Panama is on track to legally sell its first medical cannabis product before the end of 2024, and as with all new markets, a frenzy of preparation is hectically underway. 

Taking the wait-and-see approach has permitted Panama to incorporate concepts from neighboring countries while staying faithful to its strategic geographical advantages, carefully considering and regulating the use of medical cannabis in and from Panama.

The next 24 months will be critical in determining whether Panama embraces or squanders this opportunity.

Before delving further, the reader should be brought up to date on two important subjects:

• how Panama defines “medical cannabis”; and
• how Panama got here.

How Does Panama Define “Medical Cannabis”?

Panama considers cannabis to be a “controlled substance”, which it defines as any substance mentioned in one of the following two international conventions:

• the Single Convention on Narcotic Drugs, 1961, in which cannabis is specified; and
• the Convention on Psychotropic Substances, 1971. 

The main laws and regulations governing this subject in Panama define medical cannabis as any product derived from the cannabis plant that contains at least 1% tetrahydrocannabinol (THC).

Products containing cannabidiol (CBD) while maintaining THC levels below 1% are not considered to be controlled substances. 

Products containing synthetic THC of any type are not considered medical cannabis, and are prohibited.

How Did Panama Get Here?

After much pressure from local patients’ associations and doctors, the following occurred in Panama:

• 13 October 2021 – Law 242 of 13 October 2021 was passed by Panama’s legislative branch;
• 1 September 2022 – Decree 121 of 1 September 2022, which regulates Law 242, was publicised by the Health Ministry of Panama (MINSA);
• 25 September 2023 – a total of 14 companies presented their applications to obtain one of the seven available medical cannabis licences in Panama; 
• 17 January 2024 – MINSA published Resolution 008, with a list of the seven companies that were approved for the first seven licences;
• 29 January 2024 – MINSA announced that three of the seven companies not granted approval for a licence in Panama had presented their first legal recourse, a “reconsideration” of the resolution of 17 January 2024;
• 12 March 2024 – MINSA announced that it was maintaining its previous decision, as detailed in its communication of 17 January 2024;
• 28 March 2024 – MINSA announced that all three of the companies that had presented their unsuccessful reconsideration had presented their second and final executive recourse, an appeal to Panama’s Health Minister himself; and
• 2 May 2024 – Panama’s Health Minister resolved the appeals presented on 28 March 2024, and declared that the resolution of 17 January 2024 was valid.

Primary Laws and Regulations

Two main legal documents govern the medical cannabis industry in Panama:

• Law 242 of 13 October 2021, which declares its purpose as being “to regulate the medicinal and therapeutical use of cannabis and its derived products” (Law 242-2021); and
• Executive Decree 121 of 1 September 2022, released by the Ministry of Health, in turn “regulates Law 242 of 13 October 2021” (Decree 121).

Multiple other legal documents can apply to medical cannabis, such as:

• Law 28 of 28 October 2014 (Law 28-2014) and its modifications (known as the “Rare Diseases Law”), which entails a guarantee of treatment to patients of rare or infrequent illnesses;
• Law 14 of 19 May 2016 (Law 14-2016), which regulates the production, transportation and usage of controlled substances as described in the products included in the United Nations Single Convention on Narcotic Drugs, 1961 and the Convention on Psychotropic Substances, 1971;
• Law 203 of 18 March 2021, which regulates telehealth; and
• Law 419 of 1 February 2024, which reformed all previous laws that regulated medicine for human consumption and the public procurement of medicines, including medical equipment, consumables and devices.

Although many other decrees, resolutions and similar relate to this industry, this article will only concentrate on the most important laws and regulations – namely, Law 242 and Decree 121.

Navigating through new laws that have zero jurisprudence can seem complicated – the following is therefore a simplified breakdown:

• Law 242 dictates the “W’s” regarding medical cannabis in Panama – ie, “what” (what products), “when” (and for how long), “where” (and where not) and “who” (who can sell, purchase); and
• Decree 121 dictates the “How’s” of Law 242 – ie, how to control, report, grow, produce, import, export, deliver, transport, secure, prescribe, dispense and so forth.

The reader should not think that this industry is lax in Panama; on the contrary, the regulations are aimed at ensuring that medical cannabis is not used recreationally.

Understanding Law 242

Law 242 – “What?”

Panama has approved the investigation, production, transformation, importation, exportation, re-exportation and domestic sale of medical cannabis for consumption in Panama and internationally, in all its current forms, with one gray area: vapes. See more regarding vapes in 1.4 Challenges for Market Participants.

Law 242 stipulates two types of licence – a “fabrication licence” and an “investigation licence” – and that for the first five years a maximum of seven fabrication licences will be issued.

Current regulations authorise fabrication licence holders to produce, grow, transform, import, export, re-export and commercialise flowers, edibles, pills and beverages; topical use of products containing THC of 1% or higher is all permissible for medicinal use, and the list of illnesses for which they can be prescribed is extensive, permitting the final decision to be taken by the medic while treating the patient. Consumption of medical cannabis is limited to patients who hold a valid prescription issued by a trained medic.

The following are prohibited.

• Beverages that combine alcohol and cannabis. The only exception to this applies to beverages that use alcohol as a solvent.
• Medical cannabis produced in attention-grabbing shapes – ie, no cannabis products in the shapes of animals, people, fruits or any other shape that may draw the attention of minors.
• Using cannabis in food destined for human consumption. The only exception to this applies to medical cannabis edibles.
• Promotion/marketing. None is allowed – ie, not online nor on traditional channels. The only exception to this is educational material that does not directly promote the sale of any specific product, brand or strain.

