internal decisions that have helped us to reduce our G&A and cash burn makes our company a sustainable and profitable target for investors and we are pretty confident that before the end of the year we will be in a completely different situation.
“We continue supplying internally medical formulations currently approximately 300 per month and growing at 15 per cent per month. Now we are really getting to an interesting point for the company, with a very clear path forward and the possibility to generate profits for our investors.”