Legal Status of Cannabis in India

STATUS OF CANNABIS/HEMP IN INDIA: LEGALITIES, LICENSING PROCESS, AND CHALLENGES


Hemp,  known as Cannabis sativa L. or as characterized under Section 2(iii) of the Narcotics and Psychotropic Substances Act, 1985 (NDPS ACT), puts forth a definition for it by dividing it into three sections.

(iii) “cannabis (hemp)” means—

 (a) charas, that is, the separated resin, in whatever form, whether crude or purified, obtained from the cannabis plant and also includes concentrated preparation and resin known as hashish oil or liquid hashish;

(b) ganja, that is, the flowering or fruiting tops of the cannabis plant (excluding the seeds and leaves when not accompanied by the tops), by whatever name they may be known or designated; and

(c) any mixture, with or without any neutral material, of any of the above forms of cannabis or any drink, prepared therefrom;  

The Narcotic Drugs and Psychotropic Substances Act, 1985 Act was enacted taking into account India’s obligations under the three UN drug Conventions as well as Article 47 of the Constitution. The Narcotic Drugs and Psychotropic Substances Act, 1985, commonly referred to as the NDPS Act, is an Act of the Parliament of India that prohibits an individual from the production/manufacturing/cultivation, possession, sale, purchasing, transport, storage, and/or consumption of any narcotic drug or psychotropic substance. The bill was introduced in the Lok Sabha on 23 August 1985. It was passed by both the Houses of Parliament, got consent from then President Giani Zail Singh on 16 September 1985, and came into force on 14 November 1985. The NDPS Act has since been amended multiple times — in 1988, 2001, 2014, and 2021. The Act extends to the whole of India and it applies also to all Indian citizens outside India and to all persons on ships and aircraft registered in India.

States can make their own laws for regulating activities related to cannabis, except for charas. Activities include farming, manufacture, production, transport, possession, inter-State export and/or import, purchase, use, or consumption.

Section 10 enables states to permit cannabis cultivation for scientific and medicinal purposes.

Section 14 is a special provision via which the government can permit licensed cannabis farming for horticultural or industrial (obtaining fiber or seed) reasons.

 

LEGAL ASPECT OF USING CANNABIS IN AYURVEDA


The country’s Council of Scientific and Industrial Research has been exploring the viability of cannabis when used to treat side effects related to cancer, epilepsy, and sickle cell anemia. Moreover, scientists are investigating whether cannabis’s dynamic properties could be helpful in medical procedures as well.

There are two sets of laws that regulate the use of cannabis leaves in medicines – The first set of laws treat cannabis leaves as a potential narcotic drug, and the second set of laws treat cannabis leaves as an intoxicant and a taxable item, i.e. as a source of revenue for the Government.

NARCOTIC DRUG

The NDPS Act treats cannabis leaves as a ‘narcotic drug’ only when:

  1. They are attached to the cannabis plant
  2. When they are separated from the cannabis plant but are not separated from its flowering or fruiting tops
  3. If they contain resin from the cannabis plant.

So, the leaves of the cannabis plant are not regulated as narcotic drugs in India under the NDPS Act. They are regulated as a narcotic drug only when they are attached to the cannabis plant or its flowering or fruiting tops or when they contain resin from the cannabis plant. This legal position has been upheld by the Indian Court and accepted by the Indian Government.

INTOXICANT

Each State in India has an excise law or prohibition law.  Almost all state laws in India identify cannabis leaves as an intoxicant like they identify alcohol as an intoxicant. This means that cannabis leaves cannot be produced (i.e. separated from the cannabis plant) or used for commercial purposes without a license. The manufacturer will also have to pay a ‘duty’ (or tax) for the procurement of cannabis leaves.

The marketing of medicines in India is controlled by the Drugs and Cosmetics Act, 1940 (DCA). Currently, there is no drug medication containing cannabis or cannabis leaf (or cannabinoids) that is approved under DCA for sale in India. If any pharmaceutical manufacturer were to introduce a cannabis or cannabis leaf-based medicine in India, it would have to first undertake a clinical trial of such medicine and establish its safety and efficacy. Undertaking clinical trials is an expensive and time-consuming process. To add to that, cannabis is not really developed formally in India. Thus, it is challenging to secure standard quality pot or weed leaf that might be expected in the production of drugs containing cannabis or pot leaf or their concentrates.

