PESHAWAR – The Khyber Pakhtunkhwa (KP) government has officially slashed industrial hemp license fees and completely abolished excise duty on hemp seed oil. The decision, aimed at fostering “Ease of Doing Business,” aligns with a newly approved “Hemp Model” designed to streamline the cultivation and processing of cannabis for medical and industrial purposes.
While the provincial government has decided to temporarily defer the large-scale cultivation and processing of medical cannabis to refine the regulatory framework, it has introduced stringent measures to ensure compliance with international standards. According to official documents, the management of medical cannabis products will now be strictly governed by the standards set by the Drug Regulatory Authority of Pakistan (DRAP).
New Fee Structure and Financial Incentives
To attract investors and support the local economy, the high-level committee approved a significant reduction in various licensing fees. The updated costs are as follows:
| Category | Previous Fee | New Reduced Fee |
| Industrial Hemp Cultivation License | Rs. 600,000 | Rs. 500,000 |
| Cannabis Processing License | Rs. 1,500,000 | Rs. 1,000,000 |
| Hemp Processing License | Rs. 700,000 | Rs. 500,000 |
In a major fiscal relief for the sector, the government has totally abolished excise duty on industrial hemp and its seed oil, significantly lowering the entry barrier for manufacturers.
The “Hemp Model” and Industry Synergy
The committee ratified a comprehensive “Hemp Model” for the province, focusing on pharmaceutical and legal industrial use. Key pillars of this model include:
- Restricted Licensing: During the initial phase, the government will issue cultivation and processing licenses only to well-known and reputable industries.
- Industry-Farmer Collaboration: Licensed industries will operate within approved zones in partnership with local farmers.
- Flexible Registration: Farmers have the option to register as private individuals or form cooperative companies.
- Seed Importation: The responsibility for importing and certifying hemp seeds rests solely with the licensed industry partner.
- Government Patronage: The Board of Investment and the Department of Industries will facilitate joint ventures between farmers and industrialists.
Regulatory Oversight and Global Standards
To ensure transparency and prevent illegal diversion, the government is forming a special sub-committee that will begin operations within 15 days. This body is tasked with developing a “Comprehensive Cannabis Model” for Pakistan and revising existing regulations to meet modern requirements.
Experts suggest that involving DRAP will guarantee quality control and manufacturing transparency, ultimately boosting exports and maximizing medical benefits.
Furthermore, the meeting approved essential amendments to the “Khyber Pakhtunkhwa Cannabis Rules 2025.” These amendments include a structured penalty system and the introduction of standardized forms for monitoring, sampling, and inspections. This regulatory overhaul marks a significant step forward in establishing a legal, industrial foundation for cannabis in Khyber Pakhtunkhwa.
