Lessons learned from cannabis legalization in North Macedonia

In March 2016, North Macedonia amended its Law on Control of Narcotic Drugs and Psychotropic Substances.¹ As a result, it became legal to grow cannabis for medical purposes and to refine, extract and produce hemp seed and cannabis oil. North Macedonia thus joined a growing number of countries (36 including Croatia since 2019 and Greece since 2018) that allows for the cultivation and export of medical cannabis. Is this a risky business or a possible model for other countries in the region?

Mirroring Canada’s approach, North Macedonia introduced a free-market approach to cannabis cultivation, distribution and sale. This is a boon to the economy worth an estimated €100 million per year that has attracted local and foreign investors.² Competition for medical cannabis production in North Macedonia is rapidly increasing.

From May 2016 to May 2018, the Ministry of Health and the Ministry of Agriculture, Forestry and Water Economy issued a total of five licences for the production of cannabis for medical use and two licences for extraction. Since then, according to government data, a total of 55 companies have received licences to grow cannabis for medicinal purposes; another 17 companies are awaiting approval.³ A number of these companies are said to be linked to the prime minister and his friends and family.⁴

The high number of licences that have been issued means that a considerable amount of cannabis is now being grown in North Macedonia. However, there is concern among investors that supply is outpacing demand and that the business opportunity may not be as lucrative as originally foreseen. It should be kept in mind that the current legislation does not allow for the export of dry cannabis for recreational use.

Regulation is important to prevent legally-grown cannabis from being sold illegally and to ensure that the type of cannabis grown is for medicinal rather than recreational use. On paper, the regulations are quite strict and should be overseen by government entities, including the ministries of agriculture and health,⁵ as well as a five-member special commission.⁶ The cannabis grower is obliged to keep a record of the cultivated cannabis (sowing, seedling production, transplanting and number of stems). After the completion of the hemp harvest, the special commission inspects the harvested items to determine the number of collected stems and wet mass.

But with so many producers and the fact that cannabis can be harvested up to four times a year, there are concerns that the current regulatory system is insufficient. For example, inadequate control could lead to legally-produced cannabis being placed on the black market in North Macedonia or smuggled to third countries. The risk is real: at the beginning of December 2020, two tonnes of cannabis were stolen from the warehouse of a licenced company in the village of Josifovo, in Valandovo municipality.⁷ Allegedly, some of the cannabis ended up in Kosovo.⁸ In a separate case, four men (two from Skopje and one each from Albania and Kosovo) stole 60 kilograms of marijuana from the warehouse of a licenced cannabis producer in the region of Krusevo.⁹

A high-profile case in Serbia also shows the danger of a lack of regulation and cosy relations between producers and state officials. In November 2020, less than 50 kilometres from the Serbian capital, police discovered the largest marijuana plantation in Europe at a high-profile organic farm known as Jovanjica that is owned by businessman Predrag Koluvija. A search of the property revealed almost four tonnes of raw marijuana, including 650 kilograms of ready-to-sell product.¹⁰ An underground complex with dozens of basements had been converted into skunk cannabis laboratories. Marijuana was also grown in nine above-ground hangars and it was packed and stored in the warehouses and offices. Mobile-phone jammers had allegedly been installed everywhere on the property. No one could approach it without undergoing a strict check. Armed security, including former members of the Special Anti-Terrorist Unit, were deployed all around the property. They were equipped with handguns, thermal-imaging cameras for night surveillance and anti-drone rifles.¹¹

The case has kicked up a lot of dust in Serbia because of the alleged connections between the owner of the Jovanjica farm and the country’s ruling Progressive Party, fuelling allegations about state collusion with organized crime.¹² A journalist covering the case has even been threatened.¹³ The trial against Koluvija and his associates is ongoing. It is worth noting that Koluvija has been engaged in growing cannabis for medical purposes in North Macedonia.¹⁴

The Jovanjica marijuana production complex.

Photo: Jelena Zoric/N1 TV.

While demand for medicinal cannabis products is limited, there is a significant market for dry cannabis in the region. Marijuana is the most consumed drug in the Western Balkans. Furthermore, North Macedonia is a major transit hub for the trafficking of cannabis produced in Albania. The drugs are smuggled across the border by foot, using horses or donkeys and trucks or even boats across Lake Ohrid.¹⁵ Some of it passes north through Kosovo or Serbia to central and Western Europe, while some goes through Bulgaria and Greece. Cannabis is also smuggled from Albania via North Macedonia to Turkey. There, it is often exchanged for heroin, which is brought back through North Macedonia, with the final destination being Albania.¹⁶ It would be quite easy to insert cannabis produced in North Macedonia into these well-established illicit flows.

Bearing these risks in mind, from a business and security perspective it would seem prudent for the government of North Macedonia to stop issuing licences for cannabis cultivation. Otherwise, the market will become saturated – which is unattractive to investors – and hard to regulate.

It is possible that some investors are banking on a possible amendment to the law that would enable the use and export of dry cannabis. This could open North Macedonia up to drug tourism, at a time when Amsterdam is considering going in the opposite direction by banning foreigners from entering ‘coffee shops’. While legalization of cannabis would generate badly needed tax revenue, it could also accelerate public-health risks and the crime-related side effects of an increase of cannabis trafficking in North Macedonia. For example, experience from the United States shows that black-market marijuana production is on the rise, predominantly in states that have legalized marijuana.¹⁷

It is worth noting that, in May 2020, Albanian Prime Minister Edi Rama announced that his government was working on a draft law to legalize cannabis cultivation for medical purposes, which would soon be introduced to the public.¹⁸ The announcement raised a few eyebrows since Albania has long been notorious for illegal cannabis cultivation. The opposition and other critics have expressed scepticism about the initiative, arguing that for a country with a long history of illicit cultivation, legalization of medical cannabis would further encourage illicit production and would complicate the country’s efforts to control the problem. Since the prime minister’s announcement, there has been little follow-up and it is believed that the issue will not be revisited before the April 2021 general elections.

In short, attitudes and laws about cannabis are changing. In December 2020, the UN Commission on Narcotic Drugs removed cannabis from Schedule IV of the 1961 Single Convention on Narcotic Drugs. This decision has opened the door to recognizing the medicinal and therapeutic potential of the drug. But challenges remain to ensure an effective regulatory framework for the production, use and sale of cannabis. Countries in the Western Balkans where there is a significant amount of cannabis cultivation, like Albania and Serbia, are no doubt closely watching the developments in North Macedonia. Any plans to legalize cannabis could have a significant impact on politics, health, tourism, economics and drug markets in the region.

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