Government decision to allow foreign investors to grow cannabis for export faces opposition from health professionals
By Khalidha Naushad
Cabinet Spokesman and Media Minister Nalinda Jayatissa announced last week that Sri Lanka has approved seven foreign investors to cultivate cannabis under the Board of Investment (BOI), with security provisions in place. The stated objective is to ‘utilise all parts of the cannabis plant exclusively for export, in order to generate economic benefits for Sri Lanka.’ However, this decision has drawn immediate opposition from the country’s leading medical associations and drug policy experts, who cite international evidence of cannabis market challenges and question the economic viability of the proposal.
According to the Alcohol and Drug Information Centre (ADIC), the current approval also marks a clear departure from previous Sri Lankan policy positions, as a similar proposal had previously been halted following strong opposition from the Sri Lanka Medical Association, the Sri Lanka College of Psychiatrists, the College of Community Physicians, ADIC, and community groups. ADIC further notes that the current Deputy Minister of Investment Promotion had opposed such proposals while in opposition, yet is now involved in implementing the policy in his role at the BOI, highlighting a significant policy shift.
To understand the implications of this policy, Ceylon Today contacted Executive Director of the Alcohol and Drug Information Centre (ADIC), Sampath De Seram, and Former Head of Department, Department of Psychiatry, University of Sri Jayewardenepura, and a member of the SLMA Expert Committee on Tobacco, Alcohol, and Illicit Drugs, Consultant Psychiatrist, Dr. Jayamal De Silva.
Both experts pointed out that, while governments and industry advocates often portray cannabis as a rapidly expanding global market, evidence from established cannabis markets reveals concerning patterns that challenge the ‘booming industry’ narrative being presented to Sri Lankan policymakers. This cautionary perspective is particularly relevant given Sri Lanka’s ongoing economic crisis and the government’s ambitious target of US$5 billion in foreign direct investment by 2025. Dr. De Silva questions the fundamental economics behind such optimism, “On face value, cannabis market is big. But do the small and large players profit? Look at their shares, and look at Central Bank reports coming from those countries. And compare the total income, if any, with the total economy of those countries. Check whether there is any benefit at all.”
De Seram presented comprehensive pricing data that exposes the industry’s fundamental challenges. “Over the past decade, cannabis oil prices have seen a clear downward trend due to increased legalisation, competition, and oversupply in many markets,” De Seram explained. “In the U.S., wholesale cannabis flower prices fell from around USD 1,700 per pound in 2015 to about USD 1,013 per pound by 2024, a decline of nearly 40 per cent.”
Uruguay, the first country to legalise cannabis with early dreams of ‘USD 1 billion in exports’ employing thousands, now is ‘facing a harsh reality check’ with companies fleeing the market. The country’s experience demonstrates how regulatory compliance can become a burden rather than an enabler, as it ‘hobbled medical cannabis producers by requiring pharmaceutical grade products,’ ultimately devastating export ambitions rather than enabling profitability.
This pattern of disillusionment has spread beyond Latin America to Asia. After just two years of legalisation, Thailand reversed course, with the government citing concerns that cannabis ‘fuelled social ills’ and led to a ‘significant rise in cannabis use among youth.’
The severity of these market challenges becomes most evident in North America’s most mature cannabis markets, where years of operation have failed to deliver the stability that emerging markets like Sri Lanka might expect. In the United States, Oregon reported another year of marijuana oversupply in 2024, with insufficient demand to absorb production levels. The situation in Michigan is equally troubling, with sales dropping for four consecutive months and wholesale prices for adult-use flower dropping 28 per cent in just one year. These price collapses have left many cultivators ‘barely hanging on,’ according to industry reports, with state regulators and business owners now calling for moratoriums on new cultivation licences to prevent further market saturation.
“These figures indicate oversupply has made cannabis significantly cheaper over the last ten years,” De Seram noted. “When established markets with years of experience, developed infrastructure, and regulatory frameworks are struggling with oversupply and falling prices, serious questions arise about the viability of new entrants in less developed markets like Sri Lanka.”
