Jamaica Gleaner / The economic Growth Council has outlined a growth aspiration of five per cent of gross domestic product (GDP) over a four-year period. The reality of achieving this is hinged on our ability to efficiently coordinate industries to increase the collective productivity in a specialised niche market.
The United Nations has estimated that there are more than 15,000 hectares of land or little more than 37,000 acres being used to cultivate illegal ganja/cannabis in Jamaica currently. Based on these numbers, there is no better commodity to specialise in than cannabis, especially given the country’s wealth of experience in cannabis cultivation and secondary production processes.
Jamaica does not need to think outside of the box to increase its share of this global medical marijuana market, which is estimated to value US$55.8 billion by 2025.
Modern cannabis laws around the world are being enacted to achieve two primary objectives:
1. To reduce the crime and other negatives associated with the illegal trade.
2. To increase the income that the government would once have forgone if the industry is illegal.
We would assume, therefore, that whatever regulatory framework is being established is being done in such a way to facilitate the gradual conversion of these illegal cultivation to a legal industry, thereby reducing crime and present the opportunity to increase income. Use Canada as an example.
A CONVERSATION WITH LEADERSHIP
I was having a conversation with a former prime minister of Jamaica, who was curious about the direction in which the local cannabis industry is headed and the approach that the Government is taking to facilitate its establishment. We discussed several issues, including concerns about praedial larceny.
“Andre, when I was prime minister, we started growing egg plant zucchini. At the time, the country did not know what it was but poachers still stole the output. I am concerned that they might try to steal the ganja that is produced,” he expressed.
I responded, “No sir, it might be difficult to do so because the regulations put in place requires each farm to have double fencing, high-tech security cameras, and track and trace for the plant.”
He replied, “Have you ever seen a fence that a Jamaican cannot breach?
Besides, the average ganja farmer will not be able to afford that.
So what is in place for them?”
“Nothing,” I replied.
“But that is a recipe for disaster! They are setting themselves up for failure!” he declared.
How then can we have a flourishing cannabis industry?
The fundamental issue is that if the people cannot increase their income, they will find ways to breach the system.
Let us assume that the Government has a set target of funds it wishes to earn from the cannabis industry per year.
WHAT IS THE BEST REGULATORY PRICING STRATEGY?
There are two ways to meet the desired revenue target, assuming that taxes and licensing fees are the Government’s only sources of revenue from the industry,
You can take the ‘stingy approach’ and levy a large amount of taxes and fees on a small amount of market participants, while the others continue to operate illegally and the said problems of crime, etc., persist.
Or, you can take the ‘chiney man approach’ and charge a large amount of market participants a small amount of taxes and fees that will accumulate to the required target, while at the same time reduce the associated problems with illegality. We have to think thoroughly about our objectives and how best to achieve them.
FARMERS WILLING TO PAY 10 PER CENT OF REVENUES IN TAXES
Survey conducted at the recent Rastafari Rootz Fest in Negril shows that the regular ganja farmer is willing to pay 10 per cent of his earnings in taxes to the Government, in a range from 0 per cent to 28 per cent.
Some farmers explained that the Government does not deserve any taxes because of how they have been and continue to mismanage the industry and the injustice they, the farmers, have encountered over the years. Others are willing to pay a maximum of 28 per cent of their revenues in taxes.
WHAT HAS BEEN GOING ON?
Over the past seven years, the University of the West Indies has played a major role in helping micro cannabis companies product improve the value and quality of their products as well as to align their agriculture, pre-post-harvesting/production/distribution/packaging with or better than international standards.
All the small companies who cannot expand on their own will be grouped together as scarce commodities and provided with the necessary support to expand production.
– Dr Andre Haughton is a lecturer in the Department of Economics on the Mona Campus of the University of the West Indies. Follow him on Twitter @DrAndreHaughton; or email [email protected]