Are All Companies Involved in Cannabis (Marijuana) Related Industry Shariah Non-Compliant?

With the increasing legalization of marijuana/cannabis trade and consumption, cannabis related industries are witnessing a big boom and is fast becoming a multi-billion dollar industry. With quite a few listed companies already engaged in this industry, can the Shariah compliant investor invest in such high growth potential companies which are engaged in the cannabis industry?

Cannabis – An overview

It is well know that Cannabis (generally also referred to as Hemp or Marijuana) has psychoactive effects. The consumption of such things lead to a person being in a state of intoxication. All forms of induced intoxication products are considered non-permissible in Shariah, hence businesses involved in such products should be considered non-Shariah compliant. Let us explore this further.

Are there any positive usage of Cannabis?

The Cannabis plant is the unique source of more than 70 structurally related, plant – driven cannabinoids. Of this, only ONE cannabinoid – THC – is known to cause photoactive effects (intoxication), while none of the other cannabinoids are known to have such an effect.

In recent decades, there have been major scientific advances that have led to the discovery of new plant-derived cannabinoids and their potential for therapeutic use. In simpler words, this means that through scientific research, it has been seen that the cannabis plant can provide such components which have medicinal usage too.

Components derived from the cannabis plant have shown high promise in managing drug resistant Epilepsy, Rett Syndrome or RTT, Spasticity, Post traumatic disorder, Schizophrenia, Autism Spectrum Disorder and various other neurological disorders.

Are Companies Involved in The Cannabis Industry Shariah Compliant?

Companies involved in the Cannabis industry were analysed and presented to our Shariah board for review.

The Shariah board opined that if the company is involved in specifically producing such products which are exclusively used for medicinal purposes, then those companies are to be considered Shariah compliant.

But if they are producing general cannabis based products which can be used for recreational or general well-being purposes, then such companies are considered to be doing a non-permissible activity.

The differentiation is that if the cannabis based product is used only for medicinal purpose and cannot be used recreationally, then the revenue derived from such products is to be considered Shariah compliant.

Certain scenarios within the Cannabis industry and its effect on Shariah compliance of that stock:

1. Cannabis based products for recreational use are considered Shariah Non-compliant
2. Cannabis infused drinks are considered Shariah Non-compliant
3. Cannabis infused edibles are considered Shariah Non-compliant
4. Cannabis infused personal care products such as shampoos, lotions, soaps are considered Shariah Non-compliant
5. Companies selling Cannabis extracts such as CDB oils for recreational use such as for massage or as incense etc. are considered Shariah Non-compliant
6. Companies involved in Cannabis based pharmaceuticals are considered Shariah Compliant
7. Companies selling medical usage only therapeutic products are considered Shariah Compliant
8. Quality monitoring or assessing agencies which provide services to cannabis industry as well are considered Shariah compliant since they are neutral with respect to its end product usage.

List Of Companies Involved in The Cannabis Industry

Conclusion

All companies involved in cannabis related products cannot be considered non-permissible. If the products are exclusively made for medical usage and are not for reactional consumption, they are considered Shariah permissible.

On Islamicly you can find such in-depth Shariah screened companies for you to take benefit from investing in such emerging sectors.