Ask Our Experts 2/17/20: Legal Cannabis Markets in the Caribbean
Q: While there has been much recent news about legal cannabis markets taking hold throughout North America, what is the status of things in the neighboring Caribbean?
By New Frontier Data
A: Cannabis reform is picking up momentum in the Caribbean. In recent years, a handful of island nations have made strides to regulate the production and distribution of medical cannabis: Jamaica, Barbados, Saint Vincent, and the Grenadines, the U.S. Virgin Islands, and Antigua and Barbuda have respectively approved medical cannabis cultivation, while draft laws are in development in each Bermuda, Trinidad, and Tobago, and Saint Kitts and Nevis.
Role of CARICOM
The 20-member Caribbean Community (CARICOM), a regional coalition of 15 independent nations and five dependencies. has been instrumental in shaping the conversation of cannabis reform in the Caribbean. Its creation was spurred by shared concern about youth incarceration and the inconsistent application of laws leading to resentment and noncooperation with law enforcement agencies in local communities. Benefits from economic development and job creation were cited as additional incentives.
Regional Demand
An estimated 1 million cannabis consumers live in the Caribbean, with most consumers living in Cuba, Jamaica, Puerto Rico, or Haiti.
| Country/Territory | Estimated Number of Cannabis Consumers* |
| Cuba | 292,000 |
| Jamaica | 205,000 |
| Puerto Rico | 201,000 |
| Haiti | 141,000 |
| Trinidad and Tobago | 56,000 |
| Dominican Republic | 32,000 |
| Barbados | 28,000 |
| Bahamas, The | 24,000 |
| Other Caribbean Nations | 36,000 |
*A cannabis consumer is defined as a person over 18 years of age who consumes cannabis at least once per year. Numbers are rounded to the nearest thousand.
Estimates for cannabis consumers in each country rely both on population demographics and estimated usage rates. Legality and treatment of cannabis offenses factor largely in reported usage rates, leading to much higher reported rates across smaller island nations (e.g., Barbados and Bermuda) that have legalized or decriminalized cannabis in some form.
Estimated Annual Cannabis Usage Rates for Caribbean Countries (Where Data is Available)
| Country | Population | Estimated Usage Rate |
| Haiti | 10,981,229 | 1.92% |
| Puerto Rico | 3,337,177 | 7.35% |
| Jamaica | 2,890,299 | 9.16% |
| Trinidad and Tobago | 1,369,125 | 5.12% |
| Bahamas | 395,361 | 7.54% |
| Barbados | 285,719 | 12.09% |
| Bermuda | 65,441 | 14.33% |
Pricing and Market Potential
The average price being paid per gram of cannabis flower in illicit markets varies greatly throughout the region, with highest prices reported in Bermuda, the Cayman Islands, and the Virgin Islands – symptomatic of high GDP per capita ratios of such islands, coupled with high-spending tourists.
| Region | Market Value (mid-pt. estimate, $USD in billions) |
| Asia | $132.89 |
| North America | $85.57 |
| Europe | $68.49 |
| Africa | $37.30 |
| Latin America | $9.75 |
| Oceania | $8.71 |
| Caribbean | $1.72 |
| Global | $344.43 |
Note: Market Value Estimates shows are the mid-range estimate for the total amount spent on cannabis (including illicit) in each respective region for the calendar year 2018.
| Caribbean Country | Market Value (mid-pt. estimate, $USD in millions) |
| Puerto Rico | $637.4 |
| Cuba | $514.9 |
| Jamaica | $137.5 |
| Trinidad and Tobago | $117.6 |
| Haiti | $81.4 |
| Bermuda | $62.7 |
| Barbados | $47.6 |
| Bahamas, The | $35.4 |
| Dominican Republic | $31.4 |
| All other Caribbean Nations Combined | $56.6 |
*All Other Nations Combined includes market estimates for 14 remaining Caribbean countries
Note: Market Value Estimates shows are the mid-range estimate for the total amount spent on cannabis (including illicit) in each respective Caribbean country for the calendar year 2018.
Though the Caribbean represents a tiny region with relatively small domestic demand, the region harbors huge potential in the form of international tourism. The region receives roughly 40 million tourists annually, with a large concentration coming from developed nations across North America and Europe, regions where cannabis acceptance and use rates are surging.
Recent Market Developments – Regulatory Snapshot
Jamaica
Jamaica has become a regional hotspot for international investment. It announced a research and development partnership with the Harvard International Phytomedicines and Medical Cannabis Institute (earning recognition and legitimacy for Jamaica’s program), and there is intense interest from Canadian companies seeking early stakes in the island’s fledgling industry. According to data from the country’s Cannabis Licensing Authority, roughly 500 jobs have so far been created as a result of legalization. Through December 2019, there had been 57 licenses granted, with approximately 300 additional applications now in the pipeline awaiting full approval.
A snapshot of Jamaica’s cannabis industry from September 2019:
- 32 active regulated sites, including 16 cultivators;
- 3,613 hectares of clones planted;
- 2,924 seeds sowed; and
- Production of 2,664 kilograms (5.873 pounds) of cannabis.
