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Ailing Zimbabwe Puts New Energy into Cannabis as a Forex Alternative to Tobacco

Ailing Zimbabwe Puts New Energy into Cannabis as a Forex Alternative to Tobacco

Prohibition Partners/ACA Group

20 December 2022 at 08:00:00

The Global Cannabis Report 2022 says Zimbabwe has renewed its focus on developing its hemp and cannabis industries as economic drivers to try and pull the country out of its financial mire and provide an alternative revenue source to tobacco exports.

Zimbabwe was the second African country to approve cannabis regulations in 2018, looking to gain the same commercial success as Lesotho.

As Zimbabwe’s tobacco exports continue to decline due to waning demand and market prices, Zimbabwe’s government has identified cannabis, and specifically industrial hemp, as a compelling replacement crop for the country.

Zimbabwe is Africa’s largest tobacco producer, and it exported US$515 million worth of tobacco in 2021, its largest foreign currency source. However, since legalisation, poorly designed legislation and regulations has meant that little progress has been made in the development of the sector from 2019 to 2020.

Initially cannabis regulation required licensed operators to grow on designated government land, and they were also required to cede 40% equity of their operation to the government.

This discouraged any meaningful progress in the industry. In 2021, regulations were amended to make investment in the cannabis industry more competitive, mainly focused on allowing 100% ownership, and cultivation at an appropriate location of the applicant’s choice.

These changes were instrumental in kickstarting the industry, and in recent years, we’ve begun to see a number of licensed producers raise capital, build facilities and begin to export.

Zimbabwean cannabis companies have exported hemp to Switzerland, with an estimated 30 tonnes being sold in 2021 according to the Zimbabwe Industrial Hemp Trust.

To date, medical cannabis flower exports remain limited. As of October 2022, the government has issued 57 licences.

The cost of a licence in Zimbabwe is approximately US$50,000 and is valid for five years. The licence requires a US$15,000 annual renewal fee. Research licences cost US$15,000 and require a US$2,500 annual renewal fee.

Unlike South Africa, cannabis operators can be granted a licence before building their facility, making it easier to enter the industry. However, licence application and renewal fees are high, relative to other African countries such as South Africa, where the cost is only US$1,750.

The cannabis industry is currently regulated by the Department of Health, but various other departments are involved in setting regulations. Regulated products include; plants, dried flower, oils and seeds. Zimbabwe recently gazetted regulations for the growing, processing and the supply of industrial hemp for local farmers.

With Zimbabwe’s economy continuing to struggle from low growth, high inflation, hard currency scarcity and political instability, there seems to be a renewed focus from the government to make the cannabis and hemp sectors drivers of an economic turnaround, which could serve as a catalyst for further progress in the sector over the coming years.

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