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High on CEE: Exploring the Potential of the CBD Sector in North Macedonia

High on CEE: Exploring the Potential of the CBD Sector in North Macedonia

North Macedonia
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In a 2020 CEE Legal Matters article, Karanovic & Partners Partner Veton Qoku wrote that “in 2016 the Republic of North Macedonia made changes to its Law on the Control of Narcotic Drugs and Psychotropic Substances, defining the terms ‘hemp,’ ‘hemp seed oil,’ and ‘cannabis/hemp oil’ for the first time as well as regulating the procedure for cultivation and production of hemp.” CEELM spoke with Qoku to check in on the development of this young sector in the country.

Promising Growth Opportunities

“North Macedonia is one of the few countries in the region which has legalized cannabis for medical use, together with Croatia,” Qoku says, while pointing out that Slovenia has also allowed “certain CBD drugs for medicinal use.”

The country currently has, according to him, “67 registered companies who have been granted approval for cultivation of cannabis for medical purposes, and around 35 of these companies are active.” He reports that a number of active companies use technologically advanced solutions to extract and produce medicinal cannabis. “Companies investing in the cannabis business in North Macedonia come from different countries, including but not limited to the US, Germany, Israel, Bulgaria, Australia, the Netherlands, Canada, and Poland.”

While the CBD sector is still novel, to an extent, there are ample opportunities for growth and development. The industry is “slowly, but surely growing. The number of companies which have obtained approval for the cultivation of cannabis is expected to go up,” Qoku stresses, citing the “welcoming business climate of North Macedonia and the openness to introduce changes in the existing legislation” as a reason. Cannabis has even made a list of top ten priorities in the Action 21 – for European Standards at Home plan, made by the previous prime minister.

“Furthermore, the previous prime minister expressed the intention to introduce a more serious debate around the topics of decriminalization and total legalization of cannabis,” Qoku continues. “In December 2020, he issued a statement predicting that North Macedonia could gain around EUR 250 million, in 2021 alone, from the export and production of medical cannabis.” However, the prediction was contingent on the passing of the proposed draft of the new law, which did not occur.

Willingness to Advance Legislation but Little Progress

The main challenge the cannabis industry is facing growth-wise is legislation, according to Qoku. “In 2016, with the amendments of the existing Law on the Control of Narcotic Drugs and Psychotropic Substances, the procedures for cultivation and production of hemp were regulated for the first time,” he reports. Qoku states that the law has been facing a number of challenges and that it requires “refinement and clarification,” specifically when it comes to approvals and marketing. “A better control mechanism should be introduced for other narcotic drugs and psychotropic substances, which emerge rapidly and pose a challenge to public health,” he adds.

Still, the law is yet to be amended or substantially updated, with Qoku reporting that, after attempted amendments to it in 2018, it was determined that an entirely new law was needed. The draft for the new law “entered into parliamentary procedure twice, in 2019 and 2020. However, both attempts to adopt this legislation ended unsuccessfully.” The proposed draft aimed, among other novelties, to enable dry flower exports, which would allow local companies to access the global markets. It also sought to establish an “Agency for Cannabis for Medical and Scientific Purposes of the Republic of North Macedonia, as a special body intended to conduct the administrative and expert works related to the control of cannabis cultivation, extraction, and production for medical and scientific purposes.”

“While major stakeholders, including the government, have expressed their willingness to further regulate this matter and thus provide new opportunities for the industry, little has been achieved in adopting the necessary legislation,” Qoku says. A working group was formed in 2021, with the purpose of preparing suggestions for legislative updates and changes, yet “even after several held meetings, nothing came to fruition in terms of passing the relevant legislation.”

A Need to Develop Capabilities

Furthermore, Qoku reports challenges with the “institutional workforce, especially within public institutions,” where there is a clear need for a higher number of trained employees that could be “keeping up with international and domestic practices in the field of cannabis cultivation and production.” He says that public institutions lack the requisite resources to enable the efficient monitoring of the cannabis industry.

Additionally, he reports that the personnel issues extend to cannabis producers as well. According to applicable legislation, these producers must “employ expert employees in the field of pharmacy with a specialization in pharmaceutical technology and specialists for examination and control of medicines. Qualified candidates are few on the local workforce market and some of them are close to retirement,” he explains. If the number of prescribed expert employees is not met, approvals and permits could easily be revoked.

Finally, Qoku reports that one of the biggest threats to the cannabis industry in the country is a “lack of general knowledge about this industry and the benefits which it might offer. This includes, among others, the health benefits and the economic benefits, considering that the cultivation and production of cannabis for medical purposes has become a lucrative business in recent years.” He feels that educating the public and introducing more debates between the government and the private sector would be beneficial for the further prosperous development of the cannabis industry in North Macedonia.

Worth the Trip

Ultimately, “the medical cannabis market has proven to be a fertile ground for companies looking to invest in the business,” Qoku reports. Despite being strictly regulated, the market is expected to grow in the years to come, “especially since the government is eager to encourage investors to settle down in North Macedonia with their cannabis cultivation and production businesses.” And this is compounded by the fact that, as Qoku explains, growth opportunities are not related solely to the cultivation of cannabis for medical purposes and the production and trade of cannabis extracts. They “also extend to entities involved in the sector dealing with industry equipment and facilities and the services sector providing technical, legal, commercial, and other services to licensed companies working with cannabis for medical purposes in the country.”

This Article was originally published in Issue 9.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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