The Rise of Traditional Farmers in the Cannabis Industry

Whatever the exact reason may be, there are signs that support is increasing for traditional marijuana farmers, from the economic volatility following COVID to the evident financial slump in marijuana inventory.

Evidence shows that traditional farmers are facing prolonged competition in regulated and certified markets. According to the 2021 International Cannabis Policy Study, approximately 43% of all cannabis sales in the United States still go to the unregulated market, although this percentage varies by state.

According to calculations based on the total consumption and legal sales revenue, 60% to 75% of sales in California, for example, do not come from the regulated and legal sector of the industry, but rather from traditional farmers supplying the illegal market.

Outside of North America, this is a frequently discussed topic as reform moves towards globalization.

Who are traditional farmers?

In the United States, this term refers to individuals who have been cultivating marijuana for several decades, often because medical use is permitted under California state law.

In overseas countries such as Europe, Africa, and Asia, the definition and details of small-scale, non-corporate, usually family-run agricultural businesses may vary depending on the country and background. However, ultimately it refers to the same thing: a traditional form of agriculture that has been passed down through generations, even if it has not historically focused specifically on cannabis.

For this reason, it is interesting to understand how this movement is expanding internationally.

North America

Steve Bevan, a partner at OCan Group LLC, has stated that the company is a cannabis strategy and consulting firm committed to establishing a strong and sustainable cannabis supply chain in the United States and globally. Bevan said that the “traditional market” as understood by Americans refers to the current illegal market, which includes growers in rural areas and cartels in the South. This infrastructure extends all the way from production to distribution networks.

Bevan stated that, aside from the inconsistency between government policies and regulations and the existing supply chain, "customers are satisfied with the old products. This is fundamentally a distribution issue." (Editor's note: Bevan previously founded GenCanna Global, a Kentucky-based cannabis processor and CBD distributor, in 2014, and became a founding member of the U.S. Marijuana Roundtable in 2017 as well as the chairman of USHR's board. In 2020, GenCanna filed for bankruptcy and completed a Chapter 11 restructuring, selling its assets for $77 million.)

Canada - According to the Canadian national postal service, like the United States, how to solve this problem remains an unresolved issue north of the border.

However, Assistant Professor of Psychiatry and Behavioral Neuroscience at McMaster University, Mike DeVillaer, told the news media that according to academic research and government intelligence, "Aside from producing and selling marijuana, most growers and sellers are not breaking any laws.

Europe

Germany - Despite the direction of complete legalization still being undecided, the German government appears to be supportive of small-scale marijuana growers. This is happening on two tracks. Over the past seven to eight years, the number of farms growing marijuana in Germany has increased by 900%. Farmers growing marijuana are even receiving government subsidies to cultivate the crop. Furthermore, legalization legislation may allow for home cultivation and recreational markets, at least initially, completely sourced from domestic farmers.

Therefore, Germany is likely to create a significant amount of small-scale production in the initial stages, including efforts to suppress patients, non-professionals, and semi-industrial growers, as well as the industry's flourishing in the coming years (regardless of what ultimately happens with imports).

Spain, the Netherlands and Portugal - the other three major emerging cannabis markets in Europe - also have a cultivation infrastructure that mixes "traditional" and officially certified production.

Portugal's liberal attitude towards marijuana has created a medical industry, primarily exporting to Germany, pioneered by Tilray. Many of the farmers involved in this industry have backgrounds in growing other crops such as tomatoes. When compared to other European countries, Portugal's approach towards marijuana stands out.

The cannabis licensing system is controlled by the National Medical Products Administration and IP or Infarmed, who issue annual renewable cultivation licenses. The number of licenses required is determined by the country's needs. Cannabis and medically certified high-THC cannabis are both included in the licensing system.

In addition, there are regulations regarding indoor and outdoor cultivation. Medical cannabis must adhere to international pharmaceutical standards. Cannabis must be cultivated outdoors and on plots of land greater than 5 hectares, with a plant yield of at least 30 kilograms per hectare.

Carlos Nunes is the Chief Financial Officer of Portuguese consultancy firm Pangolin, which assists growers and manufacturers in obtaining medical-grade (EU GMP) cannabis licenses. He is at the forefront of this discussion.