The growing and transforming of cannabis in Panama has been regulated with two main objectives in mind: quality and control. 

Quality

Panama will only permit the growth and consumption of medical cannabis that is free of harmful chemical products, such as pesticides, fungicides, herbicides and/or chemical solvents or products that may harm public health. Any medical cannabis produced in Panama will need to meet good manufacturing practice (GMP) standards, and all fabrication licensees must ensure that their operations are compliant with modern GMP guidelines.

Several regulatory bodies are entrusted with powers to inspect and verify strict compliance with quality standards. As one government official recently stated, “Panama has the world’s best coffee; now we aim to have the world’s best medical cannabis”.

Similar GMP guidelines apply for the transformation of flower cannabis into other products, such as edibles, creams, pills and so forth.

Control

Control in Panama’s cannabis industry is widespread. Every plant is traced from seed to harvest, and every product inventoried per piece or weight. CCTV systems with face-recognition software are a requirement in every room that produces, processes, stores, transports or sells a medical cannabis product, including dispensaries.

Transporting medical cannabis in Panama requires closed and tagged parcels; each parcel must have a GPS tracking device, as must each car that transports the parcel(s).  A manifesto must accompany each transportation of medical cannabis in Panama. All the forgoing is subject to review and inspection by the regulatory authorities.

Industry employees must be vetted and pre-approved by regulatory bodies prior to being put on a licensee’s payroll.

A main benefit of Panama’s regulations is the authorisation to licensees to import, export and re-export medical cannabis products. Staying true to its historical nature as the tax-free crossroad of the world, Panama has the potential to develop (in the short-term) into the world’s premier tax-free medical cannabis hub, which should help to increase the number of products international clients can offer their patients. 

International commerce of medical cannabis is tightly controlled, and is only approved as business-to-business – meaning that a licensee from Panama can only purchase from, or sell to, a licensee from another country.

There is no limit on THC or CBD percentages, nor regarding cannabis strains.

Law 242 – “Who?”

Three “Who?” matters are worth focusing on: who can purchase, who can participate in the industry and who can sell.

Who can purchase?

In brief, patients and medical establishments (including pharmacies) can purchase.

Wholesale medical cannabis can only be purchased in Panama by fabrication licence holders (selling among licensees) and pharmacies that have a licence to sell controlled substances.

The retail purchase of medical cannabis is limited to patients with a valid prescription.

The prescription can be valid for a maximum period of 90 days, and patients will need to register in the National Medical Cannabis Registry and validate their prescriptions. Inclusion in the Registry must be renewed yearly. When prescriptions are fulfilled in a pharmacy or dispensary, the purchase must be registered in the Registry prior to handing the medical cannabis to the patient.

The National Medical Cannabis Registry is constantly synchronised and updated, meaning it will guarantee that a patient cannot purchase more medical cannabis than has been prescribed to them.

Pharmacies, hospitals and dispensaries must retain a copy on file of each prescription they fulfilled, either completely or partially, and are obligated to hold the copy on file for five years.

Who can participate?

Doctors can participate after they have undertaken the mandatory training course offered by a MINSA-approved training entity.

Licensees can also participate. Law 242 specifies two types of available licence for medical cannabis in Panama, as follows.

• Fabrication licence: holders of this licence are authorised to produce, transform, import, export, re-export and domestically sell medical cannabis.
• Investigation licence: holders of this licence cannot commercialise medical cannabis in any of its forms; such licensees can only use cannabis for investigative purposes. This licence is aimed at universities, regional investigation centres and laboratories located in Panama, and that will certify the quality, THC and CBD content, and other requirements regarding medical cannabis produced in Panama.

Regarding industry associates, whatever type of licence a licensee holds, all industry employees must obtain a Labour Code identification number (“Labour Code ID”) prior to being employed. This is free and is given after the employment candidate provides the following:

• a clean criminal record as relates to multiple criminal offences;
• proof of having undertaken a GMP/training course;
• valid identification;
• a curriculum vitae; and
• a certificate of competence in the case of pharmacists.

This Labour Code ID must be renewed every two years, and a similar approval process is imposed for other industries, such as casinos.

As a requisite of the MINSA licence-awarding process, all 16 fabrication licence applicants had to:

• fully disclose their corporate structure, shareholders and financial capacities;
• list their board of directors; and
• list their strategic international partner.

Every person involved in an application for a fabrication licence had to provide a clean criminal record and proof of identity, and pass an extensive background check under the scrutiny of the Ministry of Security.

Regarding the strategic international partner, each fabrication licensee must have an experienced partner from a country that legally sells medical cannabis. This partner oversees supplying the know-how, and in some cases the financial backing, of the Panamanian fabrication licensee.

Panama is serious about training and education regarding this industry, and used Decree 121 to mandate the implementation of a “Suppliers Training Registry”. Some consider this a third type of licence, while others see it as more of a database of approved suppliers. Training entities can be any public or private, natural or legal person. There is currently no limit regarding a specific number of entities, and such entities are entrusted with training:

• doctors on the use of medical cannabis for patients;
• pharmacists and dispensary personnel; and
• licensee employees.

Every course is different; each complete course must be at least six hours, and no course can be held virtually.

Who can sell?

Fabrication licensees can sell wholesale to pharmacies, hospitals and other licensees.  They can also distribute on a retail level through their own dispensaries.

Pharmacies, hospitals and dispensaries can only sell medical cannabis at a retail level.

Any other sales channels are considered illegal and may constitute an administrative and/or criminal offence.

Law 242 – “When?”

