Gandaki Province in Nepal has enacted the Cannabis Cultivation (Regulation and Management) Act, 2026, authorizing medicinal and industrial cannabis production. This provincial decision creates a complex legal environment, given the continued federal prohibition and the province's proximity to India's alcohol-prohibited Bihar state. Strict THC limits and licensing frameworks are expected in the coming months.
Gandaki Province in Nepal has officially enacted the Cannabis Cultivation (Regulation and Management) Act for Medicinal and Industrial Purposes, 2026, following its authentication by the Province Chief on August 3, 2026. This legislative change introduces a framework for licensed cultivation of cannabis, strictly limited to medicinal and industrial applications. The law marks a significant policy shift, though it does not extend to recreational use.
Regulatory Framework and Oversight
The new provincial law establishes a controlled environment for cannabis production. The legislation stipulates that any cultivated cannabis must contain a THC concentration of less than 3%, aligning with international standards for industrial hemp and medicinal products. While the law has been passed, it is not yet operational. The provincial government is in the process of drafting the necessary standards, specific licensing guidelines, and monitoring mechanisms. This setup phase is estimated to take approximately two months before the first licenses can be issued.
Federal and Provincial Legal Conflict
A primary point of uncertainty for industry observers is the potential conflict between provincial law and Nepal’s national legislation. Cannabis remains illegal for most purposes under Nepal's federal Narcotic Drugs (Control) Act, 1976. While the province has moved to regulate medicinal and industrial use, the intersection between this provincial initiative and federal narcotics enforcement remains untested. Companies or organizations looking to enter this space may face significant regulatory hurdles until there is more clarity on how federal and provincial laws will coexist.
Implications for the Bihar Border
This development is particularly relevant given Gandaki Province's geography, as it shares a border with Bihar, India. Bihar maintains strict prohibition laws regarding alcohol and has robust enforcement protocols under various narcotics control frameworks. The proximity of a region authorizing cannabis production—even for medical purposes—to a state with stringent anti-narcotics enforcement may lead to increased scrutiny. Authorities will likely maintain high vigilance at the border to prevent illegal diversion or smuggling of crops, which remains a key concern.
Monitorable Developments
For those following the sector, the immediate focus will be on the provincial government’s upcoming draft regulations. Investors and industry participants will look for details on the licensing process, the criteria for approved cultivation sites, and whether the federal government challenges the provincial law. The stability of this new industry will depend heavily on the ability of local authorities to enforce strict monitoring, preventing the diversion of products to the recreational market or across the border into India.