Gandaki Province Chief Returns Nepal Cannabis Bill for Review

Constitutional Review Triggered

Province Chief Bhatt exercised his constitutional authority to return the cannabis bill for reconsideration rather than granting assent. Under Nepal's federal constitution, provincial chiefs hold veto power over provincial legislation and may return bills to the assembly with recommendations for amendment. The return doesn't kill the bill. Instead, it requires the Gandaki Provincial Assembly to address the chief's concerns or override the veto with a subsequent vote.

Bhatt didn't detail the specific constitutional or procedural defects in the July 26 announcement. Provincial sources indicated the concerns may relate to federal-provincial jurisdictional boundaries under Nepal's 2015 constitution, which reserves certain regulatory powers to the central government.

Bill Provisions Under Scrutiny

The returned bill would have authorized licensed cultivation, processing, and retail sales of cannabis within Gandaki Province. Key provisions included:

• Licensing framework for growers, processors, and retailers
• Tax structure on gross cannabis sales
• Cultivation caps and geographic restrictions
• Export authorization for medical and industrial hemp products

The bill passed the Gandaki Provincial Assembly in June 2026 with a majority vote, following months of committee hearings on economic development and agricultural diversification in the province's mountainous districts.

Federal-Provincial Jurisdiction Question

Cannabis regulation may fall under concurrent federal-provincial jurisdiction, creating potential conflict. Article 57 of Nepal's constitution grants provinces authority over "agriculture" and "internal trade," while the federal government retains control over "narcotic drugs" under Schedule 5. Cannabis occupies an ambiguous position in this framework, as Nepal's 1976 Narcotic Drugs (Control) Act classifies cannabis as a controlled substance but doesn't explicitly preempt provincial agricultural regulation.

Legal analysts in Kathmandu have noted that no Nepalese province has successfully enacted cannabis-specific legislation without federal coordination. This raises questions about whether Gandaki's bill requires parallel federal amendments to the 1976 Act.

Revenue Implications for Gandaki

The bill projected NPR 500 million (approximately USD 3.7 million) in annual provincial tax revenue by fiscal year 2028. That estimate assumed 200 licensed cultivators across Gandaki's 11 districts, with an average annual yield of 500 kg per license and a 15% provincial excise tax on wholesale transactions. The revenue model also anticipated export royalties on industrial hemp shipments to India and China, though export licensing remains subject to federal approval.

Without the bill, Gandaki Province forgoes a potential revenue stream at a time when provincial budgets face pressure from declining federal transfers and limited independent tax bases.

The province needs new revenue sources, and cannabis is an obvious candidate given the region's traditional cultivation history, but the constitutional process cannot be shortcut.

Next Steps for the Assembly

The Gandaki Provincial Assembly has 15 days to respond to the chief's return under provincial procedural rules. The assembly may amend the bill to address Bhatt's concerns and resubmit it. Or it may attempt to override the return with a two-thirds majority vote. A simple re-passage without amendment would send the bill back to the chief, who would then be constitutionally required to grant assent.

Assembly sources indicated leadership is consulting with federal Ministry of Home Affairs officials to clarify jurisdictional boundaries before scheduling a new vote.

National Context

Nepal decriminalized personal cannabis possession in 2020 but hasn't enacted comprehensive federal legalization. The 2020 amendment to the Narcotic Drugs (Control) Act removed criminal penalties for possession of up to 30 grams but left cultivation, sale, and distribution illegal under federal law. Several provinces, including Gandaki and Koshi, have since explored provincial frameworks to authorize regulated markets, but none has cleared the constitutional hurdle of provincial-versus-federal authority.

Federal legislators introduced a national cannabis regulation bill in 2025, but it remains in committee with no scheduled floor vote.

What to Watch

The Gandaki assembly's response will test whether Nepal's provinces can lead cannabis policy in the absence of federal action. If the assembly overrides Bhatt's return or negotiates a compromise amendment, Gandaki could become the first Nepalese province with an operational cannabis licensing regime. Should the bill stall, the precedent may discourage other provinces from advancing similar legislation without federal coordination.

The next signal: whether the assembly schedules a vote within the 15-day window or tables the bill pending federal clarity.