New ARUC Directives Take Cannabis Association Hopefuls ‘By Surprise’
Newly updated regulations regarding the governance and administration of potential cannabis associations have taken at least one hopeful group “by surprise”.
With 26 different groups applying to open a cannabis association under Malta’s legal framework, one organisation reached out to Lovin Malta under condition of anonymity out of fear their application may be at risk if they give feedback.
Though they were thankful that the updates included some positive notes, they were confused as to why the 26 groups were not consulted ahead of the new guidelines being rolled out, which were published on 30th June.
They broke down some of the core issues.
1. Timeline
“If ARUC takes a significant amount of time to issue licenses, it will indeed be challenging to witness any legal cannabis flower being supplied by a CHRA this year. Consequently, even after two years since the introduction of the law, consumers may still be compelled to purchase cannabis flower from the black market,” they noted.
They also pointed out issues outdoor growers would specifically face.
“If prospective CHRAs with outdoor/greenhouse farms do not receive licenses before the end of July 2023, they will be unable to cultivate cannabis throughout this year’s growing season. As a result, they would have to wait until May 2024 to start growing and would only be ready to supply cannabis flowers to prospective members in July 2024 as these CHRA farms depend solely on natural sunlight,” they pointed out.
2. Logistics
When it came to the logistics of locations such as warehouses, they pointed towards a new directive that they believed would be to the detriment of business owners.
Directive 6: 2.10 “With the exception of the loan provided by the founders, the association shall not enter into any commitment which exceeds the duration of the permit”
“It is indeed unlikely that someone in Malta would be willing to lease a warehouse for use as a farm or a shop as a distribution centre for just a one-year contract. Typically, property owners prefer longer lease agreements to ensure stability and maximise their return on investment. Short-term leases may not be financially viable or practical for property owners.”
“In the context of cannabis cultivation and distribution, setting up a facility involves significant investment in infrastructure, equipment, and security measures. Property owners would likely seek longer-term commitments to ensure a stable and profitable tenant for their property.”
3. Employees
Directive 6: 3.5 “Core activities may only be outsourced to self-employed individuals (not companies). The Authority has the right and full discretion to approve or reject any of the proposed outsourcing services”
With the cannabis harvest being seasonal, the organisation predicted hiring issues under the new guidelines.
“The labour requirements of prospective CHRAs can vary throughout the cultivation cycle, with an increased need for workers during harvest and bud-trimming periods. Finding suitable and available workers can be challenging, particularly considering the current labour market conditions and the preference of many individuals for full-time employment rather than self-employment,” they said.
“Additionally, when employing foreign workers, there are specific regulations and restrictions in place that may affect their employment status and the ability to obtain a VAT number,” they continued. “These factors further complicate the process of hiring and managing a workforce for cannabis cultivation operations.”
The group ended by praising ARUC for taking into account previous feedback and urged closer collaboration between the authority and the associations.
“It is positive to hear that ARUC has taken into account the concerns and complaints of prospective CHRAs and made improvements in areas such as transport, waste management, and testing regulations. These updates demonstrate an effort to address the specific needs and challenges of the cannabis industry,” they said.
“Consulting with stakeholders prior to making significant regulatory changes can provide valuable insights, ensure a more inclusive decision-making process, and allow for a better understanding of the practical implications and potential challenges faced by those directly involved in the industry.”
What do you make of the association’s feedback?
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