In January 2020, the Jamaican government announced plans to bring smaller indigenous and traditional farmers into the regulated medical cannabis industry (and thus help curb illicit production*) through expansion of the country’s Alternative Development Programme to provide them with technical and financial support. The policy includes a new transitional licensing phase that will waive fees and reduce costs for smaller local farmers, aiming to increase the supply of legal cannabis flower (which would be trackable through the Cannabis Licensing Authority’s seed-to-sale ecosystem).
*Illicit cannabis production has been a longstanding issue for Jamaican authorities, with some 37,000 acres of cannabis illegally farmed each year.
Internationally, many cannabis products are being advertised and branded with references made to Jamaica, Rastafarianism, or Jamaican culture, yet cultivators on the island cannot legally produce or export their own. Keys to protecting the country’s intellectual property and developing its industry reside in the development of product diversity, export laws, and banking regulations.
Puerto Rico
Puerto Rico’s medical cannabis program has undergone significant growth since sales began in January 2017, with program sales generating a monthly average of $4 million. Dispensaries that have been around for a year or longer are generating monthly sales between $100,000 to $300,000. Puerto Rico’s health department reports that 101 dispensaries across the island are serving 112,363 registered cannabis patients who are largely concentrated in the northeast section of the island. With roughly 3% of the population registered as medical cannabis patients, the territory is on pace with many mature U.S. state medical cannabis markets seeing patient saturation rates between 2% or3%.
Several U.S.-based companies (including vertically integrated operators and manufacturers of infused products) have announced plans to expand operations to the territory, and additional products will be welcomed in light of product shortages stemming from a rapid increase in demand coupled with an imbalance in cultivation grow cycles (hurricane-related disruptions have also impacted supply chains and tourism) on the island). Puerto Rico’s rapid increase in demand reflects patient participation and growing interest from tourists due to Puerto Rico’s generous reciprocity clause regarding legal cannabis states on the mainland.
Barbados
In November 2019 the Barbadian Senate approved a law forming the legal foundation for the nation’s medical cannabis industry (including approval of its Sacramental Cannabis Bill 2019 allowing adherents of the Rastafarian religion to consume and cultivate cannabis in practice of worship.) The law mandates the Barbados Medicinal Cannabis Licensing Authority to develop regulations for the industry, and its Medicinal Cannabis Licensing Board to oversee the Medicinal Cannabis Licensing Authority.
Business licenses will be available for categories including: cultivation, transport, manufacturing, dispensing and sales, medical or scientific research and development, laboratory testing, and importing/exporting. There will be a tiered approach to cultivation and processor permits based on size, and license holders must be citizens or permanent residents holding immigrant status (which can be gained through investing) or otherwise be a citizen of a CARICOM member state. Medical cannabis needs to be prescribed by a recognized practitioner.
Saint Vincent and the Grenadines
Second only to Jamaica for illegal cultivation of Caribbean cannabis, Saint Vincent and the Grenadines to date has received more than 250 license applications from a reported 25 foreign investors, seven local investors, 26 local cultivators, 210 traditional cultivators, and 12 traditional cultivators’ cooperatives (local cultivators being recently established companies, while a traditional cultivator is one receiving a license after having grown cannabis illegally). A total of 70 applications have been approved. In 2019 investments in the country’s cannabis industry generated USD $5.2 million in tax revenue and licensing fees, far outpacing the USD $1.8 million projected after medical cannabis cultivation and sales were legalized in December 2018.
Key Takeaways
Banking as the Key to Regional Expansion
- Existing U.S. federal banking regulations bar financial institutions from providing services to cannabis companies, a policy which extends to Caribbean banks as a result of relationships with the U.S.
Caribbean as a Potential Manufacturing and Export Hub for Latin America
- The region holds great potential as a hub for the production and export of raw cannabis goods, specifically from Latin American countries facing challenges in the forms of technology and production capacity within their own borders.
- The timing of the rollout and investment focus in Jamaica’s regulated medical cannabis market gives it an advantage in the race to build production capacity in the Caribbean region.
Canna-Tourism Will Fuel Industry Growth
- As a major destination for North American and European travelers, Caribbean canna-tourism presents significant opportunity. While development of cannabis-focused hospitality offerings remains nascent, New Frontier Data anticipates significant commercialization of opportunities as the Caribbean’s cannabis economy expands and matures.
Escalating Export Competition with Other Developing Markets Will Require Differentiated Strategies
- Many developing countries across Africa, Asia, and Latin America view cannabis exporting as an economic development opportunity and catalyst for agricultural sector growth. However, each of them is competing for the same destination markets in Europe and Australia. As more such markets come online, Caribbean nations will be challenged to develop differentiated strategies for their exported products and their tourism offerings in order to secure sustainable shares of the growing global cannabis trade.
Tensions Between Local Farmers and Large Foreign Enterprises
- An enormous amount of illicit cannabis is grown in the Caribbean region. One of the major challenges facing legalized and regulated cannabis cultivation there will be transitioning local farmers to the regulated market.