However, Ayurveda as a branch of medicine explicitly recognizes the utilization of cannabis and cannabis leaves in the manufacturing of ayurvedic medicines. This really means that if a standard ayurvedic medication is to be made which contains cannabis or cannabis leaves, then no clinical trials must be attempted prior to its commercial launch. This makes the ayurvedic system of medicines an obvious choice to manufacture and sell cannabis and cannabis-based medicines.

The use of cannabis leaves in medicine is preferable to cannabis in general. There are two reasons behind it. To begin with, it is relatively easy to secure cannabis leaves as they are not regulated as ‘narcotic drugs’. Second, cannabis leaf-based medicines do not require a license to sell in each state under the NDPS Act as cannabis-based medicines do.

 

INDUSTRIAL USES OF CANNABIS


Although industrial hemp cultivation was made legal (with a license) in 1985, it was only after 2018 that the first license to grow was allowed.

In 2016, Uttarakhand became the first Indian state to permit large-scale commercial cultivation of industrial hemp. The first cultivation license was given to the Indian Industrial Hemp Association, a non-profit organization that promotes industrial uses of the plant.

Cultivation of cannabis for industrial purposes like making industrial hemp or for horticulture use is lawful in India. The National Policy on Narcotic Drugs and Psychotropic Substances considers hemp as a source of biomass, fibre, and high-value oil. The Government of India bolsters the research and cultivation of cannabis with low THC content.

CSIR-National Botanical Research Institute, Lucknow is the first R&D organization that has taken the challenge for the development of a variety having <0.3% THC, a  high fibre variety for industrial purposes,  and a high THC and CBD variety for medicinal purposes. 

The global hemp industry was estimated at $4.71 billion in 2019, according to the Industrial Hemp Market Size, Share, And Trends Analysis report published in February 2020 by US-based Grand View Research.

 

LIMITATIONS OF USE OF CANNABIS LEAVES IN AYURVEDIC MEDICINES


The producers of ayurvedic medicines containing cannabis leaves or its concentrates should be careful to not use resin that may be stored on the leaves of the cannabis plant for the arrangement of medicines. The resin found on any part of the cannabis plant (including leaves) is viewed as narcotic, and its utilization in ayurvedic medicine will make the ayurvedic medicines a narcotic drug, which would invite a few extra compliances, for example, manufacturing quota, mandatory sale license, and record-keeping.

The producers should also be careful to not disturb the natural balance of cannabinoids found in leaves of the cannabis plant while using cannabis leaves or its extracts in the medicine. One of the cannabinoids, THC, is known for its psychoactive properties and is regulated as a psychotropic substance under NDPS Act. If the cannabis leaves are used specifically to extract THC out of cannabis leaves for subsequent use in ayurvedic medicines, then there is a risk that the ayurvedic medicine may be directed as a psychotropic substance under NDPS Act, thereby welcoming extra compliances.

 

CAN YOU POSSESS AND USE CANNABIS IN INDIA?


Possession and utilization of cannabis in India are both illegal, as per India’s Narcotic Drugs and Psychotropic Substances Act. Punishments are generally serious for those caught with cannabis on them. Traditional Indian cannabis varieties are THC-rich. THC stands for tetrahydrocannabinol, a psychoactive substance that causes intoxication. Cannabis with:

  • Over 0.3% dry weight of THC is a narcotic called marijuana.
  • 0.3% or less THC by dry weight is a non-narcotic, highly useful substance called hemp.

The fact that cannabis can be marijuana, works against hemp. Perhaps, this is why the National Policy on NDPS calls on states to destroy wildly growing cannabis and bans its use for anything except bhang making.

If caught with a small quantity of cannabis, the individual might be sentenced to up to one year in jail or a fine of up to 10,000 rupees, or both.

In the event that the amount they have on them is “less than commercial quantity yet more than small quantity “, the jail sentence can be stretched out to up to 10 years, with a fine of 100,000 rupees. For “commercial quantity “, the term of detainment is 10 to 20 years, in addition to a fine of 100,000 to 200,000 rupees.

Repeat offenders who are caught with 20 kilograms or a greater quantity of hashish, or any item containing 500 grams of THC or more, may even be subject to capital punishment.

