Mon | Jul 22, 2019

Briefing | GDP will skyrocket if Jamaica legitimises ganja

Published:Wednesday | April 17, 2019 | 12:28 AMDr Andre Haughton/Gleaner Writer
File Ganja farm

Traditionally, cannabis has been and continues to be a widely used commodity throughout the natural, cultural, social, spiritual and economic evolution of Jamaica, the Caribbean and the world because of its diverse medical, neutraceutical, therapeutic and other properties.

The United Nations has estimated that there are 37,000 acres of illegal cannabis being grown in Jamaica every crop cycle. Assuming, on average, there are three cycles per year, with an estimated average crop yield of 600 pounds per acre per cycle, total output per cycle amounts to 22,200,000 pounds of cannabis grown in Jamaica per crop cycle. Multiplied by three, given that there are three cycles per year, that gives a total of 66,600,000 pounds for the year.

What is the value of the illegal industry?

Survey data shows that cannabis grown in the open field wholesales at an average price of $9,000 per pound and retails for an average price of $22,400 per pound. Roughly 43 per cent of the cannabis produced in Jamaica stays in the local market. Retail sales of an estimated J$884.4 billion, plus a wholesale of about $600 billion, values the market at J$1.48 trillion, or US$11.1 billion, which amounts to approximately 70 per cent of Jamaica’s total gross domestic product (GDP) currently.

Naturally, then, if Jamaica were to translate a fraction of this illegal cultivation into legal activity, it would register improved economic activity across the island and possibly double its GDP growth rate per annum if the industry is negotiated properly. This aspect, however, has not been properly thought through and has not yet been explored to its fullest. There is also the opportunity for the Government to generate tax revenue from the industry.

Due to the demand and high market value of the commodity and its by-products relative to other agricultural crops, traditional cannabis market participants in Jamaica have developed a well-established value chain of products and services. Cannabis has been, and, as it appears, will continue to be, produced, sold and used in Jamaica whether it is classified as illegal or not. As a result, the existing illegal market should be viewed as an opportunity to increase output. Over the past eight years, Scarce Commodity of The University of the West Indies has been investigating the economic structure and value chains of the traditional ganja industry locally within a global context and has documented linkages beyond the medical use. These include a wide variety of cannabis and hemp strains and by-products that are currently being researched and developed by Jamaicans across the island. A variety of oils, lotions, soaps and many more products present a wealth of opportunity for Jamaica to exploit.

The retail price plays a factor

One of the main variables that might impact how the industry unfolds domestically is the availability of the medically grown plant at an affordable retail price that the average consumer can readily afford. Current growing and licensing requirements have increased the cost of production of legal medical marijuana above that of the illegal ganja. As a result, and in line with medical cannabis prices in the United States and Canada, medical cannabis retails at an average price of US$8 per gram, while recreational illegal ganja retails at a price of about US$0.50 per gram.

The average income of Jamaicans across the island is roughly J$600,000 per annum, or J$50,000 (US$400) per month, or US$100 per week. When food, clothing and shelter are taken into consideration, it leaves little room for cannabis expenditure. Scarce Commodity surveys suggest that 39 per cent of cannabis users spend less than J$500, or US$3, per week on the weed, while 32 per cent spend between US$4 and US$18 per week on cannabis. Only 15 per cent of users spend more than US$40 per week on cannabis. Based on these numbers, the average Jamaican might be willing but not able to participate in the medical cannabis industry, owing to income constraints, and, as such, might purchase the bulk of their demands from the illegal market.

The domestic demand for the medical cannabis flowers will have an impact on how policy is framed for the alternative development programme. The fundamental issue here is how to divert cannabis users from a dangerous, unpredictable illegal market to a predictable, safer legal consumption pattern.

- Dr Andre Haughton is a university lecturer and People's National Party senator.