In the rushing movement from the medical cannabis legalization trend across Europe, the Republic of Malta is beginning to carve out a place for itself in the budding industry.
With a population of about half a million people and a national GDP of 12.3 billion euros, the small island nation has been working to attract international interest to bolster its developing cannabis market.
Malta is one of a growing number of countries in Europe trying to grab a portion of the global marijuana space. The nation is promising it will be at the forefront of cannabis in Europe and across the world.
Here the Investing News Network (INN) takes a look at the investment opportunities in Malta and the role it could play in the European and international cannabis spaces.
Medical cannabis legalization and regulation in Malta
Malta legalized cannabis in March 2018 following the decriminalization of the drug in 2015. Deo Debattista, a member of Malta’s House of Representatives, tweeted that the country’s government moved to legalize the drug after observing its medical benefits.
#Malta has officially legalised medicinal cannabis after recognising the therapeutic benefits of the plant. Proud that we have once again places our citizens’ health and dignity top of the agenda.
— Deo Debattista (@deodebattista) March 27, 2018
With the amendments to The Drug Dependence Act, the cultivation and production of medical cannabis became officially legal and doctors in the country gained the ability to prescribe non-smoking forms of medical cannabis to patients.
The Maltese government also established the Production of Cannabis for Medicinal and Research Purposes Act in 2018, which is the legislation permitting the production of medical marijuana for use and research.
As of September, Malta Enterprises, the country’s economic development agency, has approved 20 medical cannabis projects.
In an interview with Business Malta, Malta Enterprises said its continued interactions with medical cannabis companies has been crucial to the growth of the sector. The agency also noted Malta’s impressive existing medical sector was a driver for international investment into the Maltese cannabis industry.
“From the already established pharmaceutical and life sciences sector and the attractiveness of medical cannabis industry in Malta, it is clear that Malta is seen by many companies as a potential central hub from where to supply Europe and elsewhere with very high-quality pharmaceutical products,” Malta Enterprises told Business Malta.
At a Cannabis Europa event in September, Malta Prime Minister Joseph Muscat told investors that all the projects approved so far would represent an investment of 110 million euros.
The projected growth of the Malta medical cannabis market
For its part, Malta is confident in taking on a considerable share of the market in medical cannabis exports.
During a visit to Canada and the US, Muscat said the country plans to ship out C$1.5 billion of medical cannabis products within the next three years. Muscat told Television Malta exports from the country are slated to start in the first quarter of 2020.
“We are estimating that exports by year 3 of these companies will reach more than one billion euro and that 900 jobs will be made available,” the nation’s leader said, adding that he expects to attract more players to his market as it begins to grow.
How to invest in the Malta medical cannabis market
The medical sector for the drug in Europe is projected to be big business.
A report from cannabis research firm Prohibition Partners said Europe’s medical cannabis industry could bring in 55.2 billion euros by 2028.
Some cannabis firms are looking to leverage Malta’s proximity to Europe as an entry point into the larger cannabis marketplace.
In fact, one medical cannabis firm, the privately held Materia Ventures, is betting its hand on the growth of the continent’s medical cannabis sector.
At an investor event earlier this year, Materia Ventures CEO Deepak Anand said his firm plans on using Malta as a jumping-off point for their Europe operations, citing its strong pharmaceutical industry and its flexible regulatory environment as benefits for the investment.
“Malta’s had a very welcoming and open regulatory policy on a number of different things; cannabis is one of them,” Anand told INN in an interview. “The country has been very, very open to setting regulations for products where regulations don’t exist.”
Anand told INN that as a member of the European Union (EU), Malta is beholden to EU Good Manufacturing Practice (EU-GMP) requirements that strictly regulate medicines within the union.
This standard ensures the production of medical products is of the highest quality, Anand continued.
The first phase of Materia’s Malta operations, which will be focused on the production and cultivation of dried cannabis, will go online during the first half of next year, Anand told INN. The second phase focuses on extraction and product creation and is set to be completed by the second half of 2020.
Materia is joining the likes of Canadian cannabis firm Aurora Cannabis (TSX:ACB), which was approved for the country’s first cannabis cultivation facility under its subsidiary, Aurora Malta, in 2018. The subsidiary was built in collaboration with Cherubino, a leader in pharmaceutical wholesale in Malta, with Aurora as the majority shareholder in the joint venture.
The state-of-the-art facility will be used to create medicinal cannabis products and will serve as a gateway into European and international markets.
There’s also MPX International (MPXI) (CSE:MPXI,OTC Pink:MPXOF), which, after selling its US assets to iAnthus Capital Holdings (CSE:IAN,OTCQX:ITHUF), told investors it would focus on international ventures.
In August, the company confirmed the closing of its acquisition of Alphafarma Operations’ outstanding shares through its Maltese company, MPXI Malta Property.
As a part of the deal, Alphafarma transferred the lease for a GMP-sanctioned facility located just outside of Malta’s capital to MPXI for C$2.3 million.
When the transaction was first announced, Daniel Fryer, MPXI’s Head of European Development, said in a press release the move was an important milestone in the company’s expansion into Europe.
“Malta not only provides a strategic gateway to the emerging EU markets but also upholds high pharmaceutical standards and a strong regulatory framework,” said Fryer.
In August, MPXI said its Malta operations received a letter of intent from Malta Enterprises, a government agency tasked with seeking foreign investment into the country, for a license allowing it to import, extract and produce medical cannabis products for Malta and export them to key markets in the EU.
For Materia Ventures, those key markets include Germany, Denmark and the UK, Anand said.
Like Fryer, Anand agrees that the comprehensive Maltese pharmaceutical framework presents a unique advantage, pushing its position ahead of other low-cost cannabis production countries like Macedonia, Lesotho and Jamaica.
“Malta plays a pivotal role in that element … in setting up a regulatory regime that fosters the quality aspect,” said Anand.
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Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.