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India's Hidden Gems: The Cannabis and Hemp Industries

In this article, we look into the possible effects of decriminalizing cannabis and the economy behind one of India’s biggest yet ignored industries. We also talk to the Chief Business Officer of OGHemp India, about the economic side of the industrial hemp industry.

Historically, cannabis has always been consumed in India, even though it had to be criminalized due to international pressure from the US. Now, some states in India have been slowly moving ahead with policy changes and the development of their hemp and cannabis industries.

In the United States, the legal marijuana industry was worth over $13 billion in 2019, with 340,000 jobs across the industry. In the last 2 years, that number has only grown, making the cannabis industry the forefront of the new world economy. Legalizing cannabis in the US could add $128.8 billion in tax revenue and an estimated 1.6 million new jobs.

Cannabis is one of the most consumed substances in India after alcohol, with an estimated 30-40 million people reporting having used some form of cannabis in the last 12 months. Experts believe this data is inaccurate and the actual number of users is much higher than reported.

Out of the 600 districts in the country, about 400 have continued to cultivate cannabis, ignoring the criminalization of cannabis in 1985. Many claim it to be hypocritical and damaging to small-scale buyers and sellers. Economic experts also suggest the same, saying that cannabis could be one of India’s biggest illegal industries. Despite its illegal classification, cannabis and its derivative narcotics are readily available on the streets.

Besides personal consumption of cannabis, the cannabis industry in India has estimated that unless the government allows research, development, and export of cannabis seeds, the economy might miss out on as much as $25 billion. India should be concerned about the fact that countries like China and Pakistan are pouring huge amounts of money into scientific research and development.

Many pro-legalization groups have also cited the obvious medical effects of cannabis as a pro for legalizing it. Many western countries have already widely legalized medical marijuana.

Even besides the consumption of cannabis products, another large yet hidden industry is hemp products. The main selling point for industrial hemp products is that they would greatly mitigate the climate crisis.

Hemp absorbs 22 tonnes of CO2 per hectare which is higher than most trees or crops. Hemp fibers can be used to create plastic-type materials which are 100% biodegradable. Since hemp naturally resists pests, it removes the need for pesticides that contaminate water bodies and even help the soil retain fertility.

Industrial hemp farming obviously has the potential to be an economic winner industry for India, but lawmakers and even farmers haven’t been able to realize this potential yet. But that could all change within the next 5-10 years.

The Vastavik talked to Sarabjeet Rattan, Chief Business Officer of OG Hemp India, about the economic side of the hemp industry.

The data says that the global hemp industry will be worth $16 billion in 2027. Do you agree with that evaluation?

I think that this number is quite achievable, there’s only a few select products factored into this and t there’s much more research happening into different applications of industrial hemp, so the growth could happen at an even higher rate. Recently, in the US and even in other countries, there’s been a lot of regulatory change.

How much would India contribute to the $16 billion industry?

If you would have asked me this question a few years ago, it would be a very different answer. But in recent years, US, China and even South America have all been making policy change to legalize industrial hemp farming. So i think we can play a big role since policies are shaping up.

Do you think that hemp production or even cannabis will be legalized in India within the next 10 years?

I think 10 years is too much time, it will be earlier. Right now, the amount of companies in this space has never been higher, both in India and across the world. There’s also much more funding in this space now.

Do you think that investors, especially institutional investors, feel uneasy while investing into the field due to the legal challenges and social stigma of cannabis in India?

To tell you the truth, there are investors who probably wouldn’t be comfortable due to the taboo and stigma, but we found over 300 firms that invest solely in the cannabis/hemp markets. There are even foreign investors who see India as an emerging market. But there are also Indian investors who see that this is a growing industry in the rest of the world, and there’s a shift in the local investors too. At least they know what industrial hemp is now, compared to a few years ago.

Countries like China are devoting billions of dollars to the development, research, and export of hemp, so do you think India is performing adequately right now?

In terms of the bureaucracy, the policies are still not favorable for us, we are lagging a bit, but there are even developing countries in Africa that have made policy changes, so I definitely think India can do it. The realization is already there, it’s just the matter of transforming it into a set of regulations. So if there is something that changes the policies which are hampering our growth, India could definitely be one of the biggest exporters of raw hemp and even hemp products.

Data shows that legalizing cannabis in the USA could add $130 billion in tax revenue, do you think India has that potential, considering both countries have 30-40 million cannabis users?

This starts from farming. Right now, Uttarakhand has 10,000 hectares assigned to hemp farming. And as policies start favoring the industry, more farmers would start growing cannabis since it’s a cash crop and it has a wide variety of applications. I read somewhere that California’s cannabis tax was over $200 million, which is larger than even the next 3 tax categories. And I think the figures are a bit skewed in India because we have 4 times the population and many more recreational cannabis users than them. I think most people wouldn’t report using cannabis because of the stigma around it and its illegality. I think you can multiply it by 2 for a more accurate number.

Could India become a global player in this industry, considering the price and quality advantage it has over countries like the USA?

There’s a specific GMO when it comes to industrial hemp, which is just being de-regulated in India. When it comes to the US being pricier for fiber, I think that’s not completely true, they have those mega farms with harvests thrice a year, and for now, we get similar rates. But that’s when India isn’t growing it at a good pace, because when we start looking at it as an export-oriented crop, we could definitely surpass Western countries. We anyways are an agriculture-based economy, it is one of our biggest strengths.

OG Hemp India is a company that focuses on deriving paper from industrial hemp and using it to create products such as notebooks, reusable bags, etc.

So, in conclusion, industrial hemp and cannabis are industries with huge economic potential and many countries are on the verge of realizing this potential. India’s biggest strength here is its huge consumer base for cannabis and hemp-related products as well as India’s pre-existing agricultural strength. Experts believe that within the next 5-10 years, the government will implement policy changes that would greatly favor these industries and we might not be too far from full legalization of cannabis.


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