Medical community response
The Sri Lanka Medical Association (SLMA) has also issued a detailed response to the cannabis cultivation decision, with Dr. Anula Wijesundere, Chairperson of SLMA’s Expert Committee on Tobacco, Alcohol and Illicit Drugs, and Dr. Surantha Perera, President of SLMA, challenging the economic rationale behind the move.
“If the Government is looking for foreign currency inflows, the amount of investment promised through this policy is a few million dollars which mainly consist of one-time inflows,” SLMA observed. “Compared to around 500 million dollars sent to this country each month by expatriate workers, it is a drop in the ocean.”
Their concerns extend beyond simple mathematics to question the fundamental wisdom of the policy given Sri Lanka’s precarious financial position. “Such ‘investments’ will not help Sri Lanka to settle its current debt of around 100 billion dollars to any extent. Therefore, there is no logical or economic reason to implement such a potentially harmful policy for a comparatively minute return, unless there are unseen benefits to unseen groups.”
Beyond economic concerns, medical experts are challenging the core justification for large-scale cultivation. The Association points out that even in developed nations with established medical cannabis programmes, the actual therapeutic applications remain extremely limited. Approved cannabis use, even in countries like the United Kingdom and United States, ‘is confined to a very few and rare conditions.’
“The quantities of cannabis required to produce such medicines in use and for further research does not necessitate it to be grown in large tracts of land in Sri Lanka, when other countries are currently producing hundreds of tons of this substance for the same purpose.”
Adding weight to the argument, they note that global trends are moving in the opposite direction to Sri Lanka’s proposed expansion, “In fact, the amount of cannabis grown for medicinal and pharmaceutical purposes has significantly decreased since 2021, according to the International Narcotic Control Board.” This discrepancy has led the SLMA to question whether the term ‘medicinal use’ is being used misleadingly to justify large-scale commercial cultivation that goes far beyond legitimate pharmaceutical needs.
Equally troubling to health professionals are fundamental questions about Sri Lanka’s capacity to maintain the secure, controlled cultivation that such policies require. The letter points to existing enforcement challenges as evidence that containment promises may be unrealistic. “We are of the view that, ‘secure’ plantations of any sort are practically impossible to operate in the context of Sri Lanka. Currently the enforcement agencies seem unable to address even the widespread availability and use of cannabis and other illegal drugs in the country.”
The Alcohol and Drug Information Centre reinforces these enforcement concerns, drawing parallels to other controlled substances that have proven difficult to contain despite legal restrictions. “Given that alcohol, tobacco, and other illicit drugs are already accessible in Sri Lanka despite legal restrictions, what guarantees can be offered that cannabis cultivation will remain confined to so-called ‘safe’ and controlled zones?”
Foot in the door
Professionals are also drawing lessons from international experience, with Dr. De Silva highlighting a concerning pattern where cannabis policies evolve beyond their original scope. “Not export; the mere concept of ‘medicinal cannabis’ ended up giving way to so called recreational use – and that has happened in all the Western countries including US, Canada, and Australia. This is the ‘foot in the door’. The next step would be to make products available in the local market. When export markets fail, as happening now, the domestic market gets saturated.”
Dr. De Silva’s concerns are reinforced by evidence of regulatory failures even in countries with advanced oversight systems. According to the Australian Health Practitioner Regulation Agency’s official website, cannabis companies have been fined for unlawful advertising, while regulators warn that profits are often placed above patient safety. They highlight aggressive and misleading promotions aimed at vulnerable groups, and notes troubling conflicts of interest where some prescribers are tied to businesses that dispense only cannabis products. If such risks emerge in a tightly regulated environment, it raises a pressing question as to how can Sri Lanka, with its comparatively weaker regulatory mechanisms, hope to manage the dangers of commercialisation?
