29/10/2023
Dear Mr President ,
Allow me to congratulate you today for making it easy for all africans to travel to our country Kenya Visa free , Secondly ill like to challenge you on your economics agenda especially on matters Taxes , Kenyans at large they are really getting uncomfortable in the way you’re government is increasing taxes on them in almost everything they do , and if that trend continues you might not get a second term come 2027 elections , to avoid that here is my brief proposal that can help your government earn significant foreign exchange by legalizing medical cannabis in Kenya . Kenya can be the biggest Low cost producer of medicinal cannabis globally, let me tell you how …..
Since the 1920s, cannabis production has been prohibited or seriously curtailed in most parts of the world. The global trade in cannabis for medicinal purposes is presently strictly regulated by the Single Convention on Narcotic Drugs 1961, the Convention on Psychotropic Substances of 1971 and the United Nations convention against the Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988.
Countries that allow the cultivation of cannabis for medicinal purposes strictly regulate the industry through a licencing system. This means that supply is restricted. Restricted supply leads to monopolistic/oligopolistic circumstances and higher prices for consumers.
At present, the high prices allow the production of cannabis in countries like Canada, where the outdoor climate is very different from the natural climate for this plant. Almost all cultivation facilities in Canada are indoor or greenhouse. The effort to recreate nature inside a building comes with considerable costs: Not only does the temperature need to be raised, but the plants produce oxygen and need carbon dioxide to flourish, so a “greenhouse effect” is created in the building. This leads to increased risk of diseases such as mold/mildew etc.
In contrast, in Africa, the plants can be grown outdoors or in “open” greenhouses – greenhouses whose sides can be opened, allowing natural air to flow through the greenhouse, taking away the oxygen and moisture, and reintroducing carbon dioxide.
“Climate control” comes at a much lower cost in Africa than in Canada or other European and North American producers. This is the attraction (even to
established Canadian licenced producers) of buying stakes in African licenced cultivators.
Our research indicates that, at current wholesale prices, against a wholesale price of “100”, the average cost of production in North America is “68”. This means that, if wholesale cannabis prices fall by 32%, half of North American production will be unprofitable. In contrast, the cost of production in Africa on the same scale is “15”.
Cannabis prices will fall over time, as the arbitrage opportunity created by differing regulations in different countries falls away. When that happens, you want to be in the low-cost producing countries. Kenya is such a low-cost producer.
The reasons for the lower costs of production in Africa are all permanent cost advantages:
âś“ Better climate reduces the need for electricity and expensive equipment
âś“ No need to build a building for the cultivation; open greenhouses will do
âś“ Lower labour costs
âś“ Lower electricity costs
âś“ Water is free and pure
âś“ Lower land costs
âś“ Lower regulatory burden
We believe eventually the North Americans will outsource the cultivation of medicinal cannabis to low-cost countries in Africa and focus on branding and marketing the products in North America. This is what has already happened in e.g. running shoes of our worldly Known athletes ; All running shoes are manufactured in Vietnam but the branding is done in the USA.
The main competitors to Kenya and Lesotho are Colombia and Jamaica – but the partnership approach of the Kenyan government is in sharp contrast to the “licencing consternation” that exists in its natural competitor countries.
Bottom Up economics agenda should give Medical Scientists in Kenya a chance to take lead in this promising industry which will uplift our Footprint as leader agricultural innovation as well as medical innovation Hub in africa.
The writer is a medical scientist,a licensed medical Cannabis specialist working in Malawi, Lesotho , south africa and zambia and also Founder President of Integrative medicine Society of Kenya(IMSK)
