The European Union is taking into consideration the enormous potential of the Canary Islands’ cannabis industry, as both its location and financial laws make it a very tempting place for many cannabis companies worldwide. This could help the EU cannabis market to grow even further in the next few years, positioning it as one of the biggest in the world and even above the US.
The agricultural sector in the Canary Islands will no longer rely only on bananas and tomatoes. The position of the Islands, their fiscal environment, and the opening of new cannabis-related consumer markets in the EU have started to allow the arrival of technology-based cannabis marketing companies.
As with automotive or tobacco companies, a new company, licensed by the US DEA has entered the Canary Islands market.
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SovereignPort wants to exploit the cannabis business potential of Tenerife
Since this month, the company SovereignPort has been operating in the Free Zone of Tenerife as a multinational, as the company confirmed. Its plans include taking over the logistics of cannabis customs clearance for the EU and the United Kingdom markets. From the Canary Islands, the company will be able to drastically reduce both processes and costs of sending cannabis worldwide for EU customers.
What SovereignPort does is facilitate safe international logistic solutions for cannabis, helping with customs clearance, global logistics, following import and export guidelines as well as legal brokerage. The company does this by employing special free zone agreements around the world. In this way, the US headquarters are still in Denver and the EU headquarters are in the dock of companies that use the free zone in the port of Santa Cruz de Tenerife.
If the food customs code is applied in the Canary Islands, the local VAT is 3% (in the islands it is called IGIC and it is kept by the regional administration). If it is not marketed as food, cannabis is taxed at 7%. It can have a IGIC of 0% if it is delivered as a medicine under the criterion of “a rational use” of its disposition. If it is not marketed as animal feed, cannabis is taxed at 0%.
The group’s CEO, Sarah Yetman, explained that “we are very excited to be part of the Canary Islands. Our new EU port offers many great opportunities for the wider cannabis community. We will continue to serve our EU customers, but with a more affordable and optimized advantage” she says. Operations in Tenerife are run by a German based in the Canary Islands, Joshua Ready.
European Union looks at the Canary Islands as a potential cannabis paradise
Since 2018, importing cannabis to the Canary Islands has been subsidized by the EU as stated in the EU regulation 1673/2000 with its CMO for cannabis, either raw or worked. Brussels pays $98 (€90) for each ton of hemp fiber obtained with a maximum of 7.5% impurities.
“This is a huge move and an optimal time to help in world trade, now that our industry is looking for new opportunities. We are helping companies to move the best resources efficiently to provide an affordable, high-quality product to the market,” said Ready, who has also been appointed as the US firm’s EU manager.
What does the company gain from being located in Tenerife? Being a recognized and legal company in the EU translates into a reduction in shipping obstacles, deadlines and taxes. SovereignPort can now avoid foreign duties, taxes and VAT for all clients in the European Union.
The company pointed out that there are no other cannabis logistics companies operating legally in the USA and Europe and that by authorizing the operation in the Canary Islands, SovereignPort is in a unique position to help its wholesale clients. SovereignPort also bases its business on the intermediation and sale of CBD and industrial hemp, ‘a significant benefit to the international supply chain,’ the company said.
European cannabis market could be twice as big as the US market
The sale of cannabis products is growing in popularity in the EU, through the innovation of companies such as StillCanna Inc, Marijuana Company of America, ICC International Cannabis Corp, OrganiGram Holdings Inc or Aleafia Health Inc, all of which are listed on the US stock exchange.
The potential of the European market that the Canary Islands is now targeting is surprisingly large. The consulting company Brightfield Group predicted that in 2023 the demand for these products in the EU will grow by 400%. Producers such as StillCanna Inc have already accumulated cannabis assets in the UK, Romania and Poland for global supply.
Until now, the largest cannabis markets in Europe were in the UK and Austria, while Switzerland and Spain are building regulations on product quality. With a population of over 740 million people, the European market is home to more than twice the combined populations of the USA and Canada.
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First published in El Economista, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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