Law 242 stipulated that, after the seven licence winners were chosen, each of them had 60 days to comply with Decree 121 in regard to security, hygiene, legal paperwork, and GMP regulating production, storage and transportation of medicinal products, and to request an inspection headed jointly by MINSA and Panama’s Ministry of Security.

If all boxes are checked during the inspection and following full compliance, the licensee will be permitted to pay the governmental licensee fee of USD150,000 – after which, the government will issue their licence, valid for ten years.

During the first 24 months of each licence, the licensee will be permitted to import any medical cannabis product from any international supplier, conditional on the supplier being an authorised medical cannabis seller in their home country. This 24-month period is permitted so that licensees can promptly accomplish local supply of medical cannabis and satisfy the local medical cannabis market in Panama. 

After these initial 24 months, all medical cannabis products that are sold in Panama must be produced in Panama. This limitation does not apply to importation and re-exportation of cannabis products through Panama’s tax-free commerce zones.

After the initial ten years, if a fabrication licensee is interested in extending their licence, they must request such an extension.

Currently, there is no confirmed date for when medical cannabis will be available for sale in Panama, as no licences have yet been issued. Based on current local trends, the authors estimate that the first licensees will be operational before the end of 2024.  For more detail on this, see 1.4 Challenges for Market Participants.

Law 242 – “Where?”

The matter of where medical cannabis can be sold in Panama is simple – ie, anywhere where controlled substances can be sold, either business-to-business or retail.

Pharmacies, hospitals and licensees are approved for selling medical cannabis. Doctors cannot sell medical cannabis nor prescribe a specific brand.

Delivery via commercial couriers is strictly forbidden; however, patients that cannot fulfil their prescription personally may empower one person at a time to do so on their behalf. 

Only controlled and pre-approved areas (such as greenhouses or warehouses) are authorised to grow cannabis in Panama. Cultivation sites must be approved by the Ministry of Agriculture and the Ministry of Security.

If a fabrication licensee intends to re-export medical cannabis, they must be located in a tax-free zone and in a pre-approved location.

Regarding consumption of medical cannabis in Panama, use is intended to be private. Consumption in public spaces (such as roads, parks, restaurants, theatres, clubs and similar) is prohibited. In the workplace, if an employer approves the use of medical cannabis on their property and has a designated area for such use, the patient may consume their medical cannabis at work.

Decree 121

Decree 121 applies most importantly to local government – ie, concerning how to control. In simple terms, Panama’s path to control is through software and technology.

Decree 121 regulates how every medical cannabis product is grown, imported, produced, exported, sold or investigated in Panama. It regulates:

• how software systems operate and who administers them; and
• how licensees are subject to a surveillance system and to supervision by regulatory bodies. 

This system is known as the Tracking and Traceability System (the “System”). The complexities of these regulatory bodies and how they interact with the System, both among themselves and among licensees, is discussed in 1.2 Regulatory Bodies.

Law 242 and Decree 121 mandate six regulatory bodies to directly and actively oversee the medical cannabis industry; an additional three regulatory bodies are involved, but in a more passive form.

The six active regulatory bodies are:

• Ministerio de Salud (Ministry of Health, or MINSA);
• Ministerio de Desarollo Agropecuario (Ministry of Agriculture, or MIDA);
• Ministerio de Seguridad (Ministry of Security, or MINSEG);
• Ministerio de Comercio e Industrias (Ministry of Commerce, or MICI);
• Autoridad Nacional de Aduanas (Customs Authority, or ADUANA); and
• Autoridad Nacional de Innovacion Gubernamental (National Innovation Authority, or AIG).

The three passive regulatory bodies are:

• Superintendencia de Bancos (Bank Superintendency, or SUPERBANCOS);
• Superintendencia de Seguros (Insurance Superintendency, or SUPERSEGUROS); and
• Superintendencia de Sujetos No Financieros (Superintendency of Non-Financial Regulated Subjects, or SSNF).

These sometimes-overlapping regulatory bodies are discussed further below.

Ministry of Health (MINSA)

MINSA is the governing body that supervises and regulates all health-related issues involving humans, including for hospitals, protocols, vaccines, medicines, nurses and pharmacies. Approval of medicine, and medical competency certificates, also falls under MINSA’s jurisdiction, including for controlled substances.

MINSA executes its responsibilities relating to medicine for human consumption through the Direccion General de Farmacias y Drogas (General Directorate of Drugs and Pharmacies, or DGFD), which has been designated by MINSA to oversee the complete medical cannabis commercial cycle in Panama. It is DGFD’s responsibility to oversee the importation, production, transformation, transportation, commerce and local dispensing of medical cannabis for human consumption. 

As relates to medical cannabis, MINSA is specifically responsible for the following:

• educating doctors and the general public about the positive and negative effects of medical cannabis;
• evaluating all 16 fabrication licence applications, and choosing the first seven licensees;
• issuing licences;
• supervising all stages of medical cannabis in Panama, including growth, production, importation, sale, etc;
• approving the criteria for, and suppliers of, the System;
• supervising the correct implementation of the System;
• establishing criteria for laboratory tests that will be applied to medical cannabis products sold in Panama;
• receiving the yearly exports estimate from each fabrication licensee;
• receiving the quarterly reports from each investigation licensee;
• developing a national programme for investigating medical cannabis and its uses;
• approving the National Registry of Medical Cannabis Users (the “National Registry”), including the requisites a patient must fulfil before being included in the National Registry and the issuance of the special identification all patients must have to obtain their prescriptions;
• establishing criteria regarding which patients can apply for inclusion in the National Registry, and how to proceed if a patient is not a Panamanian citizen;
• regulating the prescriptions required for the purchasing of medical cannabis –  prescriptions are only valid for 90 days;
• choosing and supervising the training entities;
• approving or denying the applications for a Labour Code ID, obligatory for all industry employees;
• approving the importation of any medical cannabis requested by an investigation licensee; and
• approving every exportation of any medical cannabis product produced in Panama, prior to the shipment leaving the country.

