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KZN Cannabis Model: viable at a national level?

The Cannabis Development Council of KwaZulu Natal (CDCKZN) has drawn up a model for the cannabis economy that it has submitted to the Department of Agriculture, Land Reform and Rural Development (DALRRD). CDCKZN Treasurer, Sheldon Kramer, more popularly known as Bobby Greenhash, told the NCMP workshop on 30 March 2021 that the model would be viable at a national level once legislative hurdles were overcome.

 

KZN cannabis model

Bobby Greenhash: KZN model viable nationally

 

Here is The KZN Economic Cannabis industries Model 2021

By Bobby Greenhash

Since the start of the green rush, after the landmark Constitutional Court decision to allow for the private adult use and medicinal use of Cannabis, there has been a sudden surge of people getting into the cannabis business, mostly hemp growers. The general consensus that the private use laws don’t allow for the trade of cannabis, is misleading. This industry is far bigger than recreational and medicinal use, its hemp products, fibre, nutrition and a couple of thousand other applications in industry. It would be extremely naïve of government to ignore the potential, and KZN has stepped up to the plate. This was possible, because we started a while back to map the industry in KZN, and evolve into a significant group of Cannabis business, an organized group that is all inclusive in representation of business, medical, agricultural and cultural groups. Presently, KZN Government is in dialog with the industry in evolving an economic plan. 

We do not seek to challenge legislative restrictions, but rather identify the economic value of the cannabis supply chain to local economy, notwithstanding legal status quo. Legislation as it currently stands, allows for low THC Cannabis Hemp, which is largely cultivated for its industrial and commercial value.

This is a summarized outlay of an economic business model that was implemented under research, to establish a supply chain from rural grower to international markets, a model which has already been established in KZN since the founding of the KZN Cannabis Development Council in 2018. 

The current value and supply chains that this document will be referred to as “KZN” model.

As the local Cannabis industry is evolving, we still find society viewing Cannabis as a dangerous substance that can only be used for recreational and limited medicinal use, and we fail to see it for its many industrial and commercial potential as a cash crop. Private use of Cannabis legislation has already been gazetted and is currently under public comment, and the medicinal standards for the use of Cannabis for medicinal purposes is subject to SAHPRA. Currently in KZN, there are a handful of growers, mainly those that could afford to meet the stringent standards laid out by SAHPRA. 

The problem faced by this, is that only Medicinal and Private consumption and growing of Cannabis is addressed, with no guidelines on how the Cannabis industry can trade in mainstream emerging markets legally. The current status quo fails to recognize the other many industrial and commercial uses of Cannabis is. This information is freely available, and has been researched and developed over centuries.

In this document, we will identify the current supply chain in KZN, which includes traditional and informal, as well as registered tax paying Cannabis business that forms part of the KZN  supply chain model in KZN. Our aim is to show that the industry can self-regulate under the guidance of the CDCSA-KZN, and is in fact a model which has been operational for 2 years. During this time, problems with operational entities have been identified and addressed in the interest of conducting ethical and fair trade practices, without excluding traditional informal trade.

The BGF model was developed and has oversight from various stakeholders, including the Cannabis Development Council of South Africa – Kwa Zulu Natal, Local authorities and traditional leaders.

 

OVERVIEW OF KZN CANNABIS INDUSTRY

The current Cannabis industry in KZN is fast becoming one of the most advanced and progressive in the country, mainly due to a more relaxed attitude by authorities. The model seeks to encourage historically illegal cannabis business to formalize and register as tax paying entities, thereby creating wealth for the economy, provide employment and attract revenue to the province.

What is important to realize, is the Cannabis industry in itself creates many spin off opportunities and benefits business outside of the cannabis industry.

When the BGF model was established, we took into account that the Agricultural sector consisted of thousands of small subsistence farmers, all growing relatively small grow operations to avoid risk of prosecution. The dilemma of regulating and policing all of these growers under any regulation, would be futile. The BGF KZN does not regulate farmers, and encourages the traditional growers to access mainstream markets by selling Cannabis to registered tax paying processors who then establish true market values and pay tax accordingly. Don’t regulate the farmer, regulate the product.

The CDCSA-KZN was established and registered as a NPO in 2018, and the Executive Council consists of representation from main emerging cannabusiness, medical doctors, traditional IKS groups and cultural interest parties. It was established largely to assist the emerging industry and government in establishing a guideline on the industrial and commercial use of cannabis as a whole. The CDCSA-KZN is focused on preserving the historical growers, and ensuring that traditional subsistence growers are not sidelined by big corporate interests, and ensuring access to markets by supplying to registered Cannabis Co Operatives from which the supply chain can be fed. 

The need for regional cannabis processing co operatives is imperative to create a gateway into mainstream markets, a central point from which Cannabis processors, product manufacturers and retailers can purchase Cannabis raw semi processed products for further processing and entry into consumer markets. The co ops will be responsible for processing, testing, quality control, grading and marketing of semi processed cannabis. Co ops should also supply seeds, nutrients, information and other agricultural supplies for the cannabis agriculture sector.

The CDCSA – KZN is currently undergoing reform in line with new emerging developments, and will be approaching member business with statistical and data requirements in terms of how we approach cannabis business. New membership requirements will no longer require specific business, personal or location details, but rather for the purpose of data capture to establish economic value of the industry.

Membership for cannabusiness in KZN will be available on our website soon. www.cdckzn.co.za

 

Cannabis Development council – KZN Executive Committee

 

Currently, the model in KZN consists of the following stakeholders:

  1. Informal Growers, mainly rural subsistence farmers that grow outdoor cannabis, with little or no control over THC/CBD levels. Traditional farmers are established in Zululand, KZN midlands, Bergville and Drakensberg regions, South Coast and Swartberg/Kokstad/Underberg regions being the most prolific. Traditional IKS groups, traditional healers, cultural users and Rastafarians form a large percentage the informal trade in KZN, and are found throughout KZN. 
  2. Formal or Commercial growers, consisting mostly of commercial Hemp growers are registered and permitted Cannabis farms, mainly concentrating on Hemp growing for industrial use. There are 25 permit growers in KZN, two of the biggest in Amajuba/Newcastle area consisting of 5000 Ha, and a research greenhouse facility on the South Coast of KZN. 
  3. Manufacturers and processors, not including medical use. Most manufacturers currently in KZN are Edibles and nutritional producers, Oil extractors, hempcrete manufacturers, veterinarian product manufacturers, fibre related industries and hempseed product manