It Could Become the Las Vegas of the Caribbean

Puerto Rico has a thriving medical cannabis program because of the combined efforts of government, advocates and industry professionals who created a legal framework to provide the island’s 3.2 million citizens a new option for managing their health and wellness.

Now, five years after legalization, a check-in with industry players reveals that significant efforts are still needed to make a more just, equitable and accessible industry. However, despite these challenges, Puerto Rico can still become a leader in medical cannabis on the global stage and, if legalized recreationally, it can become an epicenter for cannabis tourism.

Oversaturation of a new market

As cannabis became more accepted in Puerto Rico, dispensaries started to pop up in droves, following government projections that there would be half a million certified patients within five years of the program’s launch, says Eliezer Villa, general manager at First Medical Cannabis, headquartered in the west of the island.

“All of us who started in the industry sort of took a leap of faith based on those projections,” Villa says.But as of August 2021, there were only 120,000 active patients in Puerto Rico, according to the Department of Health. The 216 dispensaries on the island suggest the industry is growing faster than the patient base. According to Cannaworks Institute, a Puerto Rico-based education platform, the Department of Health has issued more than 280,000 patient licenses since the beginning of the cannabis bill, indicating that license renewals have decreased in the past years. The Department of Health blames the high price of cannabis products and the lack of non-cash payment alternatives, among other reasons, for the lack of patient growth.

Industry insiders are now concerned about market oversaturation.

“No other industry is investing as much in the retail side, with more than 200 dispensaries in less than five years, where you see large investments,” says José Maldonado, who has watched the legal industry since its inception as editor-in-chief for Revista Crónicas, which covers cannabis in Puerto Rico. “We might have too much supply and not enough demand, because we’re not registering patients with the speed that we should be, being a medicinal-only market.”

One of the mistakes made by the Puerto Rican government was in how business licenses were distributed, according to José Aleczer Rivera, co-founder of the Free Juana Foundation and owner of The Health Clinic dispensaries.

“They allowed for anyone who wanted to have a grow, a manufacturer license and a dispensary to request all of the licenses simultaneously,” he explains. Rivera calls the result a “cannibalistic market” in which entities with large amounts of capital become vertically integrated.

As a result of these big businesses moving into the industry, lowered costs and decreased profit margins create competition that could harm smaller businesses.

“There’s a discrepancy in which the government only seeks to gain profit from granting licenses, forgetting where the real market is,” Rivera says.

“If you’re going to regulate, you need to make sure you have highly trained personnel to provide the right support for the industry to have steady growth, ultimately for the benefit of the island’s patients,” echoes Maldonado, “because this is a public matter after all.”

The cannabis boom

Following the official legalization of medical cannabis on the island by executive order in 2015, growth in Puerto Rico’s industry remained slow until outside forces spurred it ahead.

“The cannabis boom — and those who were here since the beginning know it — started right after we were hit by Hurricane María,” says Villa. The 2017 hurricane was considered the worst natural disaster in the island’s history.

“The number of patients who got certified after the hurricane was enormous,” Villa says, pointing to anxiety and depression as two of the major ailments people struggled with post- María. “People needed to overcome the pain this phenomenon brought upon us. I think that was the most radical event that pushed the industry forward.”

At the same time, more medical doctors were beginning to see the efficacy of medical cannabis, thanks to education efforts from the industry.

“We noticed that a lot of powerful people were in the industry or starting in this space who needed a platform to be open about being in the industry,” says Ingrid Schmidt, co-founder of Puerto Rico MedCann.Biz, the biggest medical cannabis convention on the island.

Schmidt later co-founded the Cannaworks Institute, which provides a broad curriculum for physician education on medical cannabis and assists industry professionals with their education, compliance and licensing processes.

“Puerto Rico is a case study,” says Schmidt, noting the speed with which the island implemented regulations. “We have to be proud of our medicinal program; it competes with any other.”

Continued criminalization

Despite its quick growth, Puerto Rico’s medical cannabis industry operates alongside a justice system that otherwise still criminalizes the plant.

“In Puerto Rico, when handling a case of a controlled substance, there’s no distinction between if it’s marijuana, cocaine or crack,” Rivera says. “Despite having a five-year regulated industry running, a simple cannabis possession is still an offense that entails a three-year sentence.”

The Free Juana Foundation has a group of lawyers who take cases pro bono to defend low-income individuals charged with simple possession offenses. In addition, the foundation hosts an annual 4/20 rally, where industry leaders and legislators can discuss ways to change laws regarding cannabis.

Increased education

All of the cannabis businesses and advocates interviewed for this story agreed that education for both medical doctors and prospective patients is needed to accelerate its medical cannabis program and work toward decriminalization.

“This is an emerging industry. You can’t be part of it with a static knowledge when you know everything regarding this plant is so dynamic,” Schmidt says. “When you are able to understand the chemical parts and biological parts [of cannabis] and combine it with seeing first-hand patients who were suffering tremendously now start to have a better quality of life, it’s just a complete game-changer.”

Patient education is equally important.

“Puerto Rico has a very religious and conservative population, and we need to destigmatize through education,” Maldonado says.

“The government should, with its budget, do a media campaign to prove that medicinal cannabis works, and that people can have health alternatives,” adds Villa.

Opportunity to lead

Puerto Rico also has a huge opportunity to contribute to advancing medical cannabis on the global stage, particularly in the pharmaceutical and research spheres. According to Schmidt, a history of pharmaceutical investment means the island’s workforce includes “highly qualified human capital” that has experience producing pills and other medical products.

She notes that most manufacturers creating cannabis pharmaceuticals have chemists and biologists on staff, many of whom have transitioned from careers with companies like Pfizer and Medtronic.

“[We have] a large tradition in pharmaceutical manufacturing and traditional agriculture,” echoes Maldonado. “We have very experienced people from the bio-agriculture industry; they know how to run a controlled cannabis grow operation with great skill.”

Maldonado also believes that Puerto Rico can contribute to the growing research base on medical cannabis on the global stage because, as an island, it is easier to do long-term studies on the population.

The Las Vegas of the Caribbean

As advocates and industry professionals continue to work with the government to improve its existing medical program, another opportunity that the island is keen to explore is cannabis tourism.

Sheira Cruz, owner of the Punto Verde dispensary in Fajardo, says half her patients are from off-island, through a reciprocity program the state has in place for other U.S. medical cardholders.

“It’s important that tourists understand the requirements in order for us to help them,” says Cruz, noting that if someone has a medical card from their home state and a qualifying condition, they can be served as long as they’re able to produce additional identification.

Cruz believes that the legalization of cannabis for recreational use will open up more opportunities for Puerto Rico as a whole, as the island welcomes 2-3 million tourists each year.

“This market has even more potential,” she says. “If they open the doors to recreational or delivery flexibility, for example, a lot more [consumers] would enter the industry.”

Maldonado also notes a great opportunity for an economic boost from taxing recreational cannabis through cannabis tourism.

“Right now, the program is still medicinal, but we do have the structure already in place for when we become recreational,” he says. “What the government should do is open up to the recreational market, and you can add a higher tax to it.

“We could be the Las Vegas of the Caribbean.”

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