Forget marijuana licence if you don’t have buyers, says government

As Cabinet convenes tomorrow to approve the new guidelines for marijuana growing, ministers have proposed a new pre-licensing regime that requires investors in the country’s nascent marijuana industry to secure buyers before they are given licenses.

Sunday Monitor understands that the new proposal to the Cabinet sub-committee on marijuana came from the National Drug Authority (NDA) and Health ministry.

The architects of the new proposal hope that such a radical measure would streamline things and help the government kick out speculators in the multi-billion medical cannabis industry.

“We need serious people, not vendors. We don’t want people who are going to get clearance and then start vending medical cannabis licenses….We want serious investors who are going to produce cannabis for medical purposes only,” the NDA chairman, Dr Medard Bitekyerezo, explained.

Under the proposed revised guidelines for marijuana business, the more than 100 companies and individuals with pending applications, will be asked to present evidence of marijuana buyers before getting licenses for growing or exporting marijuana products.

Sources close to the Cabinet sub-committee on marijuana told Sunday Monitor that discussions are ongoing to decide whether all those who had applied should be asked to re-submit applications with “mandatory offtake agreements”. These agreements take months or even years to negotiate. The agreements are entered between producers and buyers to buy or sell a certain amount of future production.

They are usually negotiated long before the construction of a facility to guarantee a market for the facility’s future production and improve the chances of getting financing for the installation concerned.

Other requirements

The requirement for offtake agreements comes hardly a month after the Cabinet sub-committee on medical cannabis proposed a minimum capital of $5m (Shs18.3b) and a bank guarantee of Shs4b.

They had also demanded a tax clearance certificate from the Uganda Revenue Authority, lists of employees and their job descriptions, a valid trading license, evidence of value addition to cannabis and audited accounts. The other requirement is to ensure that marijuana farms or sites are not located near schools, hospitals, and residential areas and in case of any associates/business partners, the details must be disclosed to the government, including site designs, a robust security system with access control systems and intrusion.

Growing of cannabis for treating severe medical conditions such as cancer, Parkinson’s disease, Alzheimer’s disease, arthritis and other neurological conditions is already happening in Uganda even as other investors continue to complain about the Cabinet delays.

The Health Minister, Dr Jane Ruth Aceng, is expected to present the new guidelines and a confidential list of more than 100 companies and individuals seeking government permission to grow and export cannabis for medical purposes.

Background The Narcotic Drugs and Psychotropic Substances Act, 2015, allows the cultivation, production, and exportation of medical marijuana and mandates the Health minister to issue written consent for medical marijuana.

However, Dr Aceng has since April last year kept the companies guessing due to the absence of guidelines for the new industry. Cabinet has for the last five weeks been postponing debate on the matter, pending approval of the draft guidelines.

Ms Robinah Nabbanja, the State Minister of Health (General Duties) explained how coronavirus, locust invasion, and other urgent emerging issues diverted Cabinet's attention and reiterated that the proposed guidelines will be discussed and approved by Cabinet before going to Parliament.