New Endeavors: Creating Innovative and Sustainable Value Chains in Licit Cannabis Markets
The emerging global market for medicinal cannabis and industrial hemp products holds promising economic opportunities for Malawi. Farmers and authorities are all set to take Cannabis value chain to higher levels.
Cannabis is an important crop in Africa. It provides income to rural communities and people who distribute and sell it in urban areas. However, most of this income still stems from illicit activities. Currently, an estimated 25% of globally traded cannabis is produced on the continent. Malawi is one of the largest producers of cannabis in Southern Africa.
Meanwhile, the country is facing economic challenges due to the drastic decline in demand for tobacco, its main export crop. Therefore, cannabis serves as a much-needed income source for rural farming communities in areas where legal agriculture has become economically or ecologically unsustainable. Due to persistent illegality, growers long had to cultivate small fields in inaccessible areas in order to avoid prosecution, often complicating their access to public services and sometimes taking a toll on the environment.
In 2020, however, Malawi took an important step by amending its cannabis legislation in a quest to explore new economic pathways. The new law paved the way for legal cultivation, production, processing, and export of medicinal cannabis as well as hemp for industrial purposes. With the Cannabis Regulatory Authority (CRA), the act also established a new entity to oversee this nascent market.
Sustainable and equitable value chains
As Malawi strives for new economic opportunities, participation in the global medicinal cannabis value chain could prove a promising way forward. The market for high quality medicinal cannabis products is rapidly growing on a global scale. According to experts, it moved US$ 9 billion in 2020 and could reach US$ 49 billion by 2028.
Besides their medicinal use, cannabis and hemp are increasingly sought-after, versatile products that can be used in textiles, construction materials, cosmetic oils and for many other purposes. By participating in this global value chain, Malawi could diversify its economy and support cannabis small farmers in their transition towards licit livelihoods. Hemp products can also be marketed and used on the domestic market and may thus substitute some currently imported products.
Crucially, Malawi offers environmentally friendly conditions for outdoor cannabis growing which consumes about 98 % less energy, requires less fertilisers – thereby reducing production costs as fertiliser prices are very high in the country – and emits less greenhouse gases compared to indoor cultivation. Cannabis farming has a long tradition in Malawi and many rural farming communities are keen to contribute their knowledge and become part of the country’s transformation towards a legal export market.
How does the GPDPD support?
This transformation, however, requires further support, infrastructure, and institutional capacities. The administrative support systems for the new value chains are still in their infancy stage. Yet, Malawi’s cannabis farmers need access to technical knowhow, seeds, and many other inputs.
Without industrial capacities, favorable investment conditions as well as access to land and financial services, rural farmers run the risk of being excluded from the new legal market. To ensure participation of rural communities, an adequate support infrastructure needs to be in place. For this reason, Malawi has been looking for guidance on what policies to adapt and which regulatory steps to take.
Since 2023, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), the GPDPD has been working with Malawi to support the country’s budding cannabis institutions, especially the Cannabis Regulatory Authority (CRA). Our objective is to provide strategic advice and capacity development to strengthen the in-house expertise of Malawian authorities, all while ensuring the inclusion of small farmers and responsible private sector stakeholders in the process. The ultimate goal is to establish an equitable and sustainable cannabis value chain in Malawi that offers new opportunities. With the right policies, regulatory steps, and support infrastructure in place, Malawi could become a leading player in the global cannabis market.