Kathmandu, November 3, 2026 - Nepal could be on the verge of opening a new chapter in its agricultural, medicinal and industrial sectors as growing calls for regulated cannabis cultivation gain momentum following a landmark Supreme Court directive requiring the government to establish a legal and regulatory framework for its controlled commercial production.
The Supreme Court has directed the government to formulate the necessary regulations, standards and procedures within three months to facilitate controlled cannabis cultivation and production for medicinal, scientific, agricultural, horticultural and industrial purposes.
The ruling was issued on May 18, 2025, by a division bench of Justices Nahakul Subedi and Til Prasad Shrestha. However, the full text of the verdict became publicly available only recently, on November 1, 2026.
The court instructed the government to introduce licensing arrangements and strict monitoring mechanisms covering cultivation, production, processing, storage, use, sales, distribution, import and export of cannabis for permitted purposes. It also emphasised that unauthorised cultivation, production and distribution must remain prohibited.
Importantly, the court did not order the legalisation of recreational cannabis use. Instead, it asked the government to undertake broader consultations with experts and relevant stakeholders before considering any changes to the law concerning recreational consumption.
A long-standing legal restriction and an emerging opportunity
Cannabis cultivation and trade have remained largely prohibited in Nepal under the Narcotic Drugs (Control) Act, 2033 (1976). Despite the country's historical association with cannabis and its natural availability in several geographical regions, the absence of a comprehensive regulatory framework has prevented Nepal from systematically exploring its potential for legitimate medicinal and industrial applications.
For decades, cannabis has been used in different traditional and cultural contexts in Nepal. However, its classification and regulation under narcotics legislation have restricted the development of a formal commercial industry.
The Supreme Court's recent directive has brought renewed attention to the government's responsibility to implement the existing legal provisions through appropriate regulations rather than allowing the sector to remain in a prolonged legal and administrative vacuum.
Gandaki Province takes a legislative initiative
A significant development has also emerged from Gandaki Province, which has formally opened the door to regulated cannabis cultivation for medicinal and industrial purposes.
In August 2026, the province authenticated the Bill to Regulate and Utilise Cannabis Cultivation for Medicinal and Industrial Purposes, establishing a licensing-based system for controlled cultivation.
The provincial legislation provides for designated cultivation areas, government supervision, monitoring mechanisms and restrictions on unauthorised production and distribution. It also seeks to create economic opportunities for farmers and promote the use of cannabis-derived materials in pharmaceutical and industrial manufacturing.
However, detailed implementation regulations and coordination with the federal legal framework remain important requirements. The Gandaki initiative does not amount to nationwide legalisation, and unauthorised cannabis activities remain subject to existing national narcotics legislation.
A rapidly expanding global market
The economic potential is attracting international attention. According to Statista's global market forecast, the worldwide cannabis market is projected to generate approximately US$79.5 billion in revenue in 2026, with the figure expected to increase to around US$114.35 billion by 2031.
The expanding market includes medicinal and pharmaceutical cannabis, recreational products and cannabidiol (CBD)-based products, depending on the regulatory frameworks of individual countries.
Nepal could potentially explore opportunities in this growing market through properly regulated industrial hemp and cannabis-derived products.
Potential products include hemp textiles, garments, ropes, paper, biodegradable materials, backpacks, seeds, seed oil, honey and other value-added agricultural products. Medicinal and pharmaceutical applications could also create opportunities for research, manufacturing and international trade, subject to appropriate scientific standards, licensing and legal approvals.
Opportunities for farmers, industries and rural communities
Nepal's diverse climatic conditions and agricultural landscape could offer opportunities for developing a regulated hemp and medicinal cannabis value chain.
If supported by scientific research, responsible farming practices, transparent licensing and market-oriented policies, the sector could contribute to agricultural diversification, rural employment, entrepreneurship and export-oriented industrial development.
Smallholder farmers, cooperatives, agricultural enterprises and pharmaceutical manufacturers could potentially benefit from a well-designed production and processing system.
However, realising these opportunities would require investment in research, quality testing, seed certification, product standardisation, processing facilities, market development and institutional capacity.
Environmental considerations should also remain central to the development of the industry. Sustainable cultivation, responsible water use, soil conservation and appropriate land-use planning will be necessary to ensure that economic benefits do not come at the expense of ecological integrity.
Regulation, public health and responsible implementation
Despite its economic potential, cannabis cultivation and commercialisation involve significant public health, social and regulatory considerations.
Legalising controlled cultivation for medicinal and industrial purposes must not be confused with unrestricted access or recreational consumption.
Strict licensing, traceability, quality control, THC-content testing, product safety standards and effective enforcement will be essential to prevent diversion into illegal markets and protect communities, particularly young people.
The government must also establish clear institutional responsibilities and coordinate federal, provincial and local authorities to avoid legal uncertainty and conflicting implementation practices.
Nepal must translate legal opportunities into practical action
The Supreme Court's directive and Gandaki Province's legislative initiative together represent important developments in Nepal's discussion on the future of the cannabis sector.
Nevertheless, the country's progress will depend on how effectively the government translates legal provisions into a transparent, accountable and scientifically grounded regulatory system.
Rather than allowing prolonged bureaucratic delays to undermine the opportunity, Nepal needs a coordinated approach that balances economic development, agricultural innovation, environmental sustainability, public health and legal accountability.
With appropriate safeguards and responsible governance, regulated industrial hemp and medicinal cannabis could emerge as additional avenues for rural economic development, value-added manufacturing and international trade.
For Nepal, the opportunity is not about promoting unrestricted cannabis consumption. It is about responsibly exploring the economic, agricultural, scientific and industrial potential of a plant through a clear legal framework that protects public health while creating sustainable economic opportunities.
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