Malta unveils rules for Cannabis Clubs

The regulations governing Maltese cannabis clubs are becoming a little clearer. A recent legal opinion now explains what cannabis consumer associations will need to do to obtain a license allowing them to sell cannabis to registered members, including the records they must maintain and the people they may employ.

The legal opinion has been published 15 months after recreational cannabis was effectively legalized by the government and a few weeks after the sector's new regulator has begun accepting applications registration.

Associations will be limited to a maximum of 500 members, and members will not be allowed to belong to more than one association at a time.

Annual Licenses

Organizations will be required to contribute 5% of their annual revenue to a risk-reduction fund and 10% of their retained earnings to a community projects fund. These two funds will be managed by the sector’s regulator, the Authority for the Responsible Use of Cannabis (ARUC).

The registration fees for associations have been reduced compared to the amounts originally planned : Small organizations with up to 50 members will now pay only 1,000 euros per year, instead of the minimum of 8,750 euros initially proposed.

ARUC President Leonid McKay said the decision to reduce the application fee was made in response to feedback from prospective applicants, who said they would not be able to afford the exorbitant fee.

However, the fees increase based on the number of members: the largest associations, which may have between 351 and 500 members, will pay an annual fee of 26,000 euros.

Crop, Sales, and Membership Records

All associations must maintain detailed records of each cannabis growing cycle and submit a quarterly report to ARUC detailing the number of members, the amount of cannabis sold, and cash flow.

The law stipulates that ARUC «may» operate a centralized digital system for data collection and monitoring, but currently offers no guarantee of the confidentiality and security of the association members’ personal data.

Instead, the rules simply stipulate that associations must maintain a membership registry containing all members’ personal data, without any specific requirements regarding privacy or security. Nor is there any explicit obligation for associations to delete members’ data at any given time.

Market-rate salaries

All associations must be «nonprofit» and must compensate their directors in accordance with market rates established by the law on volunteer organizations. Exceptions will be permitted only when a person possesses «specific skills» and with the approval of ARUC.

The founders of Cannabis Clubs must have lived in Malta for at least five years to establish an association, and anyone convicted of major crimes or drug-related offenses within the past ten years may not establish an association, hold a key position in an association, or work as an employee.

Inspections and Fines

ARUC inspectors will be authorized to conduct on-site inspections or audits. Violators face penalties ranging from a warning to specific orders or, in the most serious cases, referral to the police and revocation of their license.

The fines vary in severity. Organizations that fail to file a quarterly report or maintain an accurate membership list will be fined 1,000 euros, which is the lowest fine provided for under the rules.

From that point on, the fines increase gradually, reaching 2,000 euros (for selling alcohol at club events or having an excessive number of members), 2,500 euros (nuisances to neighbors), 5,000 euros (sale of cannabis that is not clearly labeled and packaged), and finally 10,000 euros for the most serious offenses.