Cannabis associations that sell to non-members or minors will face fines of up to €10,000, with the associations also required to cough up money for harm reduction and community projects.

A newly-published legal notice spells out what cannabis associations will need to do to obtain a permit allowing them to sell cannabis to registered members - from what records they must keep to who they can employ.  

The legal notice comes 15 months after the government effectively legalised recreational cannabis and weeks after the sector's new regulator started accepting registration applications.

Associations will be capped at a maximum of 500 members and people will be forbidden from joining more than one association at any given time.

Financial contributions

Associations will be obliged to contribute five per cent of their annual income to a harm reduction fund and 10 per cent of their retained earnings to a community projects fund. Both those funds will be administered by the sector’s regulator, the Authority for the Responsible Use of Cannabis (ARUC).

Registration fees for associations have been slashed from the amounts originally planned: small associations with up to 50 members will now only pay €1,000 a year, rather than the minimum €8,750 annual fee initially proposed.

ARUC boss Leonid McKay is on record saying that the decision to slash registration fees came following feedback from prospective applicants, who said they would not be able to afford the exorbitant fees.

Fees, however, rise in line with membership: the largest associations, which can have anything from 351 to 500 members, will pay a €26,000 fee annually.

Sectoral concerns

While smaller cannabis associations will pay lower fees than their larger competitors, other rules apply to all, irrespective of size.

That approach has been criticized by cannabis lobby group Releaf, which says clubs with fewer than 100 members should be given additional leeway to set up more makeshift operations and grow cannabis in grow tents.

Releaf argues that small-scale growers will be discouraged by red tape, fuelling the illicit cannabis market that the government says ARUC is intended to stamp out.

Centralised system pledge watered down

In the event, all associations will need to keep detailed records of each cannabis cultivation cycle and file a quarterly report with ARUC detailing its number of members, cannabis sold and cash flow.

The law states that ARUC “may” operate a digital centralized data collection and tracking system”, in what appears to be a downscaled ambition. Last month, ARUC chief McKay had spoken of operating such a system in more definitive terms.

Also missing from the legal notice is any mention of a system for ensuring association members’ personal data remains private or secure – something McKay had also spoken about.

Instead, the rules only state that associations must keep a register of members that includes all their personal details, without any specific privacy or security requirements. Nor is there any explicit requirement for associations to delete members’ data at any given point in time.

Market rate salaries

All associations must be “non-profit making” and will have to pay their administrators in line with market rates established by the Voluntary Organisations Act. Exceptions will only be allowed when a person has “specific skills” and with ARUC approval.

Founders must have lived in Malta for at least five years to set up an association and anyone convicted of major crimes or drug-related offences in the previous 10 years cannot set up an association, hold a key role in one or work as one of its employees.

Inspections and fines

ARUC inspectors will be empowered to carry out on-site inspections or audits. Those found to have broken the rules will face sanctions that range from a warning to specific stop orders or, in more serious cases, being referred to the police and having their permit revoked.

Fines range in severity.

Associations that don’t file a quarterly report or keep a proper list of their members will be fined €1,000 – the lowest fine stipulated in the rules.

From there, fines rise gradually to €2,000 (selling alcohol at associations or having too many members), €2,500 (causing a nuisance to neighbours),  €5,000 (selling cannabis that is not clearly labelled and packaged), and finally €10,000 for the most serious contraventions.

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