Cashing in: Why legalization of cannabis is actually beneficial to the Nepalese Economy

Cannabis Farming Regulation and Management Bill, registered in the House of Representatives, is set to regulate and promote the cultivation, buying and selling of cannabis in Nepal. This will repeal the existing law endorsed in the Narcotic Drugs (Control) Act, 2033 which enlisted cannabis as a narcotic drug [Section 3 (a) (1)] and prohibited the cultivation, production, preparation, purchase, distribution, export or import, storage or consumption of cannabis [Section 4 (a)].

Although the bill doesn’t explicitly talk about the recreational use of the drug it does address the medicinal benefits and enables it for production. The proposed bill will allow farmers to sell marijuana directly to people with a doctor’s prescription and pharmaceutical companies approved by the Board, and authorize agents for export. The proposed bill in Parliament allows households to grow up to six cannabis plants even without a permit.

According to the Narcotics Control Bureau (NCB) of Nepal Police, police destroyed around 17,762 cannabis plants in the fiscal year 2073/74. Likewise, some 9,464 cannabis plants were destroyed in 2074/75 and 198,492 in 2075/76. In 2077/04/24, an estimated 60,000 cannabis plants within a 200 Ropani radius in Tare Bhir were destroyed. This destruction is equivalent to burning literal cash, not only a cash crop.

The marijuana industry in Nepal traditionally provided revenue of about $100,000 per year. Since Nepalese are still predominantly dependent on agriculture, the legalization of marijuana will generate jobs in production, distribution, factories and trade. Not only will it provide jobs but it will include Nepal as a major tourism destination for international cannabis users. Historically, Kathmandu was included in the hippie trail which attracted tourists from all around the world. But because of the war on drugs, in the 1970s the American government pressurized the Nepali Government, with allegedly President Nixon paying King Birendra “50 million dollars” (Source: The King of Nepal- Life Before the war on drugs, Joseph R.Pietri), Nepal banned the use and sale of marijuana. As a result, the tourism industry suffered, the government lost tax revenue, and farmers lost an important cash crop.

But lifting the ban now could boom tourism exponentially. The medicinal benefits that could be reaped from cannabis could help flourish the production, sale and trade of medicines. Research in benefits from marijuana in various diseases such as cancer, mental disorders,  chronic pain and others will surely increase revenue growth. Accordingly, Hemp used in the production of bags, clothes and other utility generating products will aid in contributing to economic growth. Not to mention the government can tax marijuana and also regulate its quality and potency. We could learn from other countries such as the United States who initially started the war on drugs is now slowly realizing the benefits of marijuana and hence taking huge steps towards legalizing marijuana. States like Colorado have had a boom in the economy after legalization, Colorado’s GDP increased by 4.4% in 2015- the year after regulated sales became legal. Growth continued by 2.4% in 2016 and 3.1% in 2017, 3.5% in 2018. Real GDP grew 3.4% in the first quarter of 2019. (Source: Colorado Business Economic Outlook Forecast by Leeds School of Business)

In June 2020, 41,144 individuals held licenses to work directly in Colorado’s cannabis businesses. The state’s licensed cannabis retailers have sold more than $6.56 billion worth of marijuana products since legal sales began in 2014, following voters’ approval of a legalization ballot measure in 2012. That activity has generated more than $1.02 billion in taxes and fees for the state. (Source: Forbes: Colorado Has Generated Over $1 Billion in Marijuana Revenue, State Announces) Colorado’s cannabis tax revenues are used for education, with localities, regulatory costs, health care, health education, substance abuse prevention and treatment programs, and law enforcement. Similarly, states like Alaska, Arizona, California, Illinois and many other states including the most recent addition; New York have already legalized marijuana use.

Henceforth, the legalization of cannabis could also be a huge step in the booming economy for Nepal; by providing jobs, making Nepal a hotspot for tourists from all around the world, retaining the workforce in Nepal and prevent extensive emigration, help the government regulate the sale and quality/potency of marijuana and collect taxes for infrastructural development.

Anjila Shrestha

Anjila Shrestha is a research intern at Samriddhi Foundation. She is a recent law graduate from Kathmandu University School of Law.

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