Ministry of Security (MINSEG)

MINSEG is the governing body that supervises and regulates all security-related issues, such as regarding the police, border patrol, naval services, immigration, illegal drugs and all things related to firearms. As Panama does not have an army, navy or air force, MINSEG fills in those voids on a national level.

As relates to medical cannabis, MINSEG is specifically responsible for the following:

• supervising the correct implementation of the System;
• approving licensees and ensuring that they comply with the security standards described in the regulations;
• approving the security protocols implemented in any establishment that stores medical cannabis;
• verifying that medical cannabis residues or expired products are weighed before they leave storage, and are correctly disposed of;
• inspection of the private, in-house version of the System that each licensee must operate, basically validating that all inventory is accounted for;
• approving the external security measures of establishments that store medical cannabis;
• assisting MINSA and MIDA in their inspections (notified or not) of fabrication licensee’s cultivation and storage areas;
• reviewing industry-wide employee background checks, including for employees related to international strategic partners;
• if a patient is bedridden, pre-approving the person the patient sends to a dispensary or pharmacy to obtain their prescription;
• validating the approval of the importation of any cannabis seeds or plants into Panama, on the condition that they have previously been pre-approved by MIDA; and
• approving every exportation of any medical cannabis product produced in Panama, prior to the shipment leaving the country.

The security standards imposed on every licensee are stringent, and include the following (among others):

• all entries and exits of places where cannabis is stored must have interior and exterior cameras;
• all areas where medical cannabis is weighed, packed, transported or labelled must have cameras;
• one camera must be in place specifically for the entry into secure areas of buildings where medical cannabis is stored;
• all cameras must be high-resolution, so that employees and the products they manipulate can be easily identifiable;
• cameras must be able to record the facial features of all that enter a place where medical cannabis is stored – this includes patients, visitors, employees, etc;
• industry employees must be vetted prior to being hired; and
• GPS tracking of all medical cannabis products must be in place, including for plants.

In cases of necessity, coercive enforcement of Law 242 and Decree 121 is among MINSEG’s responsibilities.

Ministry of Agriculture (MIDA)

MIDA is the governing body that supervises and regulates all issues related to the national food supply, national agriculture and farm animals, including veterinaries and the products they use. 

MIDA offers local producers tax incentives, reduced interest rates for farm-related loans, and other financial policies aimed at managing Panama’s consumption of locally grown products and the exportation of locally produced agricultural products.

As relates to medical cannabis, MIDA’s main responsibilities include the following: 

• approving all cannabis seeds and plants prior to their arrival in Panama;
• developing procedures and approving protocols for the use and investigation of cannabis seeds and plants, as well as of medical cannabis for veterinarian use;
• authorising each fabrication licensee’s cultivation plan, as each licensee must present a yearly estimate of their expected cultivation yield, per strain, prior to planting a seed;
• analysing, preventing and mitigating the risk of plagues arriving in Panama through the importation of cannabis seeds and plants;
• establishing the phytosanitary protocols that will be followed by the fabrication licensees;
• conducting inspections of medical cannabis production sites, to ensure that phytosanitary protocols are followed and that licensees have provided MIDA with correct information;
• supervising the quarantining of cannabis plants or seeds, if deemed necessary;
• including cannabis seeds in the National Seed Commission’s database, which registers all seeds and their importers in Panama;
• verifying licensees’ compliance with the technical sheet of imported plants or seeds, as well as ensuring that no harmful pesticides or chemicals are used by licensees;
• supervising the cultivation of medical cannabis in Panama, ensuring that GMP standards are upheld;
• supervising the System;
• approving any products that contain cannabis and that are intended for veterinary use; and
• issuing a certificate of agricultural exports for any medical cannabis product produced in Panama, prior to the shipment leaving the country.

Ministry of Economy and Finance (MEF)

MEF is the governing body that administers Panama’s treasury. It also supervises, approves and regulates all the tax-free commercial zones in the country; these tax-free commercial zones are similar to huge, bounded warehouses, with some the size of small cities. The Colon Tax Free Zone, the largest such zone on Panama’s Atlantic coast, is the world’s second largest tax-free zone, and in 2023 boasted commercial transactions totalling over USD25 billion.

MEF has one specific role to play in this industry: approving the incorporation of a licensee into a tax-free commercial zone.

Decree 121 specifically indicates that only fabrication licensees that are established in a tax-free zone can re-export medical cannabis products. 

National Innovation Authority (AIG)

AIG, like MEF, has one specific role to play in this industry: ensuring that the System and the National Patient Registry are secure and online. This includes data security related to patient confidentiality and rights, System and Registry availability, maintenance and so forth.

SUPERBANCOS, SUPERSEGUROS and the SSNF

These three more passive governing bodies oversee the medical cannabis industry, similar to how they oversee almost all national industries, with one exception: fabrication licensees can expect additional scrutiny (at least initially). 

SUPERBANCOS is influential in deciding how much access the medical cannabis industry will have to the banking industry, including for national accounts, international accounts, financing, payroll and credit card processing, etc.

SUPERSEGUROS is important in the regulation of private medical insurance companies and their coverage of medical cannabis, an area which is currently unclear.

The SSNF oversees fabrication licensees’ adherence to local compliance and know-your-client (KYC) norms, but has no specific role related to medical cannabis.

