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Can Hemp make India rich?

Posted on by Vishal Vivek

Can legal cannabis make India rich?

Imagine a plant.

A plant that has been misunderstood, maligned, and outlawed.

A plant that, despite all odds, is making a comeback. This is the story of hemp, a close cousin of cannabis, but without the high.

Picture this: the United States once turned its back on hemp. But not anymore. The 2018 Farm Bill changed everything.

It differentiated hemp from its psychoactive cousin, cannabis, and opened the doors for an industry that had been waiting in the wings.

And today, the USA makes millions from hemp.

In a few years, it’ll be making billions.

Why shouldn’t India?

Table of Contents

Through the course of this article, we will cover the following topics:

  1. Economic Benefits of Legal Cannabis
  2. Employment Benefits of Legal Cannabis
  3. Entrepreneurship Benefits of Legal Cannabis
  4. Restrictions On Legal Cannabis
  5. The Future of Legal Cannabis

Note: Let me clarify what I mean by legal cannabis.

In the USA, ‘legal cannabis’ can mean a variety of cannabis plant, with a state or centrally defined THC limit. It could even be used to get ‘high’. But that’s not the whole story.

In India, we’re far from legalizing recreational use of cannabis. Here, when we say ‘legal cannabis’, we’re talking about a different character altogether. We’re talking about hemp, a special variety of cannabis plant, which can not get you high.

Hemp is a powerhouse. It’s a plant that can be transformed into a myriad of products. It’s the seed of an industry waiting to bloom. And it’s about time we give it the recognition it deserves.

So, when we talk about ‘legal cannabis’ in India, remember, we’re talking about hemp. We’re talking about potential. We’re talking about change.

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What can legal cannabis do for the economy?

Legal cannabis has an impact well beyond tax revenue. The potential economic benefits of legal cannabis are:

  1. Increase The State (Tax) Revenue: Picture this: a shadow trade, thriving in the underbelly of India. Cannabis, exchanged in hushed whispers, away from the prying eyes of the law. We’re so afraid of it, that we outlaw everything about it. What if we could keep the high-giving cannabis and the wonder-crop cannabis ( I mean hemp) apart?. Suddenly, there’s a surge of revenue. Money that can be funneled into public services, healthcare, infrastructure. Money that can make difference. Crafting a tax policy? It’s not rocket science. We’ve done it before with tobacco products. It’s a blueprint, ready to be used. And the best part? Those once labeled as criminals, now contributing taxpayers. A transformation, a win-win. From shadows to light, from crime to contribution. It’s not just possible, it’s within our grasp. Real World Example: For example, in the USA, states have just passed over $15 billion in state (tax) revenue from Cannabis products since 2014. Colorado alone has surpassed a billion dollars in state revenue too, says CNBC. India could be missing out on similar numbers, too. Financially, the legalization of cannabis makes nothing but sense.
  2. It Benefits The Local Communities: In the remotest mountain villages of India, economies don’t thrive. Hemp can change that. Hemp can get all remote India on the economic map. Jobs will sprout up like seedlings after the first monsoon rain. But that’s just the beginning. Legal hemp means investment. It means infrastructure development. It means a surge in economic activity. Picture a small business, once struggling now thriving in the wake of this green wave. That’s the ‘multiplier effect’. It’s not just about the plant; it’s about the community. It’s about growth, prosperity and a future build on green. Real World Example: In India, the main state where cannabis is farmed to make hemp products is Uttarakhand, mainly because of other states don’t allow the plant to be farmed. In the short five years since cannabis farming has been made legal in the state, the expected revenue from Hemp Products sales has been projected to be INR 240 crore (about USD 30.5 million).
  3. It Helps Diversify The Economy: Let’s take a detour to the tea gardens of Assam or the textile mills of Surat. These regions, while rich in their respective industries, lean heavily on these singular sectors. It’s a delicate balance, like a tightrope walker with a single safety net. Now, imagine introducing a new player to this economy cricket team: hemp. Suddenly, the economic landscape begins to shift. A whole new sector sprouts up, diversifying the economics portfolio, adding another safety net. The result? An economy that’s not just vibrant, but also resilient. It’s a transformation, a rebirth. From a mono-industrial landscape to a diversified economic panorama, all thanks to the power of a humble plant: hemp. Real World Example: The Uttarakhand economy depends almost solely on agriculture, forestry, and manufacturing. The creation of a legal cannabis Hemp Industry within the state has led to the creation of an export sector, both within the country, as well as to countries such as the US, Canada, New Zealand, and other European countries. This is, of course, in addition to the jobs that came from the transport/logistics needed, the actual farming, the processing, and the retail distribution network that came with setting up the industry within the state.

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What can legal cannabis do for employment?

