Dollar-starved Sri Lanka Seeks Relief Through Cannabis Export

Dollar-starved Sri Lanka is poised to shed an entrenched inhibition about allowing the commercial cultivation of cannabis. As of now, cultivation of the weed is banned except for use in indigenous medicine, and that too, under strict State control.

But cannabis cultivation and export could be a money spinner given the burgeoning global market for the weed.

Cannabis export could rake in millions if not billions of dollars with which Sri Lanka’s crushing foreign debt can be mitigated to an extent. The global cannabis market is set to increase with the UN Commission on Narcotic Drugs (UNCND) reclassifying cannabis as a “therapeutic product”.

According to the Central Bank of Sri Lanka, Sri Lanka’s external debt increased to USD 50 billion in the second quarter of 2021 from US$ 47 billion in the first quarter of 2021. Its foreign reserves are now down to US$ 2.3 billion.

On November 30, the Lankan Minister of Indigenous Medicine, Sisira Jayakody, told parliament that government has decided to bring a law within three months to allow the cultivation of cannabis both for the manufacture of medicines locally and for export.

“High quality medical cannabis can be used to treat cancer, neuro diseases, mental disorders, as a painkiller and also in the beauty culture industry. It can be used in the treatment of COVID. But it was banned when we were under British rule,” Jayakody said.

Earlier, President Gotabaya Rajapaksa had told a meeting in a rural area that he stood for the cultivation of cannabis for medicinal purposes as it is an ingredient in traditional Sri Lankan medicine. On October 7, 2020, Prime Minister Mahinda Rajapaksa had told parliament: “Our Government is considering requests for legalizing cannabis.”

The Challenge

However, the change of policy on cannabis could run into rough weather. As on date, dealing in cannabis is illegal in Sri Lanka. The government takes a tough stance on the possession and sale of the substance, with fines and prison sentences.

The Poisons, Opium, and Dangerous Drugs Act states that: “No person shall, without the license of the Minister, sow, plant, cultivate, obtain, or have in his possession any poppy plant, coca plant, or hemp plant, or collect or have in his possession the seeds, pods, leaves, flowers, or any part of any such plant.”

The law further says: “No person shall collect, prepare, process, sell or offer for sale, manufacture, store, obtain or have in his possession, distribute or use (a) any resin obtained from the hemp plant for the preparations or extracts from the hemp plant commonly known as bhang, hashish or ganja or any other preparation of which such resin forms apart.”

While there have been calls to legalize cannabis cultivation in the country (since many Western nations have lifted the ban) Sri Lankan religious leaders have strongly protested. In 2020, Ven. Dhammalankara Thera (chief prelate of Kotte Sri Kalayani Samagri Dharma Maha Sangha of Siyam Maha Nikaya) said that lifting the ban will lead to a “national problem.”

The medical fraternity also appears to be against it. According to the Sri Lankan National Council of Mental Health (NCMH), cannabis “abuse” can cause severe psychological as well as sociological ill effects. “Cannabis use is associated with apathy, sedation, disinhibition. cognitive dysfunction and poor self-care. Cannabis use may also increase the risk of psychotic disorders and result in a poor prognosis for those with an established vulnerability to psychosis. Prevalence of cannabis use is higher among people with psychosis in our country,” the NCMH says.

However, the NCMH does acknowledge the medical benefits of Cannabis-based preparations. This is because these are made as per strict Ayurvedic principles.

Burgeoning World Market

Be that as it may, the lure of dollars is stronger than other considerations, especially when Sri Lanka is dire straits financially.

The Indian trade specialist, Suhyl Abidi, writing for the Trade Promotion Council of India website, says that the world market for cannabidiol (CBD), a chemical in cannabis, is projected to grow at the rate of 21.8% in terms of value, from US$ 5.49 billion (in 2019) to US$ 26.25 billion by 2027.

“This is primarily driven by the rise in the usage of CBD in medical applications, supplements, beverages and skincare. CBD products have been promoted for a wide range of health issues, such as anxiety, insomnia, drug addiction, and acne, among many others,” Abidi says.

He points out that a stigma has got attached to the use of hemp cannabis as it is confused with marijuana, as both belonging to the cannabis family. Cannabis contains two psychoactive compounds Tetrahydrocannabinol (THC) and Cannabidiol (CBD). The high percentage of THC in marijuana is responsible for its use in getting “high”. Legal hemp must contain 0.3% THC or less, which is not adequate to get “high”, he points out.

CBD is a cannabis derivative which is therapeutically important and it is sold in the form of gels, gummies, oils, supplements and extracts. Abidi says hemp seeds are known to be a “super-food” that can boost immunity.

According to Abidi, the cannabidiol market is likely to witness significant R&D investment in the pharmaceutical industry throughout the world. The first cannabidiol drug ‘Epidiolex’ has been approved by US Federal Drug Agency, validating some of cannabidiol’s therapeutic benefits.

A Craze in US

In 2019, for the first time, CBD became one of the 40 top-selling ingredients in US mainstream retail outlets. CBD sales totaled US$ 36 million, making it the 9th largest selling supplement ingredient. Sales of CBD increased by a remarkable 872.3% from 2018 to 2019 — the largest increase among top 40 ingredients in the mainstream. Abidi points out.

It is estimated that 64 million US adults had tried CBD in the previous two years. Among those surveyed, the most common reason for taking CBD was to relax and reduce stress/anxiety. 64% rated CBD as “extremely or very effective”.

Abidi quotes ‘World’s Top Exports’ to say that cannabis oils exported by all countries totaled US$ 2.9 billion in 2019. That was a 23.3% increase for all cannabis oil exporters starting in 2015. India was the second largest exporter with US$ 320.8 million (11.1% share) in revenue, after China, which exported US$ 964 million (33.4% share) in 2019.

Some smaller countries’ export growth had been many times higher. For example: Vietnam (up 529.5%), Madagascar (up 232.2%), Morocco (up 218.1%) and Netherlands (up 124.5%).

Abidi says that governments should provide the right direction, policy and regulatory framework for the medicinal cannabis industry to flourish. The excessive regulatory stranglehold on the opium industry has steadily reduced the number of licensed cultivators which has considerably reduced exports, he points out. Citing the Indian example, he says: “India exported 98 tonnes in 2016. But in 2018 it came down to 48 tonnes, In 2019 it was down to 14 tonnes, as per ITC Trade Map data.”

Cannabis and its derivatives are banned in India under the Narcotic Drugs and Psychotropic Substances (NDPS) Act of 1985. However, India voted to de-criminalize cannabis in the UN Commission on Narcotic Drugs (UNCND) in December 2020. Therefore, action to decriminalize it in India may follow.

Last year, Pakistan allowed the cultivation of cannabis as an export crop as that country is also strapped for dollars.

In Bangladesh, all narcotics, including marijuana, had been declared illegal by the Narcotics Control Act, 1990. According to the Act, cultivation, production, processing, carrying, transportation, import, export, supply, purchase, sale, possession, preservation, warehousing, exhibition or use of any kind of narcotics including marijuana is illegal. But the Act permits manufacturing, processing, importing, exporting, supplying, buying and selling narcotics for any approved medicine or for undertaking any scientific research, provided the same is done under license.

However, it is very unlikely that Bangladesh will allow cultivation of cannabis as a commercial crop as Prime Minister Sheikh Hasina has set her face against drugs, no matter how mild and harmless. Her government had gone on a killing spree to ruthlessly stamp out drug dealers.