Pakistan bets on a cannabis high as its economy struggles

A new regulator aims to legalise hemp growth, while crushing a black market. But is Pakistan too late to the global cannabis party?

Government estimates put nearly 70 thousand acres of cannabis plantation in Pakistan. [Courtesy of Suleman Shah]
Government estimates suggest there are nearly 28,000 hectares (70,000 acres) of cannabis plantations in Pakistan [Courtesy of Suleman Shah]

Islamabad, Pakistan – When Aamir Dhedhi took his mother to India in 2014 to get treatment for Parkinson’s disease, the doctors there advised him to procure cannabidiol (CBD) oil to help her manage her pain. It was the first time that Dhedhi, a Karachi-based entrepreneur, learned about the medicinal use of the cannabis derivative.

On returning to Pakistan, the businessman ordered a small quantity of the oil from the United States. Almost instantly, it helped calm his mother’s nerves and reduce tremors, he said. Dhedhi became a firm believer in CBD’s benefits.

“Seeing the oil’s impact on my mother’s wellbeing, this has grown into a passion project for me,” the 49-year-old businessman told Al Jazeera.

While his mother eventually passed away in 2020, Dhedhi said he has since seen others get relief from CBD oil. “Now, I want to help our local growers expand their production and help spread its usage,” he said.

Dhedhi is not alone in wanting to develop a homegrown industry for medicinal cannabis.

In February, Pakistan approved the passage of an ordinance that created the Cannabis Control and Regulatory Authority (CCRA), a body tasked with “regulating the cultivation, extraction, refining, manufacturing, and sale of cannabis derivatives for medical and industrial purposes”.

The regulatory body will be overseen by a 13-member board, which will include representatives from different government departments, intelligence agencies as well as the private sector.

The establishment of the regulatory body, which was first proposed in 2020 under the tenure of former Prime Minister Imran Khan, points to Pakistan’s efforts to tap into a fast-growing and lucrative global cannabis-derivatives-related industry.

Cannabis plantation has been going on in Pakistan's tribal districts for decades despite being illegal. [Courtesy of Islam Gul Afridi]
Cannabis plantation has been going on in Pakistan’s tribal districts for decades despite being illegal [Courtesy of Islam Gul Afridi]

According to Ireland-based Research and Markets, a research organisation, the global cannabidiol market, which stood at nearly $7bn in 2022, is expected to cross $30bn by 2027.

Unlike tetrahydrocannabinol (THC), the primary psychoactive compound in the cannabis plant that gives users a high, CBD is not psychoactive and believed to have therapeutic effects. It is increasingly prescribed by doctors to help with anxiety, chronic and acute pain, and other medical conditions.

Syed Hussain Abidi – the chairman of the Pakistan Council of Scientific & Industrial Research (PCSIR), a government-owned research organisation, and member of the board of governors of the CCRA – said the creation of the regulator was a requirement of United Nations laws.

“The UN laws say that if a country wants to produce, process and conduct sales of cannabis-related products, it must have a federal entity that will deal with supply chain and ensure international compliance,” he told Al Jazeera.

The regulatory framework for the CCRA specifies the maximum level of THC in the cannabis derivative to be 0.3 percent to avoid the abuse of medicinal products and use them recreationally.

The ordinance has laid out strict penalties for any violation of laws, with fines ranging from 10 million Pakistani rupees ($35,000) to 200 million Pakistani rupees ($716,000), with monitoring and inspection conducted in tandem with Pakistan’s Anti-Narcotics force.

Abidi said the country could use cultivation of the herb to its advantage and generate revenue through export, foreign investment and domestic sales to shore up its precarious foreign reserves.

Until now, Pakistani law has barred the cultivation of cannabis, but the country’s northwestern region, particularly the province of Khyber Pakhtunkhwa, is home to thousands of hectares of land where the crop has been cultivated for hundreds of years. For the most part, governments have chosen to look away rather than crack down.

But the February ordinance aims to change that. On the one hand, it talks about “regulating” the area where cannabis is cultivated in the country, and issuing licences to farmers for growing the plant.

On the other hand, the new regulatory regime could give the government a clearer mandate to penalise those who produce cannabis without a licence. The National Cannabis Policy, which the PCSIR prepared last year and which served as the basis of the ordinance, mentions that the broader goal of the regulations is to curb the “illegal and prevailing cultivation of cannabis”.

“Technically, now the cultivation is legal since the ordinance has been passed, but we are still in [the] process of developing rules and procedures and awaiting registration of the authority,” Abidi said.

Licences, it is expected, will be issued for five-year periods. The federal government will designate areas where cannabis can be grown legally.

The dream

Abidi said said that according to estimates, there are nearly 28,000 hectares (70,000 acres) of land – mostly in Khyber Pakhtunkhwa and some in the southwestern province of Balochistan – where cannabis is grown.

“We have a long-established tradition of cannabis cultivation,” he said. “We need to avail this opportunity.”

Dhedhi, the Karachi-based entrepreneur, agrees. He is partnering with farmers in both Khyber Pakhtunkhwa and Balochistan to help modernise their cultivation methods and improve the efficiency as well as the quality of the product.

Cannabis in Pakistan is traditionally grown outdoors, relying on sunlight, and with minimal use of pesticides, fertilisers or any other chemical substances. This organic nature of Pakistani cannabis makes it different from that which is mass-produced in many other nations, but it also means that both the quality and quantity of the production are less reliable.

