Ask Our Experts 2/24/20: Eyeing the Jamaican Cannabis Market


Q: We saw that New Frontier Data participated at the Canex Investor Conference in New York; what were the takeaways for investors seeking opportunities in Jamaica?

By New Frontier Data

A: The conference featured leading stakeholders from the Caribbean and North America to discuss notable trends and opportunities among both markets. Cindy Lightbourne, chairman of Jamaica’s Cannabis Licensing Authority (CLA), shared a clear-eyed presentation on the market factors facing investors and operators in her country.

  1. Applications have surged, but final approvals remain low. Of 688 applications received to date, 50 had so far received final approval, while another 297 had been conditionally approved. A key reason for the backlog is that raising capital and getting it into Jamaica has been a major challenge. Stakeholders on the island face the same banking challenges as U.S.-based operators, so managing to get overseas capital for cannabis-related investments there remains a major challenge. Further, given acute concern about risks of being charged by U.S. banking regulators for abetting illicit activity, Jamaican banks remain very careful about processing cannabis transactions. With approximately 30% of Jamaica’s GDP coming from international remittances, banking sanctions would be crippling to the country, sharpening the imperative for adhering to cannabis banking rules.


  1. Vet the team before the CLA does. Entrepreneurs are strongly advised to perform due diligence regarding business partners before the CLA begins its background check process. Given the risks associated with cannabis in global finance, Jamaica works closely with domestic and international law enforcement agency partners to conduct thorough investigations into all members listed on a license application. During such investigations, the agency occasionally discovers issues with some team member that can lead to disqualification of an application – a major setback given the procedural length of the application review process under the best of circumstances. Thorough vetting of potential partners can mitigate the risk of any skeletons in the closet to jeopardize an application.


  1. Exporting cannabis from Jamaica will be a very long-term play. Given that few targeted export markets (e.g., most of Europe or Canada and Australia) are importing anything but relatively small quantities of cannabis, stakeholders in Jamaica should not build their businesses with expectations for exports as a near-term play. To date, quantities exported from the island have been miniscule and earmarked for research. The likelihood of dramatic growth in wholesale exports remains low, so operators must anticipate that the bulk of the revenue will be driven by local demand.


  1. Jamaica will be a competitive market, but the CLA will not pick winners and losers. Should all 600 pending applications be granted, Jamaica’s market will be extremely competitive. Nevertheless, the CLA does not intend to issue any moratorium on new licenses, committed instead to letting the free market determine which operators will survive. U.S. states like Oregon have shown how unconstrained licensing can result in overproduction, cratered prices, and widespread business failures. Therefore, it seems vitally imperative that Jamaican operators account for where the market is going, not where it currently sits.
  2. Industrial hemp will likely never be approved in Jamaica. As Ms. Lightbourne stressed, Jamaica is “ganja country”. With much of the country’s marijuana being grown outdoors, the risk of cross-pollination with low-THC genetics is too great, and would represent a major potential risk to the local grower community. Thus, the country seems certain to prioritize marijuana cultivation over any hemp crops.


  1. Current rules count, but changes loom large. Jamaica’s cannabis regulations will continually be revised to reflect the evolving business environment and lessons from the maturing market. One key area yet to be addressed is canna-tourism. While Jamaica is uniquely positioned as an international canna-tourism destination, concerns about running afoul of the International Narcotic Control Board have regulators preferring a slow and measured approach that will not jeopardize the country’s international standing.

The dynamics shaping Jamaica’s cannabis market parallel trends seen in other international markets where enthusiasm too often outpaces practical realities toward building a business in a new and fast-moving market. However, as Ms. Lightbourne stressed, being successful in Jamaica (or other emerging cannabis markets) will require adequate preparation, a clear understanding of the rules, careful contingency planning, and patience as regulators work to meet investors’ buoyant aspirations.