Regulation as the Roadblock: Unlocking Nepal’s Industrial Hemp Potential
Article By: Prapti Shrestha Originally Published in Spotlight Nepal
In 2024, the global industrial hemp market was estimated to be 11.03 billion USD, and it is estimated to rise to 30.24 billion USD by 2029. Nepal, despite having hemp grown naturally on its hills in abundance it is ill-equipped to capitalize on this huge market. Nepal’s outdated and restrictive regulatory framework can be blamed, which prevents converting its natural resources into economic prospects, job opportunities, exports, and sustainable development.
The 49-year-old Narcotic Drugs (Control) Act of 1976 does not include hemp in regulations and other regulations also fail to include any reference to industrial hemp in their provisions. The lack of a legal framework prevents any activities related to industrial hemp cultivation, processing, and trade operations. Thus, the public demanded proper regulation regarding it, as hemp products are rising in popularity globally.
In response to the public demands for hemp legalization, the Ministries of Finance and Home Affairs drafted a bill that seeks to legalize cannabis production and regulate its sale under strict conditions. However, the bill is yet to pass through parliament. The bill mandates farmers to label their cannabis products, prohibits advertising, and restricts sales to government-approved entities. The creation of a Board under the Government of Nepal is proposed to oversee the cannabis industry, as it allows cultivation of cannabis after obtaining a license from the government for medicinal purposes, along with textile industries and oil and honey production, but the bill lacks clarity on the qualifications required for leadership roles and the number of inspectors needed to enforce the Act.
Nepal’s regulatory framework for hemp faces several key challenges, which present both gaps and opportunities. One of the most significant issues is the absence of government-certified testing centers. Without a proper testing infrastructure, the safety and quality of hemp products cannot be assured, which hinders both domestic use and international trade. Establishing certified testing centers would address this gap, ensuring product safety and fostering international trust.
Additionally, the Industrial Enterprise Act of 2020 does not currently include hemp among the industries it promotes. This omission limits Nepal’s ability to explore hemp’s potential as a sustainable textile material. Amending this act to incorporate industrial hemp could unlock new economic opportunities, creating jobs and promoting hemp as an environmentally friendly product.
Another challenge lies in the unclear workforce requirements for inspectors responsible for enforcing hemp regulations. Expanding the number of inspectors with clear regulatory guidelines would improve law enforcement and compliance, making Nepal more attractive for investment. Furthermore, the leadership qualifications for regulatory bodies remain vague, which raises concerns about effective management. Setting clear criteria for leadership roles would ensure competent management and help build trust among investors and industry stakeholders.
Nepal holds significant opportunities in the global hemp industry due to its access to high-quality raw materials, which currently remain underutilized. Harnessing the full potential of these resources would position Nepal as a competitive player in the international hemp market, meeting growing consumer demand with ease. While Nepal’s focus on the textile sector is a promising start, the versatility of hemp opens doors to multiple other industries. Hemp can be utilized for cosmetics, relaxation oils, construction materials, bioplastics, handicrafts, and other eco-friendly products. Additionally, hemp’s ability to store carbon dioxide rather than emit it makes it a sustainable option, with applications such as insulation materials aligning with environmental goals.
Investing in research and development could further uncover unexplored uses of hemp, creating even more opportunities. However, a significant challenge lies in the lack of advanced technology and machinery needed to refine hemp fibers to international standards. Expanding infrastructure and providing technological support will be crucial to ensuring that manufacturers can meet global quality expectations. With proper government support and strategic investments, Nepal can unlock the full economic potential of hemp and secure a strong foothold in both existing and emerging markets.
In conclusion, the potential for industrial hemp in Nepal is immense, but realizing this potential requires a strategic overhaul of the existing regulatory framework. By shifting the regulatory focus from narcotics control to agricultural and industrial development, establishing certified testing centers, clarifying enforcement roles, and aligning policies with international standards, Nepal can unlock significant economic opportunities. Public awareness campaigns and infrastructural investments will further support the growth of a sustainable hemp industry, contributing to national economic growth and rural development. The lessons from China, India, and Canada provide a clear roadmap for reform, emphasizing the importance of regulatory clarity, public engagement, and value addition.
Nepal stands at a crossroads where the decisions made today will determine whether the country can harness the economic and social benefits of industrial hemp or continue to lag behind as other nations capitalize on this versatile crop. With the right reforms, Nepal has the opportunity to build a vibrant, sustainable hemp industry that not only contributes to economic growth but also supports environmental sustainability and rural livelihoods. The time for action is now, and the steps outlined in this paper provide a pathway for Nepal to move forward, transforming its hemp sector into a key pillar of national development.
Nepal’s restrictive hemp regulatory framework limits its ability to fully leverage the industry’s economic potential compared to the more permissive policies seen in China, India and Canada. Thus, establishing certified testing centers would improve product quality and build trust for international trade. Incorporating hemp into the Industrial Enterprise Act would promote eco-friendly textiles, stimulate job creation, and attract investment. Developing a clear regulatory workforce with well-defined guidelines would ensure better enforcement and compliance, increasing investor confidence.
By addressing these gaps and adopting strategic reforms, Nepal could unlock the potential of hemp for sustainable economic growth while ensuring compliance with international regulatory norms.