Consumption is viewed as a less serious offense, with the largest jail sentence being up to one year. Sometimes, this is limited to a maximum of six months, or a fine of up to 10,000 rupees (or both).

Despite the risk of imprisonment, cannabis consumption is normal in India. According to a study by the German data firm ABCD, New Delhi and Mumbai both positioned in the main 10 cities worldwide in terms of individuals utilizing the drug. New Delhi was in third spot; beaten exclusively by New York and Karachi.

 

WHERE CAN YOU SOURCE SEEDS LEGALLY?


Cannabis seeds are legal to use, buy and sell in the nation, however, the seed business is directed by the Indian government. The legalization of seeds to a great extent is based on the fact that they’re used in religious ceremonies. However, because of the way that seed sales are controlled, this implies that sending them into the country in the post is a legal ‘grey area’.

According to the Food Safety and Standards (Food Products Standards and Food Additives) Fifth Amendment Regulations, 2021 published in The Gazette of India: Extraordinary, Part III, Section 4, November 15, 2021, “hemp seed, hemp seed oil and hemp seed flour shall be sold as food or used as an ingredient in a food for sale”.

Regulation 2.16. of the FSSAI notification states: Hemp seeds and seed products:

“For the purpose of these regulations, hemp seed means the hulled1, non-viable seeds obtained from Cannabis sativa/other indigenous Cannabis species. The cultivation of Cannabis species for the purpose of hemp seeds in India shall comply with Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985, and the rules made thereunder.

(2) The hemp seed, hemp seed oil and hemp seed flour shall be sold as food or used as an ingredient in a food for sale subject to conforming to the standards”.

Hemp seed flour means “solid product after seeds are milled to a powder with or without extraction of oil. The flour prepared after hemp seed has been pressed to extract oil shall clearly be labelled as ‘De-oiled hemp seed flour’

But this recognition of the hemp seeds and hemp seed products as a ‘food source’ comes with its own regulatory framework, as published in the notification, regularizing and establishing parameters and directions for use and for proper labelling of the products. The notification states certain parameters to be complied with while using hemp seed in and as food, including inter alia:

  • The total THC shall not exceed 0.2 mg/kg in any beverages made from hemp seeds.
  • The level of cannabidiol (CBD) in any food for sale consisting of hemp seed or seed products shall not exceed 75 mg/kg.
  • No person shall manufacture, import or sell any food product containing hemp seed or seed products intended for administration to infants upto the age of 24 months.

Furthermore, the notification also states guidelines for labelling of such products, majorly including the ‘don’ts’ with respect to the labelling of such products, such as:

The food for sale that consists of hemp seed or seed products shall not be labelled or otherwise presented for sale in a form that expressly or by implication suggests that the product has a psychoactive effect.

The label for the food containing hemp seed or seed products for sale may include the word ‘Hemp’.

The label for the food containing hemp seed or seed products for sale shall not include an image or representation of any part of the Cannabis plant (including the leaf of that plant) other than the seed; etc.

 

MANUFACTURING OF CANNABIS/HEMP SEED IS COVERED UNDER THE AMBIT OF DRUGS AND COSMETICS ACT


  1.  According to Rule 153 of Drugs & Cosmetics Rules, 1945, an application for the grant or renewal of a licence to manufacture for sale any Ayurvedic (including Siddha) or Unani drugs shall be made in Form 24D to the Licencing Authority.
  2. Rule 154 of Drugs & Cosmetics Rules,1945  states that- subject to the conditions of rule 157 being fulfilled, a licence to manufacture for sale any Ayurvedic (including Siddha) or Unani drugs shall be issued in Form 25D. The licence shall be issued within a period of three months from the date of receipt of the application licensing authority along with a fee of rupees one thousand.
  3.  Rule 156 of Drugs & Cosmetics Rules,1945 lays down rules for procurement of original license in Form 25D or a renewal licence in Form 26D. The licence shall be valid for a period of three years from the date of its issue if not suspended or cancelled before time.
  4.  Rule 157 of Drugs & Cosmetics Rules, 1945 enumerates the following conditions to be fulfilled before a licence is granted-
  • The manufacture of Ayurvedic (including Siddha) or Unani drugs shall be carried out in such premises and under such hygienic conditions as are specified in Schedule T.
  • For getting a certificate of Good Manufacturing Practices of Ayurveda-Siddha-Unani drugs, the applicant shall make an application providing the information on existing infrastructure of the manufacturing unit, and the licensing authority shall after verification of the requirements as per Schedule T, issue the certificate within a period of three months in Form 26 E-I.
  •  It shall be conducted under the direction and supervision of competent technical staff consisting at least of one person, who is a whole-time employee and who possesses the qualifications mentioned in this sub clause.
  •  For patent or proprietary medicine under section 3(h) of the Drugs and Cosmetics Act- As a regulatory requirement, evidence regarding efficacy for the ASU drug needs to be supported by textual rationale, published literature and pilot study. Pilot study is only required when textual rationale, published literature and textual indications based on authoritative ASU books are not provided in support of indication for intended ASU drug.(Rule 158B) 