As Panama’s medical cannabis industry still only exists on paper and is not yet operational, self-regulatory bodies as such are yet to take on any active powers in the industry. The closest things to self-regulatory bodies in Panama are organisations that have supported patients’ claims for access to medical cannabis (assisted by Law 242 and Decree 121), and that remain active in promoting medical cannabis in Panama. Four groups, including the industry guild, deserve special mention and are listed in the chronological order in which they became active in promoting medical cannabis.

Fundación Luces (the Lights Foundation)

Founded by Panamanian-born epilepsy specialists, renowned worldwide as leaders in their field, this non-profit foundation has one aim: to assist epilepsy patients in overcoming their illness through education and innovative treatments.

Several of the Foundation’s members are or were practising medics in the USA’s best hospitals, and had been prescribing medical cannabis to their patients for several years, reporting extraordinary success in their patients’ outcomes.

The Foundation was the pioneer in medical cannabis legislation in Panama, and was instrumental in finally obtaining approval for legislation. It provided doctors with time to meet with governmental authorities, elected officials, lawyers and (of course) patients.

The reputable board of directors of this Foundation was key in capturing the attention of three different Panamanian Presidents, three distinct legislative branches and hundreds of doubtful local doctors. The Foundation has the support of several patient associations, local celebrities and a wide array of doctors, and, through continuous educational efforts combined with real case success, has even managed to apply enough pressure for cannabis to be considered as a viable alternative medicine for patients.

The Foundation has now been actively involved in the medical cannabis legislative process in Panama for almost ten years, and is expected to remain involved once the industry starts operating.

National Association of Multiple Sclerosis and Neuromyelitis Optica Patients (ANPEMUFA)

A few years after Fundación Luces started pressuring local authorities to approve legislation related to medical cannabis, ANPEMUFA joined the cause, and has been an active player ever since. As a non-profit organisation, ANPEMUFA states that their primary goal is “ensuring that people who suffer from the illness have access to alternative treatments and solutions to the challenges of living with multiple sclerosis”. 

ANPEMUFA, composed mainly of patients and their families with the support of national and international doctors, has also invested time and effort in explaining to uninformed doctors, lawyers and government officials the need for regulating medical cannabis. More importantly, it has shown that many patients report better and faster results from using cannabis than from using certain pharmaceutical products.

While Fundación Luces is comprised mainly of renowned medics looking at options for helping their patients, ANPEMUFA is, in contrast, constituted mainly by vocal patients looking at options for helping their medics prescribe medical cannabis legally.  ANPEMUFA can be expected to remain involved in the industry once it is operational, as regards verifying quality, supply and pricing.

Colegio Nacional de Abogados (National Lawyers Union, or CNA)

Panama does not have a Bar Association as in other countries – the closest thing is the CNA, which is a non-profit union of lawyers. The CNA is commonly called on for advice by lawmakers and private citizens, and assists with fine-tuning legislation and forecasting difficulties in applying laws. Any work done by a lawyer for the CNA is pro bono. The CNA operates through commissions; each commission has its own board of directors that reports directly to the CNA’s President.

In early 2024, for the first time in its history, the CNA formed the Commission for Medicinal Controlled Substances. This Commission has two main goals:

• assisting patients in legally obtaining access to medicines that their doctors prescribe, especially medicines that are controlled substances; and
• ensuring that local laws which assist patients’ rights are duly enforced.

The CNA’s Commission has held multiple meetings with patients, doctors, lawmakers and industry leaders, and has served as a neutral meeting ground for presenting contrary opinions, discussing perspectives and reaching common ground.

The CNA can be expected to remain active in its support for patients, patients’ rights and doctors throughout the next few years, and to propose potential, beneficial modifications to the current regulations.

Medical Cannabis Guild

This organisation is agreed upon but not yet formed. The seven fabrication licensees have agreed on forming a guild that aims to guarantee three things: quality, supply and compliance.

A common worry among the seven licensees is that one (or more) of them will commit an offence by design or by mistake (such as faltering in compliance, erring in reporting, supplying low-quality products, or worse). As medical cannabis is new and heavily regulated in Panama, the potential mistakes of one licensee undoubtedly affect the other six. 

Licensees cannot market their products in Panama and are only allowed to promote medical cannabis through education of the population, including doctors. For this reason, particular effort is being put into promptly training local doctors and reducing the historical stigma that exists in Panama related to cannabis. Doctors may shy from prescribing cannabis if negative media constantly circulates in Panama regarding the misuse of medical cannabis, or regarding mistakes by the new licensees.

The licensees’ answer for mitigating these risks is the creation of a guild that:

• shares administrative responsibilities;
• meets regularly;
• verifies that quality standards are not lowered; and
• ensures that all seven licensees adhere to all laws and regulations. 

The most notable challenge that market participants currently face – and will continue to face for the near future – is uncertainty.

Product Uncertainty

Cannabis vape pens represent a significant percentage of the industry’s market share, with numbers varying widely between 15% and 40%, depending on the country or state, market age composition and several other factors. What is agreed upon by most international industry participants is that medical cannabis vape pens are here to stay.

On 30 June 2022, Panama published Law 315, which aims at educating the general population on the hazards of e-cigs and similar products. At the same time, Law 315 prohibits the use or sale of electronic equipment such e-cigs, vaporisers, tobacco heating systems and similar products in Panama. 

This means that no vapes can be legally sold in Panama, nor can they be used in public spaces.

Law 315 does not differentiate between nicotine-containing products and non-nicotine-containing products – no distinction is made between a vape device designed for tobacco and one for cannabis.

Importing, producing and/or exporting vapes from Panamanian territory is permitted provided the products are not sold or consumed in Panama.

