Unlocking the Potential: Medical Cannabis in Ukraine

Ukraine is following the global trend of legalizing medical cannabis. In July 2023, the Ukrainian Parliament approved bill No. 7457 (the Bill). After further review by the Health Committee, it is expected to receive final approval in Parliament before being signed by the President. The bill outlines the framework for medical cannabis access and production, with specific details and controls to be established through by-laws.

Let's explore the opportunities this opens for patients, investors, and businesses while highlighting key aspects of the proposed Bill.

What is Essential?

The Bill exclusively covers medical cannabis, distinct from recreational use. Medical cannabis, derived from hemp, contains cannabidiol (CBD) and delta-9-tetrahydrocannabinol (THC), both with medical applications. Notably, CBD lacks pronounced psychoactive effects, and THC possesses minor narcotic properties contingent upon concentration. Recreational cannabis ("weed") is prohibited in Ukraine.
Medical cannabis is legal in 56 countries, offering treatment for conditions like cancer, epilepsy, and multiple sclerosis, with potential as a milder alternative to drugs like morphine.

The Bill's Overview

The Bill permits the controlled distribution of cannabis, cannabis resin, cannabis extracts, tinctures, and THC for medical, industrial, scientific, and technical purposes. These substances are intended for the treatment of neurological disorders, chronic neuropathic pain, gastrointestinal conditions, mental health issues, and palliative care via prescription, as well as for research and development in the pharmaceutical industry.
The Bill sets a maximum THC limit of 0.3% within industrial hemp, stricter than the 1% limit in many European countries. Exceeding this threshold in concentration will classify the substance as medical cannabis, subject to regulation.
Cannabis cultivation is only allowed for legal entities with the necessary licenses and quotas established by the government. Development of narcotic medications is limited to state, municipal, and private scientific institutions holding the necessary research licenses.
Pharmacies can dispense medications with narcotic and psychotropic substances if they have the required license. Purchase requires an electronic prescription from a qualified doctor.
Cultivating medical cannabis requires a police permit, special licensing, and agreements with quality control labs. THC content is tested only in state-designated labs, including those within the Ministry of Internal Affairs, the Security Service of Ukraine, the State Border Service, the Ministry of Justice, and the State Licensing Service.
Each cannabis batch and package will be labeled with a unique barcode and tracked through an electronic registry. Medications are dispensed only with a doctor's electronic prescription.
Cannabis cultivation facilities must meet specific requirements, including 24/7 video surveillance with real-time access for law enforcement. The Bill also seeks to expedite raw material import for patient medications.
The Ministry of Agriculture will keep a registry of legal entities engaged in hemp cultivation and processing, with access extended to the National Police.
The Bill explicitly bans the sale of cannabis and THC-containing products for recreational use.
Patients can possess and transport cannabis medications as prescribed, adhering to the specified quantity.
The Bill suggests reclassifying medical cannabis from the 'prohibited drugs' category (Table I) to the 'legally controlled drugs' category (Table II) in the Narcotic Drug Schedule.
Individuals involved in the unlawful use, cultivation, or distribution of medical cannabis will face penalties similar to those for drug trafficking, including imprisonment ranging from four to eight years.
Critics have raised concerns about the lack of established medical protocols for medical cannabis treatment in Ukraine. However, oncologist Andrei Beznosenko argues that Ukraine can draw from international and national treatment protocols based on scientific evidence, with translations available in Ukrainian, addressing these concerns. The Ministry of Health, by its order, has permitted the use of such protocols, based on scientific data and translated into Ukrainian.

Ukraine's Potential

Ukraine possesses all the prerequisites necessary for the advancement of medical cannabis and the facilitation of patient access to essential medications. The process should commence with utilization to expedite the delivery of medicines to patients. An initial phase could involve imports, followed by gradual progression towards domestic production, ultimately rendering Ukraine more competitive in the market. The cost of cultivating cannabis and manufacturing medications in Ukraine is notably lower than in numerous other countries, enhancing its competitive advantage.
The legalization of medical cannabis engenders fresh prospects for farmers, broadening their access to a burgeoning niche. Furthermore, the nation's idyllic climate and soil conditions are conducive to cannabis cultivation, rendering it a particularly appealing industry.
Legalization not only provides patients with access to cannabis-based medicine, ameliorating the symptoms of a range of medical conditions but also enhances Ukraine's healthcare system. Given the current societal trauma in Ukraine stemming from the war, it is anticipated that approximately six million individuals will require such medications to alleviate physical pain and psychological distress. Additionally, this move unlocks novel business opportunities, fostering job creation and supporting agricultural enterprises while propelling research in the pursuit of enhanced cannabis-based medical treatments.

Investment Prospects

The introduction of medical cannabis not only promises to enhance patient well-being but also offers exceptional business opportunities. The global medical cannabis market, valued in billions of dollars, is on a continuous growth trajectory. According to Grand View Research, the global hemp cultivation market is projected to reach $475.9 billion in 2023, with estimates forecasting a surge to $1.8 trillion by 2030, indicating an annual growth rate of 21.3%. This trend unveils a unique opportunity for investors to stake their claim in this lucrative market.
In 2019 alone, American experts reported investments of approximately $2 billion in cannabis startups. Notably, Pax Labs, a developer of electronic cigarettes, secured the most substantial investment, totaling $546 million. The Bill introduces a new investment avenue, allowing investors to participate in medication production within Ukraine and export these products to Europe. This approach has the potential to yield cost savings three times greater than production in Canada or Europe. Ukrainian investment prospects have already garnered the attention of major Canadian producers, including Aurora Cannabis and Canopy Growth, as highlighted by Gennady Shabas, the head of the Ukrainian Medical Cannabis Association.
Medical cannabis is increasingly emerging as an alternative to traditional pharmaceuticals. Hemp companies are harnessing modern technology to create specialized products. In this context, technology plays a pivotal role, providing tools to maximize productivity and profitability. These tools encompass pest control, automated fertilization, and irrigation systems, as well as light and climate control systems.
While the process of legalization is still in its early stages and carries inherent risks, the demand for law firms capable of assisting businesses in understanding and adhering to the legal framework is expected to surge. Establishing infrastructure for payment processing and customer management assumes pivotal importance, with modern technology offering the means to optimize production and profitability. Keen analysis of market trends and data-driven insights are critical, and data collection and analysis platforms can be effectively integrated into this industry.
The process of legalizing and integrating cannabis into Ukraine's medical system may require time and resources, but it represents a crucial step in strengthening patient rights and unveiling new business and investment opportunities.