There are two types of manufacturing licences. One is issued for manufacturing in one’s own premises with one’s own resources, the other is called a loan licence, in which the resources of a third party are utilized to manufacture the products. Both have a similar application process under the Drugs and Cosmetics Rules. The other way to retail ASU products is by third party manufacturing, white labelling or contract manufacturing in which the process of manufacturing is outsourced but the retail is done in one’s own brand name.

 

CANNABIS CULTIVATION IN INDIA: LEGAL FRAMEWORK


Although the NDPS Act bans the general possession and utilization of cannabis, it permits state governments to allow the cultivation of cannabis solely for horticulture, industrial, medical and scientific purposes. As of now, apparently, Uttarakhand is the only state in India that has followed up on this power to allow farmers to grow hemp. The state’s excise department permits the cultivation of cannabis depending on the condition that the THC content stays between 0.3-1.5 percent only. 

More recently, it has been reported that the Ministry of Health and Family Welfare granted the Council of Scientific and Industrial Research (“CSIR”) the green signal to utilize “an extract of a medicinal plant (cannabis for this situation) for internal or external use of individuals for analysis, therapy, mitigation or prevention of any sickness or disorder.” Subsequent to this, the Jammu and Kashmir government allowed its very first research license to the CSIR, permitting it to grow cannabis for medical research purposes in April 2017.CSIR will work as a team with the Jammu-based Indian Institute of Integrative Medicine (“IIIM”) and Mumbai-based Bombay Hemp Company (“BOHECO”) for this purpose.

Hemp cultivation also takes place in Suvagarh village in the Amreli district of Gujarat. The cultivation of hemp in Alamuru, Andhra Pradesh is in its initial stage. Odisha is one of the leading Hemp producing states in India. Other cultivating states in India are Karnataka, Tamil Nadu, and Rajasthan.

 

PROCESS OF LICENSE PROCUREMENT


  •  An application must be made to the State Government for a license under Rule 36(3) of the NDPS Rules for grant of license. Since only three states have started granting licenses for the cultivation of cannabis, it is not clear to whom the application shall be made in other states. The three states that presently have a policy on hemp cultivation are Uttarakhand, Uttar Pradesh, and Madhya Pradesh. In Uttarakhand, the application shall be made to the District Magistrate, whereas in UP and MP, the application has to be made to the Excise Department.
  •   For grant of import license, first an application shall be made to the State Government for the issue of an excise certificate. This certificate shall accompany the application being made to the Narcotics Commissioner for import.
  • For the manufacture and sale of ASU drugs containing cannabis, an application for a grant of license (under Form 24-A), shall be made to the Licencing Authority notified by the State Government under the Drugs and Cosmetics Act. For example, in Karnataka, the application will have to be made to the Drug Controller, Drugs Control Department which is under the aegis of the Ministry of Health and Family Welfare.
  • The composition, benefits, and manner of use of the medicines will have to be demonstrated. It is advisable that the opinion of an expert on ASU medicines be sought for precise instructions regarding the same.
  • The clinical trials shall be conducted to comply with Rule 158(B) of the Drugs and Cosmetics Rules. The clinical trials must be conducted in accordance with the guidelines laid down by the Indian Council of Medical Research.

 

 REGIONAL LAWS ON CANNABIS


NDPS allows the consumption of bhang but there are various states that have their own rules and regulations regarding the consumption and manufacture of cannabis.

