An insight into the protection of medical cannabis production investments in Zim
FUNGAI CHIMWAMUROMBE AND PLAXEDES TAVIRAI
To stimulate investment on the cannabis plant for industrial and medical uses, Zimbabwe has of late repealed laws requiring sole state ownership of cannabis farms to allow private investors to participate in the cannabis industry.
Zimbabwe produces the most tobacco in Africa, but cannabis export revenues will begin to supplant tobacco as farmers seek higher returns from the crop if the Zimbabwean Government continues to enhance investment protection policies in the cannabis production.
The 60/40 rule and the requirement for licensees to farm on government land only prompted investor flight.
Now, the Zimbabwe Investment and Development Agency (ZIDA), has pronounced a number of incentives to attract investments into the cannabis sector.
While the government of Zimbabwe provides investment incentives for other investment areas, the type of protection it has granted to cannabis investors is commendable.
Notwithstanding financial gains, investors need stability and security. Zimbabwe is now providing international cannabis investors the opportunity to own 100% of their operations and choose where they want to invest in the country.
This is a substantial departure from the country’s current foreign investment regime, which mandates a large local stake in every venture.
Further, the finalisation of the Investment Stability Agreement (ISA), a statute that guarantees investor property rights, protection against expropriation, and changes in the law, is another significant achievement and was created by the government to support and give investors added security as well as to boost prospective investor’s confidence.
The ISA ensures that investors have a consistent and favourable operating environment. Its goal is to establish investment partnerships between the Zimbabwean government and potential investors, as well as to support investment protection, with a particular emphasis on the government’s guarantee of legal framework stability and monetary reforms.
Monetary and fiscal incentives include 100% foreign currency retention for two years (unprocessed cannabis), three years (semi-processed) and four years (fully processed), repatriation of income and dividends and zero-rated corporate income tax for five years,” ZIDA, through the Act and the ISA, aims to attract and keep more investment in the cannabis market by providing security to investors.
Every investor interested in investing in cannabis production is required to sign the ISA. According to ZIDA, when the ISA is signed, the agreement specifies a 6-month implementation timeframe for investors, from the license stage to the manufacturing stage. The deadline is also set to identify genuine investors and to prevent them from selling their licenses. Further, the constitution of Zimbabwe the Zimbabwe Development Agency.
Act safeguards investment against expropriation.
Cannabis farming is expected to benefit the country by creating jobs, raising taxes, attracting foreign direct investment, and generating a trade surplus.
Necessitating the establishment of safeguards and an environment that seeks to protect cannabis producers, as the Zimbabwean government is doing is a step towards attempts to derive benefits from cannabis production.
Fungai Chimwamurombe is a registered legal practitioner and Senior Partner at Chimwamurombe Legal Practice and can be contacted for feedback at fungai@zenaslegalpractice.com and WhatsApp 0772 997 889. Plaxedes Tavirai is an intern and can be contacted on plaxedes@zenaslegalpractice.com