Beyond economic doubts, medical concerns add another layer of resistance. Dr. De Silva cautions that teens and youth risk losing up to 10 IQ points due to cannabis exposure, while sexual dysfunction among users is increasingly recognised as a medical issue. SLMA stresses that cannabis use is linked to mental disorders, including depression and schizophrenia, cannabis use disorder, serious lung ailments, and long-term harm to adolescent brain development, and is associated with self-harm, suicide, and road traffic accidents, further straining an already burdened healthcare system.
Drawing on outcomes in countries that expanded access, Dr. De Silva adds that rising consumption has driven hospital admissions and demand for mental health services, cautioning that, much like alcohol, the tax revenue rarely covers even the visible health costs.
Is it a global strategy?
ADIC identifies a broader pattern where the international cannabis industry, facing financial challenges in established markets, is targeting developing countries with economic difficulties. The organisation notes that ‘the global cannabis industry, supported by influential figures such as George Soros, has sought to reframe cannabis as a purely economic product’ capable of generating export income.
“By introducing the idea of ‘controlled cultivation for export,’ they aim to normalise and expand legal production as part of a long
-term strategy to achieve full legalisation,” ADIC warns.
The tobacco and alcohol industries have also made significant investments in cannabis companies, despite those firms reporting substantial losses. SLMA calls this a clear indication where such promised ‘investments’ are heading.
Critical policy questions
ADIC has presented several fundamental questions about the policy’s foundation:
– Has independent market analysis been conducted to assess realistic profitability and foreign exchange benefits, particularly given global price declines?
– Can Sri Lanka realistically compete with established producers like China and the Netherlands, especially given current market saturation?
– Does Sri Lanka have the pharmaceutical and agricultural infrastructure to meet demanding international export standards?
– Have high-value alternative crops been considered that might offer more reliable returns with lower regulatory complexity?
– Which countries have successfully addressed foreign exchange issues through cannabis cultivation, given the mounting evidence of market failures?
Both ADIC and the Sri Lanka Medical Association have urged the Government to reconsider the cannabis policy, citing significant risks to public health, social stability, and local economic interests. If established markets like Australia have seen foreign companies dominate and overwhelm local growers, what guarantees exist that Sri Lanka’s farmers and entrepreneurs will fare any better? Critics question why, if cannabis cultivation truly holds economic potential, local communities should not be the primary beneficiaries, rather than foreign investors who may profit while Sri Lankans provide the land and labour.
“We sincerely hope that you would not support the cannabis multinationals to expand their market and increase their profit, by allowing them to take this crucial step to unlock the door to further dismantling of laws and regulations that are protecting the people of this country,” the SLMA stated. “The process, which has been set in motion by your government, will ultimately cause significant health and social harm and untold misery to the people of Sri Lanka which they do not deserve.”
Rather than rushing into unproven export markets, a more cautious, evidence-based approach would safeguard local stakeholders, ensure sustainable economic benefits, and prevent the public health and social risks that have emerged in other countries pursuing similar policies. In balancing ambition with prudence, Sri Lanka has the opportunity to develop a model that protects its people while exploring legitimate avenues for growth.
Sources:
– Sri Lanka Medical Association. “Government Approval for Cannabis Cultivation in Sri Lanka.” Official Statement, 18 August 2025.
– Alcohol and Drug Information Centre. “Is permitting Cannabis cultivation a viable path to national economic growth?” Media Release, 13 August 2025.
– Australian Health Practitioner Regulation Agency. (n.d.). What is the framework for medicinal cannabis prescribing in Australia? Ahpra.
– Daily Mail Reporter. (2021, August 8). Puffed out! Canada’s legalized weed business flops with rush to grow the drug resulting in a 1.1 billion gram marijuana mountain that can’t be sold as half of all cannabis is still bought illegally. Daily Mail.
– Australian Broadcasting Corporation. (2025, April 29). Concern over possible link between medicinal cannabis and psychosis [Audio podcast]. ABC Listen.