Anyone with experience in agriculture is more likely to obtain a medical cannabis cultivation license, but they must also have a lot of money to engage in EU GMP-compliant operations, he said. "This is often the biggest obstacle faced by traditional farmers, and small farmers are often even more difficult to overcome on their own. So I would say that this is obviously a major obstacle, but not insurmountable.

When it comes to discussing marijuana, the barrier to entry is much lower. "For marijuana growers, this is certainly easier because they don't need a medical license and it's easier to conduct business," Nunes said.

In Spain, the situation in the gray market is somewhat complex, but the industry is clearly divided between those with "medical" European Union GMP licenses and everyone else. The Spanish Agency of Medicines and Medical Devices (AEMPS) states on its website that six companies have obtained licenses for cannabis production and/or manufacturing for "medical and scientific purposes," while 15 have obtained licenses for research. Then there is a mix between legal industrial cannabis growers and illegal growers providing for cannabis clubs, both operating on a fragile and uncertain frontline with authorities.

However, so far, the first international legal conflict between farmers and the government ended with losses for the former. Last year, the European Court of Human Rights dismissed activist Albert Tío's appeal against his criminal case in Spain. Tío is an activist who led clubs and related planting movements. This means that he is currently serving a sentence in his home country because of his role in inciting support for local planting rights across the nation.

The Netherlands is adopting a mixed approach. The government is currently creating a state-regulated industry "experiment" by issuing ten cultivation permits to growers across the country. These crops will be shipped to coffee shops outside of major cities (which are currently not required to purchase from the ten permitted national growers). While traditional cultivation here seems to be threatened, the ten permitted growers are, to some extent, representative, as many of them are "traditional" growers - just of other crops. Of course, beyond this, club-driven cultivation in large cities has not been stifled and may never be stifled.

Africa

South Africa - Peter Bennetto, CEO of Steadfast Investments, a company based in South Africa, has announced plans to connect local traditional farmers with the international marijuana industry to legally export high-end, EU GMP-compliant flowers, crops, and cannabis-based products. "The entire legacy farmer is at the forefront and center of the domestic legalization debate," Bennetto said. South Africa has two types of traditional farmers with similar needs but different circumstances. For those farmers who have the capital to expand easily and view cannabis as a valuable rotational (if not risk-hedging) crop, fast access to the global market is key to their long-term success. However, for those unable to secure the funds to export to Europe and meet EU GMP standards, the passage of the legalization bill has been delayed due to COVID and local disputes over small farmer rights. Currently, the government views the legalization of cannabis mainly as an opportunity to introduce permits and other fees that small-scale micro-growers cannot afford. This debate has reached a national boiling point, with unions and other groups joining farmers in opposition to the development of legislation and policies.

Morocco - According to experts currently in talks with local farmers' cooperatives, the ten licenses provided by the government have helped to promote legal production among traditional cultivators in the Rif Mountains.

Although the regulatory system has not been clearly established, the Moroccan version of reform appears to be celebrating the pioneers of mountain agriculture, who have long produced the globally renowned hashish. It is evident that Morocco's policy aims to restore the dignity of traditional cultivators and their rural agricultural communities. The evolution of this traditional cannabis cultivation and processing could potentially develop a regulatory framework that ensures local output meets domestic and international distribution requirements.

Asia

Thailand - The government has embarked on a comprehensive reform revolution while also prioritizing the growth and distribution of heritage. This requires that all companies involved in the cultivation of cannabis, including those that produce low-THC varieties, must have a majority of Thai ownership. In addition, local farmers are allowed to grow cannabis on their small plots of land and transport it directly to local hospitals.

The government has begun giving away marijuana plants, with an announcement to gift 1 million plants as a means of encouraging sustainable growth in the population. Thailand's example may be one in which a government has embraced the concept of small-scale, sustainable, traditional marijuana farming, but the lack of easily understood regulatory framework means addressing the evolution of small producers from well-meaning to economically stable is necessary.

According to Bevan, the actions taken by the governments of Thailand and Morocco are more consistent with traditional markets and are focused on transforming these markets into legal entities. Bevan argues that reforms should empower rural farmers and align with sustainable development goals. Investing in controlled marijuana cultivation has the potential to improve the conditions of many rural farmers around the world.

Marguerite Arnold is a leading journalist, advisor, and entrepreneur in the legal European cannabis industry based in Frankfurt, Germany. She has also authored two books on global cannabis reform.