The smoking issue of Sri Lanka’s cannabis exports

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Sri Lanka has long been eyeing the export of cannabis, a venture with the potential to add millions of extra dollars to the country’s export revenue. 

Regardless of being initially conveyed by President Gotabaya Rajapaksa earlier this year at a gathering held in Monaragala, the expedition on legalising cannabis, commonly known as “marijuana”, began after the recent announcement by State Minister of Indigenous Medicine Sisira Jayakody. 

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Addressing the Parliament, Jayakody confirmed that the Government has decided to implement a law within three months to allow the cultivation of cannabis, both for the manufacture of medicines locally and for export purposes.

Similarly, Minister of Trade Bandula Gunawardana told The Sunday Morning Business that by legalising cannabis, Sri Lanka could earn a higher return on export proceedings if the local industry were to take the initiative to extract and export hemp to the international market. 

According to him, no one was initiating a dialogue, as individuals reamined “restricted by their own religious and cultural barriers”, despite cannabis possessing healing properties useful for medical purposes. 

“It was the British who banned cannabis, as they could not face the strength of the Sri Lankans. But it is an unfortunate situation today, and people should start changing their opinion in this modern world,” Gunawardana said.

Nevertheless, a question arises as to whether the legalisation of cannabis would actually improve the Balance of Payments (BOP) and have a “higher export return” that is presently expected by government officials. 

The coin toss: Heads

For any conscious decision, a coin toss that represents both the pros and cons will be included in the package. 

Speaking to us, Sri Lanka Ayurvedic Drugs Corporation (SLADC) Chairperson Attorney-at-Law Sagala Abeywickrama stated that cannabis had a high global demand, which could benefit Sri Lanka, as Sri Lankan cannabis is already distinguished as a high-grade product in the world market. 

“Globally, there is a huge demand for herbal cannabis, and Sri Lanka has the best in the world. In the first half of the next year, we are hoping to start exporting. However, after legalisation is completed, we can use cannabis to produce hemp oil, manufacture medicine, perfume, etc,” she said. 

Abeywickrama added that the Bill will be presented to Parliament within the next three months, and that the potential and targeted markets for cannabis exports are the US, Canada, the Maldives, China, and various African countries, among others. 

Likewise, Samagi Jana Balawegaya (SJB) MP Diana Gamage told us that the global cannabis industry is worth billions of dollars, which Sri Lanka needs to capitalise on, as it could support the nation’s ability to settle its international debts.

“We are talking about a huge industry. I am not just referring to exporting only for medicinal purposes. From beauty products to fast-moving consumable goods (FMCGs), foods, and drinks, cannabis is used in numerous industries,” she highlighted.

In April this year, Gamage proposed in Parliament that Sri Lanka should legalise the cultivation and exportation of medicinal cannabis to other countries. However, her proposal was met with strong criticism. In response, Gamage expressed that there was no room for such criticisms.

“People criticise everything in this country – that is just the norm. It is accepted globally, and over 50 countries engage in cannabis cultivation. It is essential for our Ayurvedic treatments as well. There is nothing to criticise about it. Once this is fully implemented, and after the people see the benefits, they will understand that it was a correct decision to make,” she said.

Additionally, in February 2021, we spoke to Dr. Wasantha Sena Weliange, an academic who has been advocating the relaxation of such laws for years. 

Expressing his views, he said that even though law enforcement agencies send the illegally cultivated cannabis seized during raids to be used for medicinal purposes, this is not at all effective, since by the time these stocks reach the medical practitioners, they are likely to have lost their medicinal value.

“Depending on how many acres these farmers have farmed, that state-run institution can harvest and weigh the cannabis products, and also pay these farmers, which eventually paves the way for a regulated cannabis industry. It is important to give these farmers the opportunity to continue farming cannabis, as they possess the traditional practical knowledge required to do that more than anyone else,” he asserted.

The coin toss: Tails 

Regardless of other export sectors operating in Sri Lanka, will initiating cannabis exports bring a significant impact to the country amidst the ongoing monetary crisis? 

Speaking to The Sunday Morning Business, Open University of Sri Lanka Emeritus Professor of Economics and former Central Banker Prof. Sirimevan Colombage said that if the goal behind initiating exports is to overcome the present monetary crisis, then it will not have a “larger impact” on the country. 