  • The Assam Ganja and Bhang Prohibition Act, 1958, prohibits the sale, purchase, possession, and consumption of ganja and bhang in Assam.
  • The Bombay Prohibition (BP) Act, 1949, Section 66(1)(b) bans the manufacture, possession, and consumption of bhang and bhang-containing substances without a license. 
  • The Karnataka Prohibition Act of 1961 classifies ganja and bhang as “intoxicating drugs” and prohibits the manufacture, possession, and consumption of the same with the exception of medicinal purposes. 
  • Gujarat legalized bhang by removing it from the list of “intoxicating drugs” covered by section 23 of the Gujarat Prohibition Act on 21 February 2017. The state government has received complaints of misuse of the prohibition act against those found drinking bhang on religious occasions. Hence, keeping in view the sentiments of the public at large, the government has decided to exempt bhang from the ambit of Gujarat Prohibition Amendment Act. Ganja is more intoxicating as compared to bhang.
  • The Punjab Prohibition Act,1914 classifies the leaves, small stalks and flowering or fruiting tops of the Indian hemp plant (Cannabis Sativa L) including all forms known as bhang, saddhi or ganja, charas as “intoxicating drugs” and prohibits the manufacture, possession and consumption of the same. Exceptions are made for use in the medical field.
  • Chapter 4 section 16 of the Rajasthan Excise Act, 1950 prohibits the manufacture, possession and sale of hemp plant or portion of the hemp plant (Cannabis Sativa) from which intoxicating drug can be manufactured shall be collected.
  • Chapter 2 section 10 of the the Bihar Prohibition Act, 1938 prohibits the import, export,  transport, sale, manufacture, etc., of intoxicating drug except in accordance with rules made by the Provincial Government in this behalf, cultivates the hemp plant or extracts any portion of such plant from which any intoxicating drug can be manufactured.

 

TRADING CHALLENGES


  • 9th November, 2014 saw the formation of the Ministry of AYUSH, mainly for the generation and development of AYUSH systems of health care.  The Department of Indian System of Medicine and Homoeopathy (ISM&H) was introduced in March 1995 but later on it was renamed as Department of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy (AYUSH) in 2003.     
  • This threw light towards the development and need for progress in education and research in Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy. Manufacturing of ayurvedic medicines requires the acquisition of a license from AYUSH, whereas, only for the purpose of selling or trading of ayurvedic medicine one doesn’t need an AYUSH licence as just looking for a processor with an AYUSH license can do the work.
  • Therefore, AYUSH license is needed when trading in hemp for medicinal purposes.             
  • Amongst the types of drug licences granted by the Ministry of AYUSH, a lot of significance is given to retail, manufacturing and wholesale license is essential to function as a wholesaler in relation to such products.

CULTIVATION CHALLENGES IN INDIA


Although the NDPS Act allows the state governments to grant permissions/licenses for the cultivation of hemp for specific purposes, the actual process of obtaining these permissions/licenses is far from easy. This is a direct result of the shortfall of a standardized government route. For example, there is no clarity on which state government departments are responsible for granting of permissions to cultivate hemp. The Seventh Schedule of the Indian Constitution just adds to this dilemma. According to Entry 84  under List I of the Seventh Schedule of the Indian Constitution, the Union government has the ability to force excise duties on medicinal or industrial preparations containing “Indian hemp”. For all other preparations of Indian hemp manufactured or produced in India, the state governments have the ability to force excise duties according to Entry 51 under List II of the Seventh Schedule. 

However, the Constitution does not provide any clarity regarding which government is empowered to grant permissions for the cultivation of hemp. In any case, apparently the permission granting powers for development of hemp at the state level have been presented through state excise regulations. For example, Section 11 of the Jammu and Kashmir State Excise Act, 1958 provides that the government may by notice waive the requirement to take out a permit for the cultivation of hemp plant. Similarly, the power to grant authorizations for the cultivation of bhang and charas in Uttarakhand has been granted to the Uttarakhand state government through the Uttarakhand State Excise Act, 1910.

Although the state governments appear to be depending on their excise regulations for the power to grant permissions for the cultivation of hemp, there is still no clear picture on the actual departments that are empowered to grant licenses/permissions. Therefore, firms or companies find themselves moving from the excise departments of state governments to the Central Bureau of Narcotics to state-level agriculture and revenue departments as they continue looking for permissions. This influences the carrying on with business and creates redundant hindrances to entry for firms keen on the industrial/medical /scientific utilization of hemp.