No matter the exact cause, from post-COVID economic volatility to the marked financial doldrums of cannabis stocks, there are signs support for the “legacy farmer” is on an upswing.
Legacy farmers are proving to be an enduring competition for the regulated and certified market. According to the 2021 International Cannabis Policy Study, about 43% of all American cannabis sales still go to the illicit market, although this figure varies greatly by state. Calculations based on total consumption and legal sales suggest that between 60% and 75% of the sales in California, for example, are not coming from the regulated legal sector of the industry but, rather, legacy farmers supplying the illicit market.
Outside of North America, this is also a regular discussion as reform goes global.
Who Are Legacy Farmers?
Within the context of the U.S., this term generally refers to those who have grown cannabis for several decades, often since the change in California state law to allow medical use.
Overseas, in Europe, Africa and Asia, the definitions and specifics differ by country and context, but generally end up meaning the same thing. Namely the term refers to a small, non-corporate, often family-run farming operation that has been passed down through generations even if not specifically focused on cannabis historically.
For this reason, it is interesting to understand how this movement is expanding internationally.
North America
U.S. – According to Steve Bevan, a partner in OCan Group LLC, a cannabis strategy and consulting firm dedicated to creating strong, sustainable cannabis supply chains in both the U.S. and globally, “The ‘legacy market’ as Americans would understand the term is the current illicit market. It is the good old boys, the rural hill growers and the southern cartels. That infrastructure stretches from cultivation through distribution networks.” Beyond this, Bevan says, “Customers are happy with legacy product. It is just that government policy and regulation is not aligned with the existing supply chain. That is fundamentally a distribution problem.” (Editor’s note: Bevan previously founded Kentucky-based hemp processor and CBD distributor GenCanna Global in 2014 and was a founding board member of the U.S. Hemp Roundtable in 2017, as well as USHR’s board chair. In 2020, GenCanna filed for bankruptcy and completed a chapter 11 reorganization with the sale of $77 million of its assets.
Canada – As in the U.S., how that problem is addressed in Canada is still an unsolved issue just north of the border, according to Canada’s National Post.
However, Mike DeVillaer, assistant professor in McMaster University’s Department of Psychiatry and Behavioural Neurosciences, told the news outlet that, based on academic research and government intelligence: “Most growers and sellers did not break any laws other than producing and selling cannabis.”
Europe
Germany – While much hangs in the air about the direction of full legalization, the German government appears to be on track to support smaller cannabis farmers. This is happening on two tracks. The number of German farms cultivating hemp has increased 900% in the last seven to eight years. Hemp farmers are even receiving government subsidies to grow crops. Beyond this, legalization legislation may allow both home cultivation and a recreational market sourced, at least initially, exclusively from domestic farmers.
As a result, Germany could well create, at least initially, a plethora of smaller-scale production, including the pent-up efforts of patients, dilettantes and semi-industrial grows in addition to the industry that is set to boom in the next several years (no matter what eventual imports will also then do to it).
Spain, Holland, and Portugal – Three other major budding cannabis markets in Europe also have cultivation infrastructures that are a mixture of “legacy” and officially certified production.
Portugal’s liberal approach to cannabis, at least compared to other European countries, has created a medical industry pioneered by Tilray, predominantly for export to Germany. Many of these farmers have backgrounds that include growing crops like tomatoes.
The cannabis licensing system is under the control of the National Authority of Medicines and Health Products, I.P., or Infarmed, which issues cultivation licenses that must be renewed annually. The state determines the number of licenses on an as-needed basis. Hemp as well as higher-THC medically certified cannabis are included in the licensing system.
In addition, there are regulations about both indoor and outdoor growing. Medical cannabis must follow the strictures of international pharmaceutical standards. Hemp must be grown outside and cultivated on plots larger than five hectares with a plant offtake that must exceed 30 kilograms per hectare.
Carlos Nunes, the chief financial officer of Pangolin, a Portuguese consulting firm that helps cultivators and manufacturers get their licenses for medical grade (EU GMP) cannabis, is on the front lines of this discussion. “It’s easier for anyone who has experience in the agricultural sector to get a medical cannabis cultivation license, but they also have to have a lot of money to start an EU GMP compliant business,” he said. “This is usually the largest barrier traditional farmers face and smaller farmers often have a harder time to get through this by themselves. So I would say this is clearly a significant barrier, but not insurmountable.”
