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Sri Lankan Officials Have Faith in the Economic Power of Medical Cannabis Exports

January 25, 2022 08:00 am ET
Sri Lankan Officials Have Faith in the Economic Power of Medical Cannabis Exports

Sri Lanka is well known for its rich biodiversity, adventurous vacations, and tea plantations in the minds of most people. However, the predominantly Buddhist country is rapidly gaining negative press for its withering financial status. Some country officials believe that medical cannabis exports have the potential to resuscitate Sri Lanka’s economy. 

The island nation‘s economic future is incredibly dire. The current situation is so bad that the Central Bank has appealed for foreign currency; even going as far as to request the loose change of people returning from overseas holidays. As experts predict a looming sovereign default, lawmakers scramble for a way to reverse the country’s monetary woes. Country officials believe that Sri Lanka’s economy could be strengthened and restored with medical cannabis production and exports. 

The government missed out on about USD $3 billion-$4 billion when officials resisted an opportunity to obtain financial aid from the International Monetary Fund (IMF). Now, a medical cannabis export proposal from the Sri Lanka Podujana Peramuna (SLPP) minister is being considered as a solution to their worsening economic situation.

In November 2021, State Minister of Indigenous Medicine Promotion, Sisira Jayakody, told parliament that the timeline for a medical cannabis export market to officially transpire across the country is estimated at around three months. “High quality medical cannabis can be used to treat cancer, neuro diseases, mental disorders, as a painkiller, and also in the beauty culture industry. But it was banned when we were under British rule,” Jayakody told reporters.

About the Proposal to Legalize Medical Cannabis Exports in Sri Lanka

According to MP Jayakody, the government will gain parliamentary approval within the next three months for medical cannabis exports, so long as the cannabis has been cultivated on Sri Lankan soil. The profitability of medical cannabis exports was acknowledged in 2020 by the country’s Minister of Trade Bandula Gunawardena. The proposal stipulates that all of the cannabis grown in Sri Lanka will be used for the sole purpose of exporting it to in-need patients across global markets. 

Unfortunately for Sri Lanka, the prospect of cannabis exports did not garner enough support from the government last year. It was opposed by the State Minister of Internal Security and Prime Minister Mahinda Rajapaksa. Furthermore, Prime Minister Mahinda Rajapaksa has boldly advocated against the promotion of cannabis reform in Sri Lanka. 

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Looking to the future, MP Jayakody said that the department, without draining foreign reserves to acquire raw materials for Ayurvedic medicine production, has launched an initiative under ‘Osudharanai Medicine gardens’ to create village-speckled medicinal produce gardens.

Sri Lanka’s Economy and the Worsening Financial Crisis 

The coronavirus pandemic is not just a health risk — having killed over 15,000 people in Sri Lanka alone since the first outbreak in 2020 — but also, a risk to the island’s tourism-dependent economy. In March of last year, a wide-scale ban on cannabis imports was imposed with the primary aim of supporting Foreign exchange reserves, which are assets held on reserve by a central bank in foreign currencies.  Consequently, locals suffered from an intense shortage of crucial goods like fuel and sugar.

By the end of November, Sri Lanka’s foreign reserves amounted to just $1.58 billion. In comparison with the $7.5 billion that was harvested in foreign-currency deposits in 2019. On Monday, December 27, 2021, the Sri Lankan Ministry of Foreign Affairs said that the High Commission in Nigeria and consulates in Cyprus and Germany will be forcefully closed. The closures, which took place in January, aim to save foreign currency reserves amid the Central Bank’s decision to enforce more stern controls on dollars required for essential import funding.

On the same day of the announcement, the Central Bank also introduced more stiff limitations on foreign currency remittances received by locals. All commercial banks were instructed to provide the government with more than a quarter of their earnings – an increase from the previously requested 10 percent. What does this mean? Less money to invest in essential goods importers.

Final Take Aways: Sri Lanka’s Economy and Medical Cannabis Exports

Bilateral loans and currency swaps are still under consideration by Central Bank Governor Ajith Nivard Cabraal to increase federal reserves. However, details have not yet been divulged. Among the many discussed options for economic rebuilding, MP Jayakody says that medical cannabis exports possess the most potential for economic growth.

Whatever happens, it’s only a matter of time before Sri Lanka follows the emerging trend of cannabis reform in Southeast Asia. Analyst predictions featured in the Asia Cannabis Report suggest that Thailand’s prospective legal medical and recreational cannabis market could be worth $661 million USD by 2024. Asia’s market could reach $5.8 billion USD within the next few years. Other Asian countries that are moving in the direction of medical cannabis legalization include Malaysia, Singapore, and the Philippines. 

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