Next Stop for Cannabis Industry Investors: Malawi

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The countries in Africa are falling one by one. First Lesotho, then Zimbabwe, then Zambia, and now Malawi. Quickly changing their cannabis regulation to promote global medical marijuana export markets. How will Malawi’s introduction onto the playing field fair?

Malawi is a landlocked country in southern Africa, bordered by Mozambique, Tanzania, and Zambia. Ten different ethnic groups are associated with Malawi, which has a population of approximately 21 million people. Most of the country works in agriculture with the majority being subsistence farmers on smaller farms, while growing tea and tobacco is done on large estates. This system has largely favored the bigger estates which has led to a great wealth inequality, with most of the population living in extreme poverty resulting in high infant mortality rates, chronic and widespread malnutrition, and general sickness. The overall life expectancy is in the low 60’s.

Much like Zimbabwe which also relied heavily on tobacco exports, Malawi was in the market for a new industry, making its induction into the African green rush right on point. As said by Agriculture Minister, Kondwani Nankhumwa, “Legalisation of this crop will contribute to economic growth as it will contribute in the diversification of the economy and boost the country’s exports, especially at this time when tobacco exports are dwindling.”


Cannabis laws in Malawi for citizens

According to the Dangerous Drugs Act, “The Minister may by regulation: prohibit, control or restrict the production or possession” of illicit substances. Since trafficking is the bigger deal, and where law enforcement spends most of its energy, use crimes are generally overlooked. Since 1961, when Malawi signed the UN Single Convention on Narcotic Drugs, it has been illegal to sell or supply cannabis in the country. This has not stopped cannabis smuggling from being pretty routine, something Malawi has received criticism for.

Citizens are not permitted to grow any form of cannabis, hemp or marijuana, but it happens often anyway, with illegal cannabis grow operations being the primary activity when it comes to illicit drug rule-breaking in Malawi. Anyone caught illegally doing grow and supply crimes can now face up to 25 years in prison and an approximately $70k fine.

CBD, medical, and religious

CBD, or cannabidiol, one of the non-psychoactive components of the cannabis plant associated with many medical benefits, is exempt from the laws governing the rest of the plant, but there seems to be ambiguity in the terminology, and it is not actually legal there, only cultivated and produced for export.

In terms of medical use, the new bill did attend to a medical program for the residents of the country, although how well it will be carried out remains to be seen. Some of the bullet points include patients requiring a Registry Identification Card, that distributing cannabis from doctors to patients can only be done with the attendance of inspectors and police officers, and not producing adequate documentation or making false statements in regards to entrance and use of the cannabis program can incur financial penalties and up to five years in prison.

Malawi is home to a small Rastafarian community that has itself been pushing for religious legalization. This bill, along with not granting any form of recreational or personal use laws, also didn’t recognize any religious use rights.

Cannabis laws for business use

Earlier this year, cannabis was legalized for medical and industrial use in Malawi. The bill establishes certain bullet points for the regulation of the industrial cannabis market including the following:

  • The Cannabis Regulatory Authority (CRA) is the new body that will be responsible for issuing licensing for cultivation, processing, distribution, and export of products for the industrial hemp and medicinal cannabis programs.
  • The CRA will also issue research permits.
  • License holders must comply with CRA security requirements regarding growing, sale, exportation, processing, distribution, and storage.
  • Cultivation must be done under strict practices including children not being involved, the natural environment being preserved, and compliance with a very high soil standard including fertilizers and pesticides that can be used.
  • Inspectors will be appointed by the CRA to ensure compliance with regulation.
  • Growing and supply operations that are not government approved are subject to large financial penalties and up to 25 years in prison.

Hemp cultivation is allowed with up to 1.0% THC. This means that it’s over the 0.2% allowed in cannabis applications by current EU standards, but follows in line with other countries that have more recently set their THC limit higher.

How’s business going?

Since Malawi only made its regulatory updates recently, it’s expected that not all the pieces are in place yet. It can often take a country years to work out kinks in their licensing and regulatory framework, so the specifics of how much licenses will cost, and if there are other provisions that must be met by potential licencees, is still unknown.

In terms of interest by foreign countries in using Malawi for their own cannabis production projects, Director of Investment Promotion Joshua Nthankomwa stated back in 2018 before the laws had passed “We have registered huge interests from companies in Canada, Israel and many other places. We look forward to many more investors coming, not only in this sector, but many other sectors that Government has created environment for one to grow their business.”

The first company to get a research license to grow cannabis in Malawi was Invegrow, which started conducting trials on low-THC hemp back in 2015 to investigate hemp as a practical crop and determine viable seed strains. Its trials were used to help the government draft the legislation for commercial legalization. With its foothold already in the country, Invegrow is looking to start production of broad-spectrum hemp extracts and essential oils for export.

Other international companies had expressed interest in Malawi before the legalization, among them, Green Quest Pharmaceuticals, which requires 50,000 hectares of land to grow industrial hemp for manufacturing products like clothing and medicine. Green Quest Pharmaceuticals investor, South African/Canadian Graham Macintosh was among a group of lobbyists that encouraged politicians to create regulation that would allow them this ability.

The investment in Africa

Africa is becoming a hot spot for foreign investment in cannabis since Lesotho first opened up its cannabis regulation to allow for legal cultivation of medicinal cannabis in 2017. Zimbabwe and Zambia followed suit in the next years, with each bringing increased chance for investment, and more companies interested in getting a foothold in their fertile, rich-soiled land. These countries come complete with cheap farm labor in the form of the locals who are technically being priced out of their own markets.

Whether Malawi will follow suit will only be known as more specifics come out about prices and rules for licenses. As per statements made earlier by government officials, looking for foreign investment is key, and this possibly could mean steep licensing prices. On the other hand, if prices are kept low, it could mean more opportunity for not only locals to take advantage of their own land and profit directly from the new market, but also for lower capital investors from abroad who don’t have the bigger capital of their larger competitors, the chance to buy in as well.

Conclusion

Malawi is likely not the last African country to jump into the new legal medical cannabis market. In fact, several others in the general southern region (and elsewhere) are already looking into updating legislation to take part. For anyone interested in Malawi, or Africa in general, as a place for their own possible investment, a close watch should be kept on news coming out about pricing and particular laws and requirements for whatever kind of establishment is in mind. Chances are, within the next several months we’ll start hearing about all the new deals going down in Malawi’s new legal cannabis market.

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