Challenges for International Licensing
The business of cannabis in the global environment is on the rise and expanding rapidly and multi-dimensionally. The growing cannabis industry has high economic potential and offers exciting and lucrative opportunities for countries and entrepreneurs. The door is opened, the show is on. What’s next?
As for any new industry, this growth phase brings many challenges for players at all levels. Many challenges stem from the very limited experience entrepreneurs, established companies and government authorities have in the regulated cannabis space. Canadian regulators and businesses are ahead of the game due to country wide legalization of cannabis on October 17, 2018, and we can apply that knowledge to the rest of the world.
One of the Governments’ goals is to stimulate economic growth by creating new business opportunities and attracting foreign experience and investors. Building facilities for cannabis cultivation and processing and stimulating research and development in the cannabis space are attractive propositions. The question is how to do it when some countries still consider cannabis as an illegal substance and is treated as a criminal offense. The first step is to develop and implement a new set of regulations and revisit existing legal requirements.
Some of the challenge’s governments face is determining to what extent to legalize; if, when and how. A starting point is to design a proposed legal framework considering cultural and economic specifics of the country. But how do they do it? The easiest way is to begin with a review of existing legal requirements of another country to their own country’s needs. At this early stage governments are engaging individuals, association or consulting companies with the proven cannabis experience to assist in determining the most efficient and effective path to achieve the end goal. This is where Canadian companies like CCI and industry associations are lending a hand to the international markets.
Once a draft of the proposed regulations is prepared it’s usually posted for a public consultation which may take an extended period. A clear description of economic and health benefits and controls to prevent any harm to the citizens and especially to vulnerable populations such as youth, persons with disabilities and elderly would assist in decreasing timelines. Debates and changes may take much longer than expected if a proposed law is not adequately designed or there is a resistance from either public or political opposition. It can take years to enact a new regulation – which can go beyond any one political term. Delays or major conflicts can put the country in a weak competitive position compared to their more effective and flexible global neighbours.
Finally, when the laws are agreed upon, they get published. The government must determine the appropriate application process for this new industry and therefore opens either a tender, as we have seen in Germany, or a call for applications. Applicants/bidders are applying for a licence to cultivate cannabis or manufacture cannabis derived products in the country. Early movers have seen this coming and have already sharpened their pencils and started the application process. Some who chose to wait may not have a first-mover advantage but will benefit from eventual process stability and learnings from those before them which ultimately form elements of a solid application.
An unexpected challenge is hidden in the application requirements. This note is more for the regulators than applicants. Individuals involved in development of the application requirements quite often don’t have a deep understanding of the cannabis industry. This may result in unreasonably stringent or high eligibility criteria that can disqualify some of the best applicants.
We see more often the old perception of the application process being dispelled. It used to be thought among applicants that preparing the bid/licence application is not a complicated task and one simply needs to follow the instructions and answer questions. However, history has shown that those unprepared will face unexpected challenges. A robust and appealing set of documents to the reviewers is critical, and therefore the application preparation team requires cannabis industry experience in order to successfully navigate the regulations. For global markets, this experience is now a minimum requirement to see it through to operations.
An intimate knowledge of application documentation is one challenge. Simply reading or skimming through the papers is not enough. An applicant must understand them to the extent allowing to cross-reference not only multiple documents within the application set but also related directly and indirectly legal requirements. This allows one to recognize interdependencies that form a basis for compliance expected by the regulators. There is an expectation for each applicant to demonstrate how they plan to operate the business in compliance with all laws and regulations in case a licence is granted.
Another challenge is interpretation of the application requirements posted in a foreign language and translated into English. Majority of applicants with solid cannabis experience are coming from English speaking countries and obtain translated requirements as a starting point. Some decide to run documents through Google translate or similar system. Having either native speakers or a qualified translator who can validate translation would help to avoid costly mistakes. We have seen big assumptions made from Google translate that are simply incorrect and that could derail entire applications. If an application is finalized in English, it may require a certified translation. It is important to engage a qualified translator(s) with proper experience. Direct cannabis industry experience is ideal but hard to find. At least, a translator must have pharma experience preferably with drugs that are controlled substances and some knowledge of agriculture to be able to translate terms related to cultivation of cannabis.
Understanding the culture of country is also critical for success. There are many well known examples of corporations entering foreign markets and projects failing at the beginning due to lack of familiarity with differences in customs in both countries. For instance, Germany and India are very different in their approach to business conduct and communications. What is customary to one may be perceived offensive in another. Employees on both ends need to be trained on how to communicate and what to expect.
The same principle is applicable to applicants in cannabis industry. To be successful, they should gain an understanding of the culture in which they are going to operate. For the application itself, it is important to know your audience and to tailor the application to that audience.
If you are looking to obtain a licence in another country and need help in preparing applications or making connections in the country of interest, contact our subject matter experts at Cannabis Compliance Inc. (CCI) and we will help you through the licensing process. CCI is one of the original consulting agencies involved in shaping the Canadian regulatory landscape and has helped their clients successfully navigate through it. By doing so, CCI has become a flagship consulting business for national and international governments and corporations.
To find out how we can help you, contact us today.
Written By: Valentina Vaguengueim