SA cannabis consumption expected to rise by 20% in five years
South Africa has opted for decriminalization instead of legalization and this is frustrating the growth of the South African cannabis economy. SA has to date also kept itself out of the global high-THC market because no distribution systems have been developed, and about 1,8 million regular cannabis consumers who spend an annual R1,8 billion on marijuana and related products – most of which are illegal
That’s the core assessment of South Africa in New Frontier Data’s (NFD) Global Cannabis Report released on 23 September 2021.
Cannabis consumption is expected to rise by 20% over the next five years.
|NFD: SA Cannabis Snapshot|
|Total Population||59,4 million|
|Total Cannabis Spend||1,2 billion|
|Total Cannabis Consumers||1,8 million|
|Average Annual Usage Rate||4,40%|
|Average Price Per Gram (Flower)||US$3,63|
|Expected Growth in Spend (5 yrs)||20%|
Each country has unique legalization dynamics
The NDF report says that “Cannabis regulations vary in the different regions across the world, with some countries developing fully regulated markets, complete with a taxed and regulated framework for retail distribution of a variety of cannabis products for all adults, (e.g., Canada and in U.S. legal adult-use states), and others instead opting for decriminalization, with allowances for home cultivation and possession but with no framework for legal sales, like Georgia and South Africa.
A few countries – Spain and the Netherlands – have legalized their cannabis markets through businesses that permit social consumption on site. Most countries to legalize access to high-THC cannabis have done so, however, by adopting a framework to allow access only for qualified medical patients.
SA cannabis action is in home grow, no chance of being a major world player soon
It says that home growers are creating most of the economic activity in the legal market as a result of the 2018 Constitutional Court decriminalization of cannabis.
“According to the ruling, cannabis cultivated in a private place may only be used by the grower/cultivator, and it is illegal to supply it to anyone else. That has created a strong home-cultivation market in South Africa, where there is wide access to homegrown cannabis and no criminal penalties for consumption or personal use” says the NFD report.
The NDF report does not anticipate South Africa becoming a major player in the international cannabis industry any time soon.
Africa remains the “dark continent” of cannabis legalization yet one of the plant’s most vociferous consumers. NFD reckons 7,5% of Africans use cannabis regularly and that the market will grow by 26% over the next five years. South Africa is modest by comparison with only 4,4% of the population deemed regular consumers with an expected five year market growth of 20%.
|Total Population||1,3 billion||59,4 million|
|Total Cannabis Spend||33,1 billion||1,2 billion|
|Total Cannabis Consumers||59,2 million||1,8 million|
|Average Annual Usage Rate||7,50%||4,40%|
|Average Price Per Gram (Flower)||US$2,99||US$3,63|
|Expected Growth in Spend (5 yrs)||26%||20%|
Average SA price per gram = R45
South African flower is more expensive than in the rest of Africa because of overall quality. NFD reports that the average gram in South Africa costs US$3,63 – or R54.45 (at an exchange rate of US$1 = R15), compared to the US$2,99/gram (R44,85) cost elsewhere in Africa.
NFD’s estimation of the number of South African cannabis consumers of 1,8 million is significantly lower than that in the National Cannabis Master Plan which estimates there are 3,5 million local users.