All the above is important when considering two things – ie, that:

• Panama boasts one of the lowest rates of tobacco consumption worldwide, at around 7% of the population; and
• any smoking (especially of cannabis) is considered harmful and entails a strong, historical social stigma.

Approximately 30% of Spaniards and Germans smoke cigarettes, as do almost 20% of Americans and Canadians. Panama is at 7% in this regard, and dropping fast. Smoking is prohibited in restaurants, casinos, concerts or public spaces in Panama. This means that, in a visit to Panama lasting a full week, one would probably only see one or two people per day smoking a cigarette.

Panamanians are thus not accustomed to seeing people smoke in public, nor are they used to the smell of burnt tobacco in their midst. Smelling cannabis smoke, or seeing a patient smoke cannabis anywhere, would immediately draw the attention of passersby. As patients have enough difficulties to deal with, adding further stigma to their treatment is not beneficial. 

The solution for many patients is medical cannabis vapes. The immediate discrete dosage thereof, with practically no accompanying smell, helps to maintain patient privacy.

The legality of the use of medical cannabis vapes in Panama is controversial. Those against vapes point to Law 315 of 2022, which is very clear regarding the prohibitions of vapes in Panama. Those in favour of vapes point to Law 28-2014, which states that the commencement or interruption of a medicine for patients of rare diseases will be determined solely by the patient’s specialist. However, what happens if a specialist prescribes that medical cannabis should be delivered by vape pen instead of by an edible or smokable? This uncertainty will likely reveal itself in the court system over the next few months.

Banking Uncertainty

Panama’s currency is the balboa, which is pegged one-to-one to the US dollar. The local Constitution prohibits a central bank or the issuance of paper currency. In short, using bills in Panama means using US dollar bills. When one transfers money into or out of Panama, this is done in US currency. 

Panama has 41 “general licence” banks, or “first-floor” banks. Most are Panamanian or regional banks, six are international banks and two are national, government-owned banks.

The exact same issues that are affecting the cannabis industry in the USA are affecting the industry in Panama. All of Panama’s banks depend on their banking correspondents in the USA for access to international markets and the swift wire system. If a correspondent bank in the USA is unwilling to open an account for a dispensary in California or Boston, they are much less willing to allow a Panamanian bank to use them to transfer proceeds from medical cannabis to or from Panama.

The two government-owned banks, Banco Nacional and Caja del Ahorro, are in a complicated position; Panama has no federal system, so the government that charges licensees for their licence fee is the same government that owns the banks. That said, the uncertainty here pertains to why a government-owned bank would not open a bank account for a company that holds a government-issued medical cannabis licence, and whether private banks would do so.

Running a cash-only medical cannabis enterprise in Panama is complicated, costly, risky and a compliance nightmare for all involved.

Insurance Uncertainty

Similar to banks, insurance companies are very cautious when considering medical cannabis. Patients that require very specific strains of medical cannabis (normally with THC under 1.5%) have complained that the monthly cost of medicines (which they are forced to smuggle into Panama) can exceed USD500 per month. In a country where the monthly minimum salary is around USD600 per month, the need for public or private medical insurance to cover this medication cost is understandable.

Although Law 28-2014 mandates that “public and private insurance companies have the responsibility to attend” rare-disease patients, there is no obligation to do so regarding other patients. Law 28-2014 also allows pharmaceutical companies that donate their products directly to patients to deduct the cost of these products from their income tax; however, Decree 121 prohibits the donation of medical cannabis.

Will public or private insurance companies cover medical cannabis prescriptions? Will local suppliers be permitted to donate part of their production to patients in need? Eliminating these uncertainties will help patients who require medical cannabis and who cannot sustain the monthly costs of medication.

Bureaucratic Uncertainty

As noted in 1.1 Primary Laws & Regulations, multiple laws and regulations form Panama’s medical cannabis legislation, and on many occasions they overlap. This causes uncertainty, and creates the risk of non-compliance due to error rather than ill will.

The System – which is fundamental – has not yet been acquired by the Panamanian government, much less installed, tested or taught to regulators or to those being regulated.

The laboratories meant to verify the quality of products produced in or sold in Panama have yet to receive their operating licences.

The training entities meant to train medics, industry employees and the police have yet to be chosen or contracted for, and the course material has not been circulated in the industry.

MIDA has not yet established a protocol for the importation of cannabis seeds, nor for the growing of cannabis in Panama.

MINSA has yet to circulate the protocols to be followed in cases of visitors or expats in Panama – ie, can visitors purchase medical cannabis, if prescribed?

Training of the police force has not been completed, leading to the question of what would happen were a first patient to be stopped during a routine traffic stop and medical cannabis found in their possession. Panama has a very strict, non-lenient policy regarding narcotics; educating police and changing their perspective – ie, in understanding that a patient is not the same as a recreational user – will be paramount for eliminating the current stigma and preventing discomfort among patients. 

Calendar Uncertainty

Based on previous uncertainties, it must be concluded that, even if all seven licences were to be issued tomorrow, Panama would still not be able to supply its patients for several more months (or possibly even years).

Currently, local industry participants cannot:

• plan their cultivation cycles;
• reserve ready-to-ship products from overseas suppliers;
• import machinery needed in the industry;
• hire employees (as they are not yet trained); or
• lease commercial space for dispensaries. 

All the above should, under normal circumstances, be part of a well-developed business plan; however, this is impossible owing to uncertainty regarding when sales will be available. Regarding banking issues, SUPERBANCOS and the SSNF require that a formal business plan be delivered to the bank prior to opening a licensee’s bank account. Although local authorities are working diligently to cut delay times, no business can plan without a calendar and clear dates on hand. This is a big risk since, as is well known, “those who fail to plan, plan to fail”.

