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Zimbabwe is ‘smoking its socks’ over hemp revenue hopes

The Zimbabwe government’s estimate that hemp will generate export earnings of US$1,2 billion next year is wildly unrealistic. Although the country has prioritized hemp cultivation as an agricultural policy, this figure is three times higher than its biggest current agricultural export, tobacco. Tobacco sales totalled US$444 million for the year closing in August.

 

Zimbabwe Marijuana Field, Zimbabwe Cannabis Revenue

High hopes for Zim hemp may be too high

 

Zim govt: US$40 million a month in export revenues ‘conservative’

In his budget statement on 26 November 2020, Finance Minister Mthuli Ncube said cannabis production for medicinal purposes had “immense potential” to generate export receipts and tax revenues. A so-called cannabis levy will be introduced next year, in line with export values, Ncube said. Taxes of as much as 20% will be applied on oils, bulk extracts and dried cannabis flowers.

 

See Zimbabwe licence story

 

He said the Zimbabwe Treasury’s estimation that local grow operations – with international partners – can produce US$40 million to US $46 million worth of cannabis a month.

 

Government’s expectations ‘utterly unrealistic’

However, this figure has been described by one investor as ‘utterly unrealistic’, adding that next year’s proposed cannabis taxes, will act as a disincentive to invest in the industry. 

See Zim slaps 20% tax on cannabis bud exports

 

The investor, who did not want to be named, told Cannabiz Africa that Zimbabwe had the potential to become Africa’s hemp leader. But he said, government’s current fiscal desperation and hunger for taxes could hamper early growth. The investor added that the government’s projections did not factor in two major concerns faced by investors: 

  • challenges in electricity supply, and 
  • guarantees there would be no further cannabis taxes introduced through the back door.

 

Zimbabwe Hemp Farmer, Man with weed plants, Zimbabwe weed fields

Dreaming of less government tax on hemp products

 

Harare economist John Robertson, told Reuters on 3 December 2020 that Treasury’s projections were ambitious. “It’s a massive over-estimate and ignores that cannabis is grown in many markets outside of Zimbabwe,” he said by phone.

“It’s sold in grams, not in kilograms or tons, so there will be disappointment,” 

Robertson said. “The only enthusiasm will be from producers, but massive supply globally will depress prices.”

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