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Is Lebanon’s legalisation of cannabis an economic lifeline or an opportunity for corruption?

Image of a cannabis plant [Sadak Mohamed/Anadolu Agency]
Cannabis plant [Sadak Mohamed/Anadolu Agency]

Lebanon last week legalised the cultivation and export of cannabis for medicinal and industrial purposes. The move is intended to provide an economic stimulus for the country’s ailing economy, at least that’s the stated aim.

Legalisation of the industry in a country which is the world’s third largest producer of cannabis, according to the UN Office on Drugs Crime (UNODC), was advocated as a financial rescue plan as early as 2018. A report by McKinsey & Co, commissioned by the Lebanese government to set out a five-year plan to rescue the economy, recommended legalisation alongside harnessing the avocado export industry, increasing tourism and creating a banking hub.

Tourism, however, is in disarray as a result of civil unrest, the close proximity of the Syrian war and now coronavirus travel bans. Moreover, the country already boasts a vastly oversized banking sector that could hardly manage becoming a regional hub, while the prospects of an avocado-fuelled economic boom are both slim and unexciting for Lebanese tycoons.

In the years since the McKinsey report was released, successive Lebanese governments have moved towards legalisation of cannabis, reasoning that the financial benefits outweigh moral objections. Will, though, the industry become an economic lifeline, or simply another opportunity for corruption?

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Certainly, the plan’s popularity among MPs and elites could be based on the potential for a few to make their millions, rather than a widespread cross-societal financial gain. In fact, some have already made their wealth through the drug trade in Lebanon’s Bekaa Valley, where farmers have been growing cannabis since Ottoman times. The region is characterised by a collection of powerful clans which, armed to the teeth, protect their quasi-monopoly on cannabis production fiercely. Successive Lebanese governments have made periodic attempts to destroy the crop, resulting in gunfights which frequently end in the locals’ favour. In a newly legalised industry, which could be worth upwards of $1 billion according to former Economy and Trade Minister Raed Khoury, armed monopolies could spell an even more pronounced centralisation of wealth at the top.

Under the new legislation, moreover, an official authority under the jurisdiction of the presidency of the Cabinet, will oversee the enforcement of the law and issue of permits for the cultivation, transportation, production, store, trade and distribution of cannabis. The authority is set to be funded by permit fees and will receive no money from the government budget, creating a clear conflict of interest. Funding by revenue means powerful clans can be awarded licences, regardless of whether they follow industry protocols, by passing hefty bribes under the table. In Lebanon, which ranks 137 on the world corruption index, the use of bribes to secure licences and permits is a when, not if, scenario.

Worse still, the proposed plan makes it all but impossible for current cannabis farmers to integrate into the newly regulated formal market. The legislation stipulates that anyone with a criminal record or warrant for arrest will not be eligible to apply for a permit to grow the crop. Most Bekaa Valley cannabis farmers, however, have criminal records as a result of years of campaigns by the government to stop the drug trade. Lebanon’s 1998 narcotics law made cultivation of cannabis illegal but outlawing the trade only eight years after the Mediterranean state was exporting nearly 2,000 tonnes from small coastal ports annually could never have been effective.

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What’s more, Bekaa Valley farmers say that demand has grown by more than 50 per cent since the start of the conflict in neighbouring Syria. The trade and cultivation of cannabis in the Bekaa is so widespread that disqualifying those with criminal records disadvantages only those who are caught. According to a 2018 report by the Guardian, there are 42,000 outstanding arrest warrants in the Hermel-Baalbek region of the Bekaa Valley alone. The government is seeking to pass an amnesty law but, with the legislation aimed at facilitating the release of prisoners from the country’s overcrowded prisons, few cannabis farmers can expect a clean slate.

Farmers unable to integrate into a regulated cannabis industry face having to change their crop, or continue to produce the drug illegally, for recreational purposes, but even this poses problems. Other crop options could include potatoes, olives and tomatoes, but these are highly competitive products, produced in small quantities, and are much less profitable than cannabis. Moreover, the demand for recreational drugs, which fetch substantially higher prices than agricultural crops, has not dissipated overnight. However, even if farmers chose to produce cannabis for recreational use, they are entering a saturated market dominated by the powerful regional clans. On 24 March, Lebanon’s Internal Security Forces seized 25 tonnes of hashish in the Port of Beirut destined for an African nation; it was the largest intercept of smuggled drugs in the country’s history. Considering the size and out of the ordinary nature of the seizure suggests that many more tonnes of hashish are smuggled out of the country annually. In this climate, how can individual Bekaa farmers be expected to compete?

Legalisation of cannabis cultivation in Lebanon will probably not benefit the majority of farmers in the Bekaa Valley, nor the government. Rather, wealth generated from the sale of medicinal and industrial cannabis products is likely to remain almost solely in the hands of the top echelons of society, often those who hold prominent political positions. In this sense, legalisation is not an economic rescue plan for Lebanon, but a chance for the country’s richest to add to their millions. As with the exploratory offshore drilling project, which many hoped would uncover vast oil and gas reserves within Lebanese waters, turning the country into a Dubai on the Mediterranean — it hasn’t, yet — legalisation of the cannabis industry is not a catch-all problem solver. Instead, the newly regulated industry looks like being nothing but an opportunity for more corruption.

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The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.

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