Reform objective
To establish clear and transparent rules on the market, ensure effective regulation of the cannabis market in Ukraine.
Mechanism
Removing unnecessary regulations, including hemp cultivation quotas and licenses; harmonization of the legislation of Ukraine with the EU law, fulfillment of obligations under the Association Agreement.
Instruments
Amendments to the Law “On Narcotic Drugs, Psychotropic Substances, and Precursors” and the Resolution of the Cabinet of Ministers of Ukraine #589; a separate legislative act that would regulate the procedure for testing the tetrahydrocannabinol content.
In 2020, BRDO experts analyzed international practices and Ukrainian legislation and developed recommendations for the recovery of the industrial hemp market in Ukraine, and set out them in the Green Paper “Industrial Hemp Market”. Also, we developed a business case “Industrial hemp cultivation” for the state information service #StartBusinessChallenge. In 2021, BRDO experts are working to amend regulatory acts to simplify the regulation of the industrial hemp market.
Proposals
The use of industrial hemp quotas at the level of narcotic drugs is inappropriate, non-flexible, and violates the right of economic entities to operate freely. That is why it is necessary to cancel quotas as an unnecessary and business-unfriendly regulatory tool with a high risk of corruption.
Moreover, in Ukraine, the permitted THC (tetrahydrocannabinol) level in industrial hemp is too low — 0.08%, while in the EU — 0.2%. Under the Association Agreement, Ukraine is obliged to implement the Council Regulation (EC) No 1307/2013 and set the requirements for THC content. This means that Ukraine should raise the permitted THC level to 0.2%. It is also necessary to draft a regulatory act that would regulate the procedure for testing the tetrahydrocannabinol content.
Licensing requirements and Requirements for facilities and premises intended for this activity need to be harmonized, as they contradict each other. This, in turn, creates a conflict and additional barriers for entrepreneurs.
Why is this essential for Ukraine?
If unnecessary regulations are removed, Ukrainian farmers will be able to engage in multi-vector business with a potential income of up to $100 thousand per hectare. Therefore, market policy tools should primarily stimulate producers and potential investors, not discourage them. That is why it is necessary to simplify regulation, as well as introduce incentive-based mechanisms for producers, such as state support and agricultural insurance. This will create an attractive segment for investment.