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FOCUS: How much money could Jersey make from medicinal cannabis?

FOCUS: How much money could Jersey make from medicinal cannabis?

Monday 10 January 2022

FOCUS: How much money could Jersey make from medicinal cannabis?

Monday 10 January 2022

Government officials say there is big money to be made in medicinal cannabis, estimating that one hectare could generate nearly £5m...but how reliable are those estimates? And how long before the rest of the island sees any benefit?

Last week, a group of backbench politicians - the Economic and International Affairs Panel- tasked with reviewing the island's medicinal cannabis industry, published a key report on the emerging sector.

It found that the Government's current weak regime for issuing cultivation licences and lack of bespoke regulation around the sector was in fact putting the golden opportunity - and potentially the island's reputation - at risk.

Last week, Express highlighted the key risks identified - spanning planning, security and Ministerial responsibility among other areas - and recommendations for improvement from the Panel.

Today, we focus on how much the industry could be worth - and whether those estimates are accurate...

While the Economic Development Minister and his department had highlighted medicinal cannabis as a key opportunity for Jersey, the Panel expressed concerns that the figures being used were purely "speculative".


Pictured: The Panel’s advisers concluded that very little additional “new” taxation would arise from the industry in the short to medium term.

The Panel’s specialist advisers concluded that to date, very little additional “new” taxation would arise in the short to medium term. This includes personal tax, corporate tax and indirect taxation such as GST.

Job creation

In terms of employment, Daniel Houseago, the Group Director for Economy, said the department didn’t have the “actual detail” but estimated that each facility would need 50 people based on “speculative conversations” with an investment company in Southern Europe.

The Panel, however, said they found it difficult to understand how the number of approximately 50 staff per facility, even as an estimate, could be “so easily arrived at without an understanding of what the company would produce”. 

According to their advisers, the industry has the potential to employ anything between 40 and 50 employees in the immediate term, increasing to 160 to 180 employees in the medium-term, and growing to 330 to 360 employees in the long-term.

Tax takings

In the short-term, the panel’s advisers believe the industry could generate up to £1.3m in wages and salaries, increasing to £4.8m by 2023, with a potential further rise to £9.7m beyond 2023 if employee numbers reach 350.


Pictured: Senator Lyndon Farnham said that fiscal receipts would be expected from possibly 2023 but more likely 2024.

Jersey has opted for a 20% rate on companies’ taxable profits.

The Panel was told that in 2020, the value of sales in medicinal cannabis in the UK was close to £700m. They said they were “unclear” how this would transfer into profit for the island and asked what the expected fiscal receipts would be. 

The Minister for EDTSC, Senator Lyndon Farnham said that fiscal receipts would be expected from possibly 2023 but more likely 2024 with an estimate of £4m in tax receipt, because companies would have “large set-up costs”.

How much per kg?

Mr Houseago said the current value of a kilogram had been “guesstimated” to be between £3,000 and £4,000 and that it was anticipated that one hectare could generate about £4.9m.

The Panel was told that over the next two to three years the amount of hectares could increase to three, with “credible licence applications” in the pipeline potentially adding a further four.

How realistic are these projections?

The politicians said they were “extremely concerned” that these figures were based on “overcoming a lot of challenges”, adding they could be considered speculative. “The industry is very much in its infant stages and the Panel is of the opinion the fiscal receipts relied on the conditions for the medicinal cannabis industry being overall successful, they wrote.


Pictured: The Panel recommended considering other tax bases.

Concerned over the fact that no profit will be made from the industry in the short-term, the Panel suggested considering other tax bases, such as a turnover tax or a licence change linked to companies’ turnover.

The licensing process

The Panel also voiced concerns over the absence of “rigorous checks and balances” to understand the full economic impact of licence application. It came after Mr Houseago said his department didn’t fully scrutinise each application for its economic impact to the island, relying instead on private sector investors. 

They also found that whilst the Economic Development Department was involved in securing the commercial viability of the industry as a whole, it played no part in the granting of licences. That responsibility lies with the Health Minister - one of several examples of "blurred" lines of industry accountability, according to the Panel.

The Panel also raised concerns over the future economic viability of the Jersey licence application fee, set at £7,500 with an annual renewal fee of £3,750.  

They expressed concerns that the current fee might not cover the costs incurred to Government - such as administration and the ongoing work required from the office of the Chief Pharmacist. They recommended the Council of Ministers review the fee immediately and benchmark it against the “minimum required resource to regulate this industry in Jersey”. 

With this in mind, the Panel found that returns in the early stages would likely be "minimal", raising the question, will Jersey's government receive a good return on its own investment into the sector? Time will tell...


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Posted by john garner on
We had this with the offshore gambling.....Jersey was still talking about it when Alderney piled in and ate our lunch ..There is a supposition here that first mover advantage will be the game changer ...In reality other jurisdictions will catch up in a year ...Dont count your chickens Farnham
Posted by Scott Mills on
no chance against the big boys around the world. The starter pistol was heard years ago....shame Jersey hasn't even started running yet. It'll have to be top quality product (expert experience and knowledge is required here), not just someone who has a few empty greenhouses going spare.
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