He explained that the existing exporters could generate a higher income if the Government relaxes the barriers that prevent them from undertaking exports. 

“Exporters are suffering from the present macro-economic environment. The regulations that are imposed, such as controlling the exchange rate, conversion of dollars, etc. have resulted in several exporters leaving Sri Lanka. Therefore, rather than introducing other products, the Government should save the existing exporters in the country,” Colombage said. 

He further said that the problem faced by Sri Lanka is that it focuses on “factor-driven economic growth” and over-dependence on traditional sectors such as worker remittances, garments, etc. rather than expanding through technologically driven exports. 

“South Korea, Hong Kong, and Malaysia have developed their technology-driven exports. What we should have done is promote these technology-based exports. It is essential to diversify the export basket but it is also vital to protect the existing companies,” he added. 

Expressing similar views, Advocata Institute Chief Operating Officer (COO) Dhananath Fernando also stated that if the decision to commence exports is based solely on improving the country’s export revenue, then it is not the solution, as the problem lies with the internal processes. 

“Existing exporters are not performing well because of internal barriers. Even if we start exporting cannabis, the macro-economic problem of exporting will remain the same. Therefore, to increase exports, these problems and the fundamentals should be addressed, rather than thinking that exporting cannabis will increase our export revenue,” Fernando said. 

A report published in 2018 by Verité Research titled “Reducing Domestic Barriers to Export Success” reveals that the current registration process for exporters who wish to register is unnecessarily lengthy, inefficient, and unduly burdensome, which causes more hindrance than assistance, especially for Small and Medium Enterprises (SMEs). 

“The current registration process for a sole proprietor/partnership involves a minimum of 10 steps and six different agencies and can take between one to three weeks to complete. Businesses exporting products that require export permits/licenses are subject to an extended process,” the report stated. 

The report also added: “The process also imposes an undue burden on businesses, particularly SMEs that are registered as sole proprietors/partnerships and that are located outside the Western Province. Rules and regulations that are burdensome and lack a clear rationale serve to discourage businesses from exporting, and therefore undermine the objective the Government aims to achieve.”

Meanwhile, an official from the Export Development Board (EDB) told us that Sri Lanka should try other export avenues rather than focusing on “something that is not possible”.

Speaking to The Sunday Morning Business, the aforementioned official stated that firstly, Sri Lanka would have to legalise cannabis in the country, then grow, harvest, and even build a zone or adequate hub if it is to start exporting, which is not practical.

“With the present legalisation, growing and exporting cannabis is going to be a complicated process, which will be very difficult to implement. Therefore, we need to look at what’s practical, what’s good for the country, discover markets, and more importantly, improve the quantity and the quality of our exports. If we can sort out these issues, we can improve quite a bit in our export market,” he said.

He informed us that there is also a need to explore niche markets with an aim of diversifying the product basket and markets. Clarifying, he stressed that there is an abundance of opportunities available to explore in the agricultural sector.

“We have spoken about expanding the export basket for about 20 years. But this is the best opportunity we have ever had, since there is a huge trade shift going on. People are looking for different markets and products. Sri Lanka is in a fantastic position, and our opportunities with agriculture are enormous,” he noted.

Moreover, the Sri Lanka Medical Association (SLMA) last year mentioned that there is no requirement to legalise the cultivation of cannabis. 

They said this was because permission has been granted for the use of cannabis as a component of some Ayurvedic medicines, and because there is an established system in place for cannabis to be provided to licensed Ayurvedic practitioners by the Ayurvedic Department.

“The SLMA requested the Government to take all steps to reduce the consumption of cannabis, and not allow the relaxation of measures currently in place. If cultivation is allowed, there will most certainly be leakage of cannabis to the general public,” the statement mentioned. 

The statement further said that there are only a few illnesses that respond to cannabis-based medicines, whereas anything further could only cause health issues such as depression and schizophrenia, serious lung ailments, impact brain development in adolescents, or even lead to self-harm and suicide as well as road traffic accidents. 

“If any form of further legalisation of cannabis happens, it will be a major victory for an emerging killer industry and a resounding social and economic defeat to all Sri Lankans,” the statement concluded.

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