“We have massive potential in this field to provide health benefits through CBD. There is an opportunity to provide cheaper medical alternatives to people, which can help our domestic users as well as [improve the] potential for export,” Dhedhi said.

“That can bring in financial rewards to our local growers.”

More than 1,500km (930 miles) north of Karachi is the Tirah Valley, a vast mountainous tract of land situated between the tribal districts of Khyber and Orakzai in Khyber Pakhtunkhwa. There, Suleman Shah, a 32-year-old mechanical engineer-turned-farmer, shares Dhedhi’s dream.

Farmer Suleman Shah grows cannabis on 200 acres of his land in Orakzai, a tribal district in Khyber Pakhtunkhwa. [Courtesy of Suleman Shah]
Farmer Suleman Shah grows cannabis on 81 hectares (200 acres) of his land in Orakzai, a tribal district in Khyber Pakhtunkhwa [Courtesy of Suleman Shah]

Shah has been running the family’s cannabis farms for the past eight years, and his staff of nearly 40 people plant cannabis on nearly 200 acres (81 hectares) of land. Most farmers in the region, he said, were unaware of the medicinal qualities of hemp and primarily grow the plant for its recreational characteristics, using traditional methods.

Though cultivating cannabis has been illegal, Shah said he never faced any reprimand from the government. Still, farmers like him have faced other challenges.

Cannabis cultivated in neighbouring Afghanistan – with even less government oversight – had previously meant that Pakistani cannabis faced tough competition in the local recreational use market. The neighbours have long had a fairly porous border.

“When there used to be cannabis cultivation in Afghanistan, we would often be in loss, unable to recoup our investment in growing the plant. But since [the] Taliban have placed a ban, our business is doing considerably better,” the farmer said, referring to the Afghan Taliban, who returned to power in Kabul in 2021.

Before the Taliban took over in Afghanistan, Shah said he was earning about 50,000 Pakistani rupees ($180) per acre, just barely sufficient to meet the cost of production. “However, the last two years have been better. Take this year for example, when I was able to make nearly 500,000 rupees ($1,800) per acre,” he said.

“If the government brings on the regulatory framework, it will only help the farmers more,” Shah told Al Jazeera. “They can provide expertise to the farmers, help them research and grow better quality of products for the people, allowing to move beyond just the recreational use.”

Globally, one litre (0.26 gallons) of CBD oil is priced at between $6,000 and $10,000, depending on quality. “This is the potential we need to tap into by modernising our cultivation and processing methods,” Shah said.

‘Late to the party’

Not everyone, however, is convinced that Pakistan’s shift towards embracing cannabis production will give its economy the kick it needs.

Fawad Chaudhry, a former federal minister who is credited with kickstarting the conversation around facilitating CBD and industrial hemp production in late 2020, said that the four-year delay since then in getting the plan off the ground means Pakistan has been “late to the party”.

“My suggestion [in 2020] was simply that you allocate space for growth of the plant, issue international tenders for investors and let them come here. But we wasted our potential and threw away the time advantage,” he told Al Jazeera.

“The world has moved forward.”

Robin Roy Krigslund-Hansen, the chief executive and co-founder of Formula Swiss, a Switzerland-based cannabis producer and global distributor, agreed.

Krigslund-Hansen said that while he favoured countries taking steps in the “right direction” by showing interest in the medicinal usage of cannabis, there was a risk of over-saturation in the market.

“Germany has recently legalised it. China is a major producer. Latin American countries are doing it as well. So, you have a lot of production from different countries, but when everybody is a producer and seller, then who will be the buyer?” the businessman asked.

He questioned whether Pakistan had the capacity to produce medicinal-grade cannabis that could meet global standards.

“If you want to sell medical grade cannabis, it must be produced indoors, ensuring consistency and uniform production. When you grow it indoors, the electricity costs will be exceptionally high to keep the lights and air conditioning, all to make sure that the product remains top-grade throughout,” he said. “And this will cost a significant amount of money.”

Abidi, the government official, however, remained optimistic when asked about these challenges.

He acknowledged that Pakistan needed more resources to “hygienically produce cannabis” but said that his organisation had been tasked by the government to develop processes to improve the quality of the product.

Pakistani officials are hoping to generate more than a billion dollar of revenue from cannabis derivative in three years. [Courtesy of Suleman Shah]
Pakistani officials are hoping to generate more than a billion dollars of revenue from cannabis derivatives in three years [Courtesy of Suleman Shah]

“We have developed end-to-end solutions to extract top-quality CBD oil and currently, we are carrying out our research and extraction in Lahore, Karachi and Peshawar in our pilot project,” he said. “We are anticipating that in three years, we can easily generate revenues of over $1.5bn, domestic sales and exports combined.”

Shah, the farmer, said he is also developing indigenous ways to improve production methods with the help of entrepreneurs like Dhedhi and insisted that the organic, outdoor nature of Pakistani cannabis growth was its defining feature.

“We will be using plastic sheets to cover our plantation instead of building greenhouses. We are developing methods to stop cross-pollination,” he said.

Abidi, the board member, acknowledged the stigma associated with the use of cannabis products in a conservative society like Pakistan but said that the government was counting on growing awareness of the benefits of CBD among young people.

“The regulatory framework will ensure that people will get only the prescribed, medicinal use products, [and] it will crack down on the illegal sales and consumption of marijuana,” he said. “Once the clean product goes for retail, it will help curtail [the] black market, and only patients with prescriptions can access it.”

Source: Al Jazeera