From crisis to cannabis: Sri Lanka focuses on medical exports

The August 13, 2025, Sri Lanka has officially granted authorization to seven foreign investors to legally grow Cannabis for export purposes. The authorization was issued by the Board of Investment (BoI), following a competitive selection process in which seven candidates were chosen from among 37.

The former director general of the Department of Ayurveda, the Dr. Dhammika Abeygunawardena, who is overseeing the project, outlined the framework:

«As a condition, each investor must deposit a bond of 2 million U.S. dollars with the Central Bank of Sri Lanka as collateral.»

He also explained that the’minimum investment required is US$5 million and that cultivation will be strictly limited to export purposes, primarily for the pharmaceutical manufacturing and testing. No cannabis may be diverted for local consumption.

The first phase provides for temporary licenses six months, renewable based on progress reports. Investors are required to ensure that measures are in place to strict security measures, including the installation of fences and security provided by the Special Task Force (STF) and the police. In total, 64 acres of land in the Mirigama region have been allocated.

The government expects this initiative to generate significant foreign currency revenue, with oversight shared among the BoI, the Ministry of Public Security, the Ministry of the Environment, and the Department of Ayurveda.

Cannabis for export only

On the same day, Cabinet Spokesperson and Minister of Media Nalinda Jayatissa confirmed this policy during a weekly briefing. He explained that this decision follows a lengthy process committed to since 2004:

«This is the first time such a situation has arisen and the government has provided this opportunity to export.»

He added that this measure is part of a Sri Lanka's broader strategy to secure foreign currency, particularly in light of global demand for medical marijuana in Europe and North America.

From Economic Collapse to Pro-Market Reforms

The authorization of cannabis cultivation comes amid Sri Lanka’s economic collapse in 2022 and the radical reforms undertaken since then. The president Anura Kumara Dissanayake, the country’s first left-wing head of state, surprised observers by adopting market-oriented reforms despite his campaign rhetoric.

Mr. Dissanayake has upheld his commitments under the the IMF's $2.9 billion bailout plan, by raising tariffs and restructuring the public energy sector. His The government has also sought to double its investments foreign direct investment to bring them to $2 billion, paving the way for high-threshold projects that qualify for tax benefits.

In this context, the Investment Council identified the cannabis cultivation for the export of oil for medical use as one of the promising sectors. As Arjuna Herath, chairman of the BoI, stated:

«The government hopes to announce significant investments very soon in order to offer concessions and incentives.»

The country hopes to attract up to 100 million dollars investments, with the first six pilot projects they will launch in secure containers for export to the the United States and Europe.