A smooth sea never made a skilled sailor – Panama may require some life jackets as the water ahead appears turbulent.

Administrative Compliance

Panama’s multiple and overlapping cannabis regulations are reminiscent of when FATCA regulations were passed in the USA in 2010 – a few years later, they were imposed on Panama and its banking sector. Overnight, the overwhelming majority of Panamanian banks decided to unilaterally stop working with American citizens. 

Accounts were closed and new accounts were rejected. Getting an American to sign on their Panamanian spouse’s Panamanian checking account, in a Panamanian bank, was near impossible. 

However, the reasons for this were not based on anti-American sentiment or anything similar. On the contrary, Panamanian banks wanted American clients, and wanted to comply with FATCA. The issue was fear on the part of Panamanian banks; the FATCA regulations were long, complex and hard to understand. The banks, although wanting to comply, did not know how to, and feared that an omission due to lack of clarity would entail fines (or worse) and accusations that they were assisting US citizens in evading US laws.

Overnight, a simple solution was devised: to cease all work with American citizens unless the transactions were financially large enough to merit such risk.

Today, the cannabis industry in Panama is very similar. There is a common fear among all licence holders; they all claim to be investing heavily in compliance, and want to ensure complete adherence to local norms and regulations. They all fear that, due to the volume, overlapping nature and complexity of laws, they will falter in some technicality and be fined or even prosecuted. Law 242 and Decree 121 both provide a long list of monetary sanctions that can be imposed on licensees if they falter, though this also leaves the door open for criminal investigations.

Criminal System

Panama switched criminal systems in late-2016, eliminating the previous inquisitorial criminal system and implementing a new accusatory criminal system. Previously, defendants had the right to try and prove their innocence; now they are presumed innocent until proven guilty.

The system changed, but not necessarily the people in it. Many prosecutors hail from the old system, were trained in that system, worked inside that system for 20 years and today still hold positions of importance in the new system. A downside to the current criminal system is that prosecutors and/or district attorneys bear no responsibility for their actions, meaning that they can:

• present frivolous charges against a person;
• start an investigation that takes years;
• take an undocumented case to court;
• lose that case in an overwhelming manner; and
• go to work the next day as though nothing happened. 

This is because there are no ramifications for the prosecutor, which is worrisome since, in Panama, simply having one’s name mentioned in a criminal investigation can swiftly lead to bank accounts being closed, commercial ties being suspended and assets being frozen. This is relevant to medical cannabis as, if one uninformed and uneducated prosecutor decides to open an investigation into a licensee with zero evidence of wrongdoing, that licensee will be under a microscope until the investigation is closed due to lack of evidence, or until victory in court. Training prosecutors should be as important as training industry employees, as both can have an adverse effect on the industry.

Anti-money Laundering Regulations

Panama has an abundance of anti-money laundering regulations. Anyone who believes that they can walk into a Panamanian bank with USD20,000 in cash and open a bank account in under a month’s time has obviously not been to Panama, and is uninformed. 

Most of Panama’s anti-money laundering regulations are aimed at controlling the flow of cash in and through Panama; the Criminal Code lists 37 criminal offences that can be considered money laundering, all carrying a prison sentence of five to 12 years.

Every company in Panama that receives over USD10,000 in cash in a transaction needs to report that transaction to a specialised government agency. Every real estate transaction, even if it is 100% purchased through a mortgage, must report the transaction to the same entity.

Requiring the cannabis industry to operate without banks is counterproductive. How can Panama enforce all the positive and well-intended anti-money laundering regulations while requiring licensees to work only in cash? Panama’s medical cannabis industry is estimated to rake in anywhere between USD300 million and USD600 million domestically per year. Such amounts of cash pose a security risk – licensees would not wish to have such amounts on hand or face the problem of its secure storage.

Compliance with anti-money laundering regulations is difficult if licensees cannot use digital cash services, credit cards and banks in general. Non-compliance with anti-money laundering laws is a criminal offence that leads to a money laundering investigation. It is a vicious cycle with no proposed exit route.

Three regulatory bodies are entrusted with enforcing compliance and applying penalties in Panama’s medical cannabis industry: MINSA, MIDA and MINSEG.

MINSA

MINSA is the main regulatory body and, as such, the institution with the most oversight and penalty-imposing powers. MINSA can impose three types of penalties, for minor infractions, major infractions and severe infractions.

Minor infractions

MINSA may fine a licensee anywhere between USD500 and USD5,000 per each minor infraction. There are currently a dozen minor infractions, including:

• non-compliance with monthly, on-time reports to MINSA;
• presenting incomplete reports;
• minor sanitary violations;
• failure to notify MINSA of a licensee’s administrative changes, such as licensee operating hours and location; and
• storing medical cannabis outside the licensee’s secure areas.

Major infractions

MINSA may fine a licensee anywhere between USD5,001 and USD15,000 per each major infraction. There are currently 29 major infractions, including:

• fulfilling incomplete or altered prescriptions;
• presenting inventory discrepancies between what the licensee has in stock and what they should have in stock;
• impeding MINSA investigations;
• presenting import or export documents that differ from the actual products being imported or exported;
• altering information being fed into the System;
• transporting medical cannabis without completing the established protocols;
• not informing MINSA of the theft or loss of any products;
• purchasing medical cannabis from unauthorised sources; and
• failure to inform MINSA of changes to the licensee’s corporate structure.