On the hemp side of the discussion, the barrier to entry is much lower. “For hemp farmers, it is certainly easier, because they do not need a medical license and is much easier to get into business,” Nunes said.
In Spain, although the situation is a bit complicated by the grey market, the industry is clearly split between “medical” EU GMP licenses and everyone else. On its website, AEMPS states that six companies are licensed for cannabis production and/or manufacturing “for medical and scientific purposes,” and 15 companies are licensed to cultivate cannabis for research. Then there is a mix between legitimate industrial hemp farmers and the illicit grows feeding the cannabis clubs—both of which exist on a tenuous and uneasy front line with authorities.
So far, however, the first international legal clash between farmers and government ended in a loss for the former. The EU Court of Human Rights rejected activist Albert Tío’s appeal of his Spanish criminal case last year. Tío is an activist who spearheaded the club and associated cultivation movement. This means he is serving a domestic sentence, imposed for his role in instigating the national groundswell for local cultivation rights.
Holland is taking a hybrid approach. The government is now in the process of creating a nationally regulated industry “experiment” by issuing ten cultivation licenses to growers all over the country. This crop will be headed for coffee shops outside of the major cities (which at present are exempt from requirements to purchase from the ten licensed national cultivators). While it may seem that legacy cultivation is under threat here, for that reason, the ten cultivators given licenses by the government also fit the description to a certain extent in that many are “legacy” if not small cultivators—just of other crops. And beyond that, of course, the club-driven cultivation in bigger cities has not been snuffed out and may never be.
Africa
South Africa – According to Peter Bennetto, the CEO of South African based Steadfast Investments, which connects traditional farmers to the international cannabis industry for the legal export of high grade, EU GMP flower as well as other crops and cannabinoid products, “Here the entire discussion of the legacy farmer is front and center in the legalization discussion domestically. There are two kinds of legacy farmers in South Africa, both with similar needs as much as they are different. In the case of legacy farmers who have the capital to expand easily and see cannabis as a valuable rotation if not risk hedging crop, being able to quickly access global markets is a critical component of their longer-term success. However, for those farmers who are not able to access the capital to export to Europe and meet EU GMP standards, there needs to be a consideration of how to integrate this part of the agricultural discussion into a legal, certified industry domestically.”
The passage of the legalization bill so far has been delayed because of COVID and domestic squabbling over the rights of smaller farmers. At present, the legalization of cannabis is primarily being seen by the government at least as an opportunity for introducing licensing and other fees that are out of reach for the average micro grower. The dispute has reached a national boiling point, with unions and other groups joining the farmers in opposing the direction of evolving legislation and policy.
Morocco – According to experts now in conversations with local farmers’ cooperatives, the ten licenses offered by the government promote legal production from legacy growers in the Rif Mountains.
While the regulatory system has yet to be clarified, the Moroccan version of reform appears to celebrate the mountainous agricultural pioneers that have long produced hash with a global reputation. It seems clear that Moroccan policy is aimed at restoring dignity to the legacy growers and their rural farming communities. The evolution of this traditional cannabis growing and processing could lead to a regulatory framework that will make the local output compliant for domestic and international distribution.
Asia
Thailand – The government has begun its own revolutionary journey toward full reform while also showing more respect to legacy growing and distribution. This has started with mandating that all firms that cultivate cannabis, even of the low THC kind, must be majority Thai-owned. Beyond this, local farmers are able to grow cannabis in their micro plots and deliver this straight to local hospitals.
The government also began giving away cannabis plants, out of one million plants the government announced it would gift, to encourage the population to start to grow sustainably. If there were a single example, globally, of a government embracing the idea of a small, sustainable, legacy cannabis farmer, the Thai example might well be it. However, the lack of a well-understood regulatory framework means that the evolution from good intention into stable economic benefit for small producers will need to be addressed.
That said, according to Bevan, “The approaches by the Thai and Moroccan government are significantly more aligned with the existing legacy markets and more concerned with transitioning those into a normal legal status. Reform should be empowering rural cultivators. That approach meets every rural and sustainable development goal that I am aware of. Putting money into these controlled cannabis agriculture grows has tremendous potential to lift up the plight of these rural farmers in many parts of the world.”
Marguerite Arnold is an American-German journalist, consultant and entrepreneur in the legal European cannabis industry based in Frankfurt, Germany. She is also the author of two books on global cannabis reform.
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