Of course, the creation and introduction of a whole new industrial sector brings with it a wealth of jobs. The employment benefits of legal cannabis are:

  1. Direct Job Creation
    From the fields to the factories, from the storefronts to the offices, hemp is a job creator. Take the cultivators, for example. These are the folks who plant the seeds, tend the crops, and harvest the bounty. They’re the backbone of the hemp industry, the start of the supply chain. Then there are the processors. They take the raw hemp and transform it into a myriad of products. Oils, fibers, seeds – each one requires a skilled hand to produce. Manufacturers take these processed goods and turn them into the products we know and love. Clothes, food, building materials – the list is as diverse as it is long. Distributors ensure these products reach the retailers, who in turn make them available to the consumers. And let’s not forget the ancillary service providers – the marketers, the lawyers, the consultants. Each one plays a crucial role in this burgeoning industry. And the best part? These aren’t just jobs; they’re careers.  They’re opportunities for people to learn, grow, and contribute to an industry that’s not just profitable, but sustainable. It’s a green revolution, and it’s just getting started. Real World Example: We turn to the country that has (arguably) had the best implementation of the legalization of cannabis, the USA.  No rhetoric, only numbers: The legal cannabis sector in the USA accounted for 428,059 jobs in 2022 alone.  This number comes from the research firm, Whitney Economics, in partnership with Leafly. You can view the full report of Cannabis job creation in the USA at this link.
  1. Indirect Job Creation: Like we mentioned, the legalization of cannabis brings with it a whole lot of auxiliary jobs, in addition to the legal cannabis sector itself.  Real World Examples: Other than the direct employment opportunities that come with the legalization of cannabis in an economy, several other jobs could be created.

Some real world examples of these are:

  1. Security, transportation, and logistics jobs: Associated jobs with the supply chain and retail chain of the legal cannabis industry.
  1. Construction and real estate jobs: this would include things like architects, engineers, construction workers, electricians, plumbers, and other skilled workers.
  1. Tourism and hospitality jobs: The legalization of cannabis has a high possibility of boosting tourism. This would lead to job markets such as hotels, cafes, restaurants, and tour operations.
  2. Research and development jobs: as the economics of scale begins to kick in with the legal cannabis industry, there will be a higher focus on things like methods of extractions, cultivation, product formulation, and the like.

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What can legal hemp do for entrepreneurship?

The economic benefits of legal cannabis? Check. The employment opportunities? Check. Combine these two, and you’ve got a recipe for entrepreneurial growth. It’s a seedbed of innovation, a hotbed of opportunity.

Legal cannabis flings open the door to a world of possibilities. Consulting firms advising on best practices. Innovative startups creating hemp-infused products. R&D outfits pushing the boundaries of what’s possible with hemp. Niche businesses catering to specific needs.

Think of hemp accessories and clothing, CBD wellness products, hemp food items. Each one is a potential business, a potential success story.

And the technology? It’s advancing at a breakneck pace. Harvesting tech, growth tech, manufacturing tech – each one is a piece of the puzzle, each one is an opportunity.

Governments could fan these entrepreneurial flames. Subsidies, easy licensing, benefits for employing local communities – these are all tools in the arsenal, ready to be deployed.

Real World Example: Look at Washington. In the short time since the legalization of cannabis in the state, there are now over 580 cannabis related startups in the state, alone. 

You can find the extensive list, and the tax contributions of these businesses at this link.

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Restrictions On Legal Cannabis

Countries either love the cannabis industry, or they don’t — there is very little in-between.

Any would-be cannabis entrepreneurs are severely deterred by the lack of public support, as well as legal restrictions placed upon them by their various governments.

Real World Example: In India, the legal cannabis industry is still very much in the embryonic stage. The country’s food regulator, FSSAI (similar to the FDA) has recognized hemp seeds as a food product, but that’s about it. 

Granted, a lot can be done with hemp, from clothing to food, but again, the country is missing out on a lot of potential revenue from other parts of the cannabis industry.

Even with the full recognition of hemp products, there are still a lot of restrictions on the final produce. For example:

  1. No hemp-based products may be marketed with images of any part of the cannabis plant.
  2. No hemp-based drinks may have more than a very minimal amount of THC in them.
  3. No hemp based product packaging may mention the word “cannabis” or “marijuana” anywhere.

These are just three of the restrictions placed on hemp products in India. The full list of restrictions is so extensive that we have a whole separate article on it.

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The Future of Legal Cannabis

The journey to legal cannabis is a marathon, not a sprint. We’re not there yet, but we’ve come a long way. The past decade has seen a shift, a softening of stances, a series of small victories.

Look at the USA, where the industry is now fully legal. Or India, where hemp-based food has been given the green light. Even the fabric and clothing industries are starting to weave hemp into their narratives.

People’s perceptions are changing. They’re seeing beyond the stigma, beyond the misconceptions. They’re seeing the potential of legal cannabis, not just as a medicinal narcotic, but as an economic powerhouse.

And as minds change, so do laws. The legal landscape is shifting, slowly but surely, in favor of the cannabis industry.

Yes, the road to full legalization is still long and winding. But the future? It’s as bright as a field of hemp under the summer sun.

Appendix

Sources:

Vishal Vivek

Vishal Vivek is the CEO and Founder of Ukhi . Ukhi makes agri waste-based granules that are alternative to plastic. It can be used on traditional plastic machines to make injection molded daily use articles, stretched sheets for packaging like polybag, and single use vacuum forming products like plates, containers and does not require special investment by industry to adopt. It can also be drawn into textile fibers and textile fabrics that have fashion, medical and industrial use. https://www.ukhi.org/