An Update on Cannabis Industry Progression in Zimbabwe

by Tendai Nyamidzi | Aug 3, 2021 | 0 comments

Investments in medicinal cannabis are taken in both Industrial hemp and cannabis sativa. The Zimbabwe Investment and Development Agency (ZIDA) set up to promote and to implement investment promotion strategies for the purpose of encouraging investment in Zimbabwe is playing a significant role in the growth of the medicinal cannabis industry. ZIDA’s One-Stop Investment Services Centre (OSICS) is responsible for implementing set of policies and operational mechanisms for investment into cannabis production [1] In that regard, a legal instrument known as the Investment Stability Agreement (ISA)[2] was created by the government to support and give investors added security as well as to boost prospective investor’s confidence.

Investment Stability Agreement (ISA)
The ISA guarantees a constant and conducive operating environment for investors. It aims to create investment relationships between the Government of Zimbabwe and prospective investors as well to encourage investment protection, with a specific focus on the government’s promise of stability of legal frameworks and monetary reforms. In trying to attract and retain more investment into the cannabis sector, ZIDA through its Act and the ISA gives security to investors and guaranties potential investors.[3]

The assurances that the agreement provides include property rights against change in law and expropriation. The agreement also covers critical issues such as fiscal and monetary incentives, security sector agreements and land issues.[4] Prior in the old regime, investors were required to co-own investments with the government and locate their investments at government prescribed locations. However, Government policies have since shifted due to strong political will to develop the sector and the position is that, investors can now have “100% ownership of their investments and locate their facilities anywhere in the country without prescription”.[5] In other words, investors have an option to produce cannabis on either private land or land belonging to the Government based on terms mutually agreed by the landowner and the investor.

Guarantee against expropriation of investments
Section 17 of the ZIDA Act provides that “no – investment shall be nationalised or expropriated; and no investor shall be compelled to cede an investment to another person, either directly or indirectly through measures having an effect equivalent to nationalisation or expropriation; except for a public purpose, in accordance with due process of law, in a nondiscriminatory manner and on payment of prompt, adequate and effective compensation”[6] The Constitution of Zimbabwe also guarantee against expropriations of investments. The ZIDA Act and ISA addresses previous political risks which have been inherent in the investment environment. It is clear that the new regime appreciates the fact that there is greater need for stability hence, it is a requirement that every investor looking to invest in cannabis production signs the ISA.[7] According to ZIDA, upon signing ISA, the agreement set timelines up 6 months for investors to implement, that is, from the licensing stage to the production stage.[8] The setting of the timeline is also set to determine serious investors and to avoid investors from selling their licences which in any case prohibited.

Medicinal cannabis checklist
In light of ZIDA’s guidelines, the following requirements must be met in order for one to become an investor in cannabis production; a completed ZIDA application form for Medicinal cannabis licence accompanied by an application fee of US$11,250.00; upon approval of the application, payment licence fee of US$46,000.00; three copies of site plan of the proposed land to be licensed, and detailed security Plan Proof of Funds; detailed business proposal including financials and projections to be submitted to ZIDA and ISA to be signed with ZIDA upon issuance of licence.[9] It is important to note that Zimbabwe has the best and reasonable cannabis fees in the region.[10] To date over 55 licences have been issued to a few local investors and foreign investors from America, China, Sweden and to Zimbabweans abroad.[11]

Security forces, meaning the police and the army, shall be responsible for monitoring, enforcement and ensuring compliance, safety and security of the cannabis production sites[12]. Investors are expected to install smart technology on all medicinal cannabis production premises for security reasons.[13] To give back to its people and to promote local beneficiation, skill transfer and development of the local pharmaceutical industry, the government approved the establishment of the Cannabis Green Fund. The Green Fund will be financed from the 20% share of the medicinal cannabis levy. The 20% share shall be used to implement, monitor and evaluate medical cannabis projects as well as cover aspect of ISA and sponsoring research and development in the industry.[14] With that said everyone with capacity is permitted and encouraged to apply for licences to produce cannabis.