Severe infractions

MINSA may fine a licensee anywhere between USD15,001 and USD25,000 per each severe infraction. There are currently eight severe infractions, including:

• producing or selling contaminated, altered or expired products;
• dispensing medical cannabis without a prescription;
• falsifying information on reports or in the System;
• repeating major infractions; and
• interfering with MINSA’s inspections.

A final penalty amount to be imposed is decided by MINSA, after considering:

• the damage done by the infraction;
• the benefits obtained from the infraction;
• whether the infraction was intentional or negligent; and
• whether the licensee had previously committed the same infraction.

MIDA

MIDA can apply penalties on a licensee, and specifically as regards the cultivation division of their operation. MIDA’s powers only encompass the agricultural aspect of medical cannabis. Hence, MIDA is in charge of ensuring that:

• no harmful chemicals are used;
• only approved seeds are used; and
• agricultural GMPs are strictly followed.

MIDA also supervises the complete cultivation process from seed to flower. MIDA can impose penalties, but no distinction is made between penalties applied to fruits and vegetables grown in Panama and those applied to medical cannabis.

MINSEG/Public Prosecutor

MINSA and MIDA are entrusted with compliance and with applying monetary penalties (and possibly licence suspensions) in the case of lax compliance by licensees. 

MINSEG oversees the security compliance of each medical cannabis product sold in Panama, including verifying traceability.

The public prosecutor’s office is responsible for interpreting whether these infractions are of a criminal nature or not. MINSA may impose a fine on a licensee for dispensing medical cannabis to a person without a prescription – this is also a criminal offence in Panama, so the offender may incur a monetary fine as well as potential personal liberty restrictions.

The main international cross-jurisdictional issues currently faced by Panama concern assurance of international compliance and respect for other countries’ authority. Panama requires that all local licensees work only with valid licensees from other countries. A licensee in Panama can purchase products from a supplier anywhere in the world, solely conditional on the supplier being licensed to sell medical cannabis in their home country. The same applies as regards selling medical cannabis from Panama to other countries; local licensees are free to sell to any country in the world provided their client is authorised by their home country to purchase medical cannabis. 

Any transaction involving Panama and the importation or exportation of medical cannabis will need to be declared and validated by Panama and the partner country, prior to any products arriving in or leaving Panama.

Regarding national cross-jurisdictional issues, the main issue is the overlapping responsibilities that sometimes occur between MINSA, MIDA, MINSEG and the System. These overlapping responsibilities can lead to repetitive reporting, an increase in paperwork and confusion regarding to whom a licensee must report. 

For example, when hiring an industry employee at any level, the potential employee must first obtain a Labour Code ID from the Labour Ministry, before completing a course with a certified training entity. The employee must then be submitted to scrutiny by MINSEG, and the employer must be declared in the System to MINSA. If the employee works in the cultivation section of the business, they must also be registered with MIDA.

Several legal elements affect access to medical cannabis in Panama, all of which should be resolved during 2024.

The System Is Not Operational

The System, including the National Patient Registry, is not yet operational. Even if a licensee had the products to supply the market today, they would be unable to due to inability to register their inventory; and it would be unclear how they would register prescriptions or present their monthly reports.

The National Patient Registry, a module of the System, is also not yet operational – meaning that there are no approved patients for medical cannabis, and indicating that even if the product were available it would still be illegal to dispense.

Training Entities Are Not Themselves Trained

Doctors must undertake a course prior to being certified to prescribe medical cannabis.

Pharmacists must complete a training course prior to being approved to fulfil a medical cannabis prescription.

A licensee’s employees, including their administrative staff, must complete a training course prior to working for the licensee.

To date, MINSA has yet to inform the public of the content of these training courses, their duration, and whether they will be virtual or not. Currently, there is also lack of clarity regarding which companies will undergo such training.

With the content of the training courses yet to be determined, and with those companies that will train local experts and employees still not decided on, completing obligatory training is not an achievable goal.   

Insurance Coverage

An important number of patients will receive prescriptions that will be too expensive for them to fulfil without making use of medical insurance.

Will the public healthcare system supply cannabis? Will private medical insurance companies cover medical cannabis? There are simply no answers yet. While certain laws do specifically mandate both public and private medical insurance companies to cover all expenses of patients suffering from rare diseases, there is still lack of clarity regarding what happens in the case of patients suffering from other illnesses that are more frequent than for one in 2,000 people. 

Another question concerns who decides whether cannabis is the correct medicine for a patient. The answer, according to MINSA, is the patient’s doctor. This means that, in theory, private insurance companies should cover medical cannabis – though in practice this remains to be seen.

Prescription Fulfilment by Third Parties

In the case of bedridden patients, limited-mobility patients or patients in palliative care, if a doctor prescribes medical cannabis, the patient cannot go to a pharmacy or dispensary to fulfil the prescription. The patient can send a person to do this for them; however, that person must be registered in the National Patient Registry and be approved by MINSEG after presenting a clean criminal record, which can prove troublesome. 

Panama’s regulations only mention one non-controlled cannabinoid: CBD. No limitation applies to edibles containing CBD, provided that the cannabinoids are not synthetic, and that the final product does not contain 1% or more THC. Nonetheless, this does not mean an open season for CBD in Panama. Each product must arrive in Panama with documentation proving that it has been laboratory-tested in its country of origin and contains under 1% THC – after which, each product will need to apply for and obtain a sanitary registration prior to being sold in Panama.

Currently, there is no legal move or legislative appetite for decriminalising cannabis in Panama, much less for promoting its recreational use. If and when a rescheduling of the classification of cannabis is approved by the US Drug Enforcement Agency, Panama may feel persuaded to follow suit. 

For now, nothing indicates any intention by Panama to decriminalise the use of cannabis with THC of over 1%.