Supreme Court orders government to regulate cannabis cultivation for medicinal and industrial use

The Supreme Court ordered Nepal’s government to create regulations, standards and procedures for controlled commercial cannabis cultivation and production. The system must serve medicinal, scientific, agricultural, horticultural and industrial purposes. This matters because the Narcotic Drugs (Control) Act, 1976 already allowed the government to make rules, but those rules had not been created for a prolonged period.

Within three months of receiving the order, the government must establish licensing and monitoring arrangements. These must govern cultivation, production, processing, storage, use, sale, distribution, import and export. The rules must also prevent unauthorised cultivation, manufacture, preparation and distribution.

The ruling does not legalise recreational cannabis use. Instead, the court called for wider consultations with experts and stakeholders before any possible legal amendment. Justices Nahakul Subedi and Til Prasad Shrestha issued the ruling on May 18, 2025, responding to a writ petition by advocate Saroj Adhikari and others.

A regulatory framework is a coordinated set of laws, standards, procedures and enforcement systems. It defines what activities are allowed, who may conduct them and how authorities will supervise them. Here, the framework would make controlled commercial cannabis possible without abandoning the restrictions in the Narcotic Drugs (Control) Act, 1976.

Licensing would require growers and other businesses to receive official permission before operating. The government’s rules would cover cultivation, production, processing, storage, use, sale, distribution, import and export. Monitoring would check whether licensees follow those conditions and whether cannabis remains within approved channels. The court specifically required a strict regulatory and monitoring mechanism.

That system would separate authorised activity from unauthorised activity. Licensed cultivation and production could proceed for medicinal, scientific, agricultural, horticultural and industrial purposes. Illegal cultivation, production, manufacture, preparation and distribution would remain prohibited. The framework is therefore both an access system and a control system.

The proposed licensing system could cover cannabis used for five stated purposes: medicinal, scientific, agricultural, horticultural and industrial. These purposes describe the activities the court said could be brought under controlled commercial cultivation and production. Licensing would not mean unrestricted access or general legalisation.

For example, a producer could potentially seek permission to cultivate and process cannabis for an industrial or medicinal purpose. The government would then regulate related steps, including storage, use, sale, distribution, import and export. Each activity would operate under regulations, standards, procedures and monitoring requirements established under the Narcotic Drugs (Control) Act, 1976.

Unauthorised cultivation, production, manufacture, preparation and distribution would remain prohibited. Recreational use also was not included as an approved purpose under the existing law. The court said that issue has wider social and economic implications and requires broader consultation with experts and stakeholders before lawmakers consider amendments.

The proposed system is broad in both purpose and operation. It covers five purposes named in the ruling: medicinal, scientific, agricultural, horticultural and industrial use. The court’s order links those purposes to controlled commercial cultivation and production rather than unrestricted cannabis access.

It also lists nine activities for licensing and regulation: cultivation, production, processing, storage, use, sale, distribution, import and export. This means the framework would not stop at the farm. It would regulate movement and handling through several stages, including domestic transactions and cross-border trade.

The government must establish standards, procedures and strict monitoring for this system within three months of receiving the order. The mechanism must allow licensed activity while preventing unauthorised cultivation, production, manufacture, preparation and distribution. Recreational use is not counted among the five purposes and remains a separate issue requiring wider consultation.

The court said the government had failed for a prolonged period to use its delegated authority to frame rules under the Narcotic Drugs (Control) Act. Without those rules, provisions intended to regulate cannabis cultivation and use could not be implemented effectively. The problem was therefore not only missing paperwork; it was a gap between the law and its operation.

The court described rule-making as a legal responsibility given to the government by the legislature. It said state authorities had a duty to formulate the rules without delay. The verdict called the failure a refusal or neglect to discharge legal obligations.

That finding led the court to direct the government to establish the missing framework. The order requires regulations, standards, procedures and monitoring for controlled cannabis activity. It aims to let the state regulate approved sectors and prevent illegal cultivation, production, manufacture, preparation and distribution while the existing law remains in force.

The Supreme Court could intervene because the Narcotic Drugs (Control) Act, 1976 authorised the government to make rules needed for implementation. The court said that authority created a duty, not merely an optional power. Since the government had not acted for a prolonged period, the court found a legal failure that required direction.

The ruling came through a writ petition filed by advocate Saroj Adhikari and others. A division bench of Justices Nahakul Subedi and Til Prasad Shrestha concluded that the missing rules were preventing the Act from working as intended. It ordered the government to create regulations, standards and procedures within three months of receiving the order.

Nepal’s Constitution supplied the judicial route. The court said it had grounds to issue an order under Article 133 (2) and (3). Those provisions enabled it to direct the government to frame rules for effective implementation of the existing Act, rather than itself writing the detailed regulatory scheme.

The 1961 Single Convention on Narcotic Drugs is an international treaty that sets shared controls for narcotic drugs, including cannabis. Countries joining that system must regulate production and related activities according to international obligations. The article specifically identifies Articles 23 and 28 as provisions concerning control and supervision of cannabis cultivation.

In practical terms, supervision means cultivation should occur only through an authorised, monitored system. A country can permit controlled activity for recognised purposes, but it must prevent production from moving into unauthorised channels. That is why the Supreme Court linked Nepal’s future regulations to both the domestic Act and the Convention.

The court ordered strict licensing and monitoring while allowing medicinal, scientific, agricultural, horticultural and industrial purposes. It also required controls over production, processing, storage, sales, distribution, imports and exports. The Convention therefore provides an international framework supporting the court’s emphasis on authorised cultivation and prevention of illegal distribution.