The Government of Zimbabwe has identified the great potential that cannabis production has to generate export receipts and tax revenues, it estimated that the cannabis sector could earn up to US$1,25 billion in exports in 2021 hence, becoming one of the leading single foreign currency earners in the country. Pursuant to the Finance Minister’s Proposal of the cannabis levy in the 2021 National Budget Statement that was delivered on 26 November 2020, progressive steps have been made and a law has been passed giving a guideline on collection of tax on exportation of medicinal cannabis.

Section 24 of the recently enacted Finance Act No.2 of 2020 gives effect to an amendment of the Value Added Tax Act to include a guideline on the collection of tax on exportation of medicinal cannabis under section 12 F of the Value Added Tax Act. For the purposes of the Act ‘medicinal cannabis’ therefore includes the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts and salts of isomers, with a delta-9 tetrahydrocannabinoid concentration of not more than 0,3% on a dry weight basis; and in respect of the cultivation or other dealing with or in which a permit has been issued in terms of the Agricultural Marketing Authority (Industrial Hemp) Regulations, 2020 (Statutory Instrument 218 of 2020), or any other law that may be substituted for the same;

In terms of the newly amended section 12 F (2) tax will be chargeable on the value of exports, at varied rates of tax that correspond to the level of processing, that is:

•  ten per centum on the export sale value of finished packaged medicinal cannabis oils that are ready for resale shall be levied on a supplier of such product for export from Zimbabwe;
• fifteen per centum on the export sale value of bulk extracted medicinal cannabis oils that require further processing or packaging shall be levied on a supplier of such product for export from Zimbabwe;
•  twenty per centum on the export sale value of dried medicinal cannabis flowers shall be levied on a supplier of such product for export from Zimbabwe.

Tax regulation on exportation of medicinal cannabis means that there will be an increase in government revenue which will have a multiplier effect on the Gross National Product. Therefore, this tax policy is an effective tool for economic recovery and growth and whether the figures projected by the Minister are achieved or not, there is still much potential to earn revenue through cannabis exportation.