The success of the United States Virgin Islands’ plan to legalize adult-use cannabis is dependent on its ability to draw tourists into the legal market. Policymakers and licensees across the Caribbean are closely watching the Territory’s approach, in hope of replicating parts of it, should it prove successful.
And success may still be possible. Questions are beginning to emerge, however, about the proposal’s feasibility in light of Covid, and the government’s ability to implement it once approved.
The Virgin Islands Cannabis Use Act, which is being pushed by Governor Albert Bryan Jr., would allow any resident or visitor age twenty-one or older to purchase and consume cannabis. According to an analysis by the Territory’s Office of Management and Budget, obtained by Cannabis Wire, the market would be bolstered by visiting consumers, an estimated 250,000 per year. That figure is based on the estimate that 15-16% of a projected 1,669,242 “cruise-ship and stay-over visitors” would take part in the market per year, and would consume about 1.6 metric tons of cannabis per year.
The industry, according to the Office of Management and Budget’s projections, could see $38 million in cannabis flower sales to residents and $43 million per year to visitors, with estimates that the full economic impact could be much higher when other product sales are factored in. The government estimates it could receive an estimated $14 million via a combination of taxes, permit, and licensing fees. It also estimates that close to 150 businesses would be created, along with 600 to 880 jobs in the first two years.
“The introduction of fully legalized cannabis use will have an appreciable and positive economic impact,” reads the Office of Management and Budget analysis.
Can the plan work? Critics of the current proposal argue that projections for the market’s size and government revenues should be much more conservative, due to the long term impact of the COVID-19 pandemic on tourism. They have also dismissed the idea, put forth by Governor Bryan, that the legal market would be put in place in time to supply revenue to help shore up a bond to save the Government Employees Retirement System (GERS), which covers pensions on the islands of Saint Croix, Saint Thomas, and Saint John.
Last month, Janelle Sarauw, a Virgin Island Senator, told Cannabis Wire she had reservations about rushing implementation of adult-use cannabis regulations, citing the government’s delays in implementing the medical cannabis regime passed more than a year ago.
She wants to slow the process down. Sarauw added, explaining she isn’t against the adult-use legislation being put in place, but prefers for the medical program to be implemented before work is done on an adult use bill.
In June, Sarauw argued that the recreational bill was imperfect and needs work: “The recreational bill as it stands cannot pass. We have to protect our people, we have to give opportunities for our people to prosper from this industry on the recreational side and we must look at the fee structure and the education program for farmers.”
“There are some good parts of the bill we can keep, there are parts we have to amend,” she said, adding: “I just want to dispel the rumor that cannabis is going to save the GERS system.”
Critics of the tourism-focused cannabis plan point to an analysis from the United Nations World Tourism Organization, which shows that the COVID-19 pandemic will result in a contraction of the tourism sector by 20% to 30% in 2020. Other, more pessimistic, analyses—such as one from the International Air Transport Association—show that countries relying on foreign tourists have seen tourist numbers drop by almost 80% since January 2020, and paint a bleak outlook for recovery.
Gemma Wenner also believes implementation of adult use provisions should be reconsidered. A native of Saint Thomas and a professor of tourism and hospitality at Southern Illinois University, who studies the impact the legalization could have on the tourism sector in the Caribbean, told Cannabis Wire that a legal cannabis market is “a sensible way to create other opportunities in tourism. Short term, however, I think we need to focus on developing training within the community.”
“We also need to start working on the regulatory framework immediately,” she said, explaining that the ability to produce quality products locally would boost economic opportunities. You can use the timeline of a year to extend quality control and work on customer service for tours and shops. That work gives the industry a real chance,” Wenner said. “That’s something all Caribbean islands need to focus on.”
The idea to harness tourism as a driver of a legal cannabis industry has taken root in other parts of the Caribbean, as well. The region received 31.5 million stayover visitors and 30.2 million cruise passenger visits in 2019, according to the Caribbean Tourism Organization.
In Jamaica, which received 4.31 million combined cruise and stayover visitors last year, for example, Floyd Green, the State Minister in the Ministry of Industry, Commerce, Agriculture, and Fisheries, told Cannabis Wire that the country is “still” actively pursuing opportunities in the area of cannabis tourism. According to Green, the island is hoping to use tourism to create opportunities for local cannabis cultivators. Other destinations, such as, the Bahamas and Saint Lucia, are also considering the economics of similar programs.
James Walker, an attorney who runs a blog called Cruise Law News, points out that companies such as Royal Caribbean and others actively promote onshore excursions that tend to involve cannabis-themes, such as one titled “A Day in the Life of Bob Marley,” which ship goers must be eighteen years old to attend.
Those promotions continue, even as the use of cannabis remains illegal onboard or during cruise vacations, “including during transfers to and from ships, inside terminals, while onboard, at our ports of call, during shore excursions or at our private destinations,” per Royal Caribbean’s “Guest Conduct Policy.” Carnival, another major operator in the region, has a similar policy.
Across the Caribbean, according to the Caribbean Tourism Organisation, the intersection of cannabis and tourism is one the organization is interested in researching, especially with tourism accounting for about 15.5% of total GDP and approximately 14% of jobs.
The idea of a tourism-bolstered cannabis industry is clearly in play. “We can’t pretend it doesn’t exist and the rest of the world isn’t talking about it,” Hugh Riley, the former head of the Caribbean Tourism Organisation, said at a forum the group held last year. Riley added that it is still “entirely up to destinations within and outside of the Caribbean to determine whether they want to use cannabis as a magnet to draw tourists,” explaining that the Tourism Organisation only plays an advisory role in those decisions. (Riley resigned last year, after a decade in the post.)
With the Caribbean Tourism Organisation still due to appoint his replacement, officials at the Organisation told Cannabis Wire that there is no immediate plan to commission a wider study among its twenty-four member states since “at the moment, COVID-19 is attracting virtually all our attention.”