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How the lack of a regulatory framework affects the development of modern cannabis production in Denmark


The European market for medical cannabis is becoming extremely competitive with very strict rules and regulations. There are already too many manufacturers from different countries, so in the next few years there will be a “knockout race” in which prices will fall to the minimum level, which will force a number of enterprises to close, and a number of projects will not be able to break even. 

A few months ago, on the pages of a specialized electronic publication of Ukrainian cannabis growers, attention was focused on “Conclusions based on the results of a 2-year history of a pilot program for the use of medical cannabis in Denmark”. On the one hand, the official statistics of the state structures of the kingdom speaks of the constant problems faced by patients using medical cannabis, on the other hand, we have repeatedly described investment projects, primarily by Canadian companies, aimed at the construction of significant facilities for the cultivation and processing of a plant with significant therapeutic properties. in this country. The editors of the specialized electronic edition of Ukrainian cannabis growers turned to the specialists of the information and analytical platform Hemp Consulting for clarifications on the above contradictions concerning these issues. The information provided is further stated without any cuts or adjustments.

In fact, there are no contradictions in investing significant financial resources in the capacity for growing and processing a significant amount of hemp raw materials, on the one hand, and its lack for use by end-users in Denmark. At the moment, these are parallel processes that are in no way connected with each other. The reason for this rather paradoxical situation lies in the fact that after two years of large-scale investments in the creation of production and processing facilities, in Denmark it has not yet been possible to launch a single national product on the market, the formulation of which includes constituent plants with significant therapeutic properties or drug-free cannabinoid extracts. 

On January 1, 2018, Denmark introduced an experimental medical cannabis scheme. The pilot program is designed for four years, but it is already assumed that it will be extended. The program is administered by the Danish Medicines Agency (Lægemiddelstyrelse), which authorizes medical products formulated with hemp therapeutic elements. Lægemiddelstyrelse vets companies applying for licenses to manufacture medical hemp products. The pilot program also provides an opportunity for companies to apply for permission to legally grow cannabis for further medicinal use of the plant. In Denmark, medications made from cannabis are used, among other things, to relieve pain and cramps, and can be used by patients with multiple sclerosis as well as people who are ill undergoing chemotherapy. So far, no Danish company has received all the approvals required to market their products.

Over the past two years, medical cannabis growers have invested significant financial resources in the construction of greenhouses, the purchase of security equipment, technological equipment and obtaining the corresponding type of permits. However, at the moment there is no legal framework regulating the above type of activity, therefore, hemp raw material producers, as well as its processors, face the fact that there is no legal opportunity to implement their projects.

In particular, according to Morten Snede, CEO of Spectrum Therapeutics, “All activities related to the implementation of the project for the cultivation and processing of medical cannabis took much longer than we expected. This is also why there is a significant deficit in 2020, primarily of financial resources, since we are forced to bear serious costs due to the need for regular salary payments to employees of our enterprise, which cannot fully function. "

Another large Danish producer of medical cannabis "Aurora Nordic Cannabis" in 2020 also suspended the implementation of previously planned facilities in the country. The owner of the company Mads Pedersen claims that “in Denmark, a project has already been implemented to build a greenhouse with an area of ​​10 thousand square meters, in which about 15 tons of“ leaves and inflorescences ”of a plant can be grown per year. This facility has been commissioned, but it is not yet equipped and therefore cannot generate profit. Another project for the construction of 40 thousand square meters of greenhouses is just being implemented. During 2018-2019 the deficit of Aurora Nordic Cannabis was about DKK 40 million.

The prospect of overproduction of medical cannabis is clearly visible in Europe at the moment. The gradual liberalization of legislation in a number of EU countries has led to the fact that a significant number of European companies have set up the production of significant volumes of raw materials with significant therapeutic potential in order to gain a foothold in the multi-billion dollar market that is being formed on the continent. However, we can already say that demand is growing much slower than predicted. If at least half of European manufacturers of medical cannabis in 2020 receive the necessary permits for this type of activity and enter the market with their products, the issue of an overproduction crisis will become acute on the continent.

Commentary of experts of the Association "Ukrainian technical hemp" 

Spectrum Therapeutics originally operated under the name Danish Cannabis, but the majority shareholder is now the Canadian medical cannabis producer Canopy Growth, which insisted on renaming the company. Spectrum Therapeutics is a company that has invested about DKK 350 million to establish a production facility for the cultivation and processing of medical hemp near Odense . In the 2018/19 financial year, the company had a deficit of about DKK 55 million. The financial performance of "Canopy Growth" is even sadder than "Spectrum Therapeutics" - the deficit in the company at the beginning of 2020 amounted to about 1.9 billion. This, among other things, is due to the massive overproduction of raw materials, as well as products manufactured by the company (“Canopy Growth” produced about 40 tons of hemp raw materials, but was able to sell only about 11 tons).

The European market for medical cannabis is becoming extremely competitive with very strict rules and regulations. There are already too many manufacturers from different countries, so in the next few years there will be a “knockout race” in which prices will fall to the minimum level, which will force a number of enterprises to close, and a number of projects will not be able to break even. 

Now we refract the above tendencies to the realities of the national market and so far we only state that we do not have a legal framework regulating the use of the therapeutic properties of cannabis for medical purposes. We are trying to draw a conclusion to what extent national projects for the construction of facilities for the production and processing of medical hemp in Ukraine are currently competitive. We are trying to analyze who is primarily interested in lobbying for the adoption of the law and whether the idea that it is necessary to maximize the therapeutic potential of technical hemp for industrial purposes (food, cosmetics, food / feed / biologically active additives, etc.) is more progressive. etc.) .. 

Issues related to the provision of permits, as well as application algorithms and legal mechanisms for the use of the health-improving / medicinal properties of technical hemp of therapeutic orientation will become the basis for the round table “Experience in using therapeutic elements of industrial hemp as raw materials for food, cosmetic preparations, biologically active or feed additives ", Which is being prepared as part of the training of students of the" Hemp University ", which will be held in the second half of September at the National University of Bioresources and Environmental Management (NUBiP) of Ukraine. Among other things, as part of the 5th course of training, students of the "Hemp University" will be presented with the initiatives of the profile association of Ukrainian cannabis growers to amend the current legislation related to the creation of a departmental legal framework regulating the use of "green mass" of hemp plant in industrial purposes by methods excluding extraction.

Обучение в рамках "Конопляного Университета"

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