Cannabis has a deep cultural and medicinal history in Sri Lanka. Locally known as kansa, for the plant, and Ganja, for the flowering head, it is valued in Ayurvedic medicine for its therapeutic properties.

In a landmark move aimed at boosting foreign exchange earnings, the Sri Lankan government has for the first time approved foreign investment in cannabis cultivation under strict legal and regulatory conditions, officials announced this week.

Former Commissioner General of the Ayurveda Department, Dr. Dhammika Abeygunawardena, confirmed that seven foreign investors have been granted permission to legally cultivate cannabis in Sri Lanka for export purposes only. The approvals were issued under the Board of Investment (BoI) framework after a rigorous selection process that shortlisted the applicants from a pool of 37 proposals.

“This is the first time such an initiative has been authorised,” Dr. Abeygunawardena said, adding that the licences come with stringent controls to ensure compliance with local laws and international export regulations. Each investor has been issued a temporary six-month licence, with the possibility of renewal depending on progress reports and adherence to guidelines.

High Investment Threshold and Security Requirements

Under the project’s terms, each investor is required to make a minimum capital investment of USD 5 million and deposit a USD 2 million bond with the Central Bank of Sri Lanka as a performance guarantee. A total of 64 acres of BoI-controlled land in Mirigama has been allocated for the initial phase of cultivation.

To prevent diversion into the domestic market, all cannabis grown must be exported exclusively for pharmaceutical production and testing. None of the crop, including seeds, leaves, or roots, can enter the local supply chain.

The cultivation sites will be surrounded by secure fencing, and investors are obligated to arrange protection from the Special Task Force (STF) and local police. The BoI, Ministry of Public Security and Parliamentary Affairs, Ministry of Environment, and Department of Ayurveda will jointly oversee operations.

“We have placed the highest emphasis on security, traceability, and the lawful end-use of the product,” Dr. Abeygunawardena stressed. “There is zero tolerance for leakage into the domestic market.”

Economic Opportunity Amid Crisis

Cabinet Spokesman and Media Minister Nalinda Jayatissa described the decision as part of a broader push to leverage niche agricultural exports for economic recovery. Sri Lanka continues to face acute foreign currency shortages following its 2022 debt default and ongoing balance-of-payments pressures.

“This process began in 2004 and has now reached the implementation stage,” Jayatissa, who also serves as Health Minister, told reporters at the weekly Cabinet briefing. “Strict safety procedures are in place, and this initiative offers an opportunity for the country to earn valuable foreign exchange.”

The licences must be renewed every six months, a condition intended to ensure constant oversight and accountability.

Targeting Lucrative Global Markets

Medicinal cannabis is a fast-growing global industry, particularly in Europe and North America, where legalisation for therapeutic use has created significant demand. Authorities believe Sri Lanka’s tropical climate, agricultural expertise, and Ayurvedic tradition could give it a competitive advantage in supplying high-quality medical cannabis to international markets.

The previous government had already proposed regulated cultivation of medical-grade cannabis for export, but the idea had stalled due to regulatory hurdles and public debate over potential social and ethical impacts.

“This is not about promoting drug use,” Dr. Abeygunawardena said. “It is about producing a controlled, pharmaceutical-grade product for legal markets abroad.”

Cannabis in Sri Lanka: A Complex History

Cannabis has a deep cultural and medicinal history in Sri Lanka. Locally known as kansa (for the plant) and ganja (for the flowering head), it is valued in Ayurvedic medicine for its therapeutic properties. Ancient Sanskrit and Sinhalese terms such as virapati (“hero-leaved”) and ananda (“bliss”) reflect its traditional uses for pain relief, mood enhancement, and other medicinal applications.

The plant was criminalised under the Poisons, Opium and Dangerous Drugs Ordinance of 1935, but subsequent amendments allowed its use for medical purposes under licence from the Ministry of Health. The Ayurveda Act enables licensed practitioners to obtain cannabis for manufacturing approved remedies.

At present, the state-owned Ayurvedic Drugs Corporation is the only legal supplier on the island, sourcing most of its cannabis from police seizures of illegal shipments. With an estimated 16,000 registered Ayurvedic practitioners, demand for fresh, high-quality cannabis far outstrips the available legal supply, which is often old and degraded by the time it reaches them.

Balancing Opportunity and Regulation

The move to permit foreign-invested cultivation is expected to be closely monitored by both regulators and the public. While supporters argue it can open a valuable export stream and position Sri Lanka as a global medicinal cannabis supplier, critics caution against potential risks, including regulatory lapses and domestic misuse.

Sri Lanka’s law enforcement agencies have historically prioritised preventing sales to minors and cracking down on vendors operating near schools. Possession of less than 5 kg is treated as a minor offence, but trafficking and unauthorised cultivation remain criminal acts.

The government insists the new scheme will not weaken these protections. “This cultivation is exclusively for export under strict BOI and Department of Ayurveda control,” Minister Jayatissa reiterated. “There will be no local consumption from these projects.”

A Step into the Future

For Sri Lanka, the initiative marks both a break with colonial-era prohibitions and a modern economic experiment. From the 17th-century trade observed by Portuguese chroniclers, to Dutch and British restrictions in the 18th and 19th centuries, to today’s tightly regulated medicinal framework, cannabis in Sri Lanka has been shaped by a long interplay of culture, commerce, and law.

With the first licences now issued, the country steps into uncharted territory — one where ancient Ayurvedic traditions meet the modern pharmaceutical export market, and where the challenge will be balancing economic ambition with public health and security.

If successful, officials believe the project could expand, drawing more investment and making medicinal cannabis a significant niche export alongside tea, spices, and rubber.

“This is about innovation within our legal and cultural frameworks,” Dr. Abeygunawardena said. “It is a chance to show the world that Sri Lanka can produce the highest-quality medicinal cannabis while upholding the strictest standards of control.”