Nepal’s Supreme Court has ordered the government to establish a regulatory framework for the controlled cultivation and production of cannabis within three months, potentially opening the way for medicinal, scientific and industrial use of the plant after nearly five decades of restrictions.
The court directed the government to formulate regulations, standards and procedures under the Narcotic Drugs (Control) Act, 1976, covering commercial cultivation, processing, storage, sale, distribution, import and export, along with licensing, monitoring and measures against unauthorised production and trafficking. The permitted purposes include medicinal treatment, scientific research, agriculture, horticulture and industrial raw-material production.
What the court decided
A division bench of Justices Nahakul Subedi and Til Prasad Shrestha issued the verdict on May 18, 2025, but its full text became public only recently, with details reported on November 1. The petition was filed by advocate Saroj Adhikari and Rigeendra Giri of the Nepal Drug Business Association, among others, challenging the government’s long failure to frame regulations under the Act. The three months run from the date the government receives the order, not from the date of judgment.
The ruling does not legalise recreational marijuana. The court declined to decriminalise recreational use, saying it is for Parliament to decide, and asked the government to consult experts and stakeholders on possible amendments. Until regulations are in place, farmers should not treat the verdict as permission to grow cannabis commercially.
The law the court relied on
The Act generally bans cultivating, producing, selling, storing, importing, exporting, trafficking and consuming cannabis, but contains openings for controlled use. Section 4 allows the government to make rules on producing charas from naturally growing cannabis in the western hills.
Sections 5 and 5(a) cover medicinal use on a qualified practitioner’s recommendation, and Section 6 allows institutions working under government direction to cultivate and produce cannabis for medicinal or scientific purposes, including authorised export.
The court read these as showing the law is not an absolute ban and directed the government to make them workable.
Penalties remain in force. Growing up to 25 plants carries up to three months’ imprisonment or a fine up to Rs 3,000, and more than 25 plants carries three years’ imprisonment or a fine of Rs 5,000 to Rs 25,000, according to the published text of the Act.
Gandaki moves first
Gandaki Province has already moved ahead. Its assembly passed the Medicinal and Industrial Cannabis Cultivation (Regulation and Use) Act, 2083 on July 9. Province Chief Dilli Raj Bhatta returned it on July 24, citing possible conflict with federal law including the 1976 Act, and the assembly passed it again without amendment on August 3, after which it was authenticated.
The law provides for licences, designated cultivation areas, consultation with local governments, inspection, a five-year permit and a 0.3 percent THC threshold for export-related industrial cultivation.
International obligations
Nepal is party to the 1961 UN Single Convention on Narcotic Drugs. The court considered Articles 23 and 28.
Article 28 says the convention does not apply to cannabis grown exclusively for industrial fibre and seed or horticultural purposes, while requiring measures against misuse of cannabis leaves. Nepal must still set up its own licensing and enforcement.
Why cannabis was banned
Cannabis was used in Nepal for traditional medicine and religious practice, and Kathmandu became a hub on the hippie trail in the late 1960s and early 1970s, when cannabis products were openly sold.
Nepal revoked cultivation and sale licences in 1973 and introduced the Act in 1976. Accounts often link this to US pressure, but a 2019 investigation found too little documentation to say how much. Farmers in places such as eastern Rukum lost a cash crop.
Economic potential
Industrial hemp can supply fibre, seed and oil for textiles, rope, paper and construction materials. A 2025 study in Renewable and Sustainable Energy Reviews identified about 1.8 million hectares of potentially suitable land. It estimated 0.5 to 0.9 million tonnes of fibre and 126 to 174 million litres of biodiesel from selected areas, with production costs of about $3,177 a hectare and a cost-benefit ratio of 2.46 to 4.08.
The challenges ahead
The government must decide which agency issues licences, where cultivation is allowed, how much can be grown and how production is tracked. Testing for THC and CBD will need laboratory capacity, and the Ministry of Home Affairs has acknowledged that research on THC levels in naturally growing Nepali cannabis is insufficient.
Medicinal products will need pharmaceutical standards, and federal and provincial authorities must coordinate. Safeguards against diversion into illegal markets, buyers for farmers and public health protections will also matter.
