Jamaica Is Finalizing Export Agreements For Cannabis, Here's How The Global Market Is About To Change
Last summer, big players in cannabis agriculture, like the Canadian conglomerate Aphria Inc. (NASDAQ:APHA), couldn’t take the Caribbean heat and got out of the kitchen.
Aphria, who acquired a Jamaican licensed cultivator in 2018 to get ahead of an expected production boom in Jamaica, left the island in 2020, abandoning its assets. The big ag player, along with a handful of other Canadian companies, like the producer The Green Organic Dutchman Holdings Ltd. (OTC:TGODF), invested in the island as the Jamaican government announced a push to complete comprehensive trade and export regulations for medicinal cannabis.
The agreements, coupled with Jamaica’s astonishingly cost-effective production potentials, spelled a cannabis gold rush on the island and a definitive answer to solve prohibitive supply issues in legal markets around the world.
But the COVID-19 pandemic temporarily stalled the legislation, and companies like Aphria and The Dutchman, saddled with struggling Canadian operations, were forced to sell their Jamaican assets even as the prospect for a cannabis boom on the island remained certain, if not a bit further off.
Now, Jamaican export legislation, expected to be finalized in mid-2021, is back on track, and the global industry’s need for a solution to quell supply shortages remains. In fact, market stresses from COVID-19 have only inflamed a need for cost-effective supply and exposed the reality that licensed cultivation in North America—where producers can pay $1-$2 million in licensing fees before planting a seed—is untenable to sustain market growth.
So, where do the soon-to-pass Jamaican agreements point the market?
The exit of big players like Alprhia in 2020 has left a considerable vacuum for existing Jamaican licensed producers, like Massive Therapeutics, a Canadian-Jamaican company ready to begin operations once export agreements are passed.
Massive Therapeutics, strongly tied to the Jamaican community and keyed in to the status of legislation, hasn’t left the island. In fact, they’ve continued forward at scale—and for good reason. A Jamaican licensed producer can cut cultivation costs for medical-grade cannabis by nearly 80%. Using modern hybrid greenhouses, the operating expenses to produce one pound of exportable cannabis for Massive Therapeutics totals roughly $100. In North America, those costs, relatively, exceed $400.
It’s not hard to imagine why Massive Therapeutics hasn’t wavered in its Jamaican investments. By the end of 2021, Jamaican could more than likely emerge as the global cannabis market’s solution for cost-friendly cannabis production. And when it does, companies like Aphria and Aurora Cannabis, Inc. (NYSE:ACB) will rush back to the Caribbean, eager to capitalize on the lucrative opportunity they quickly recognized in 2019.
And when they do, a modest producer like Massive Therapeutics, which expects to build 50 hybrid greenhouses on its Jamaican estate, will already be turning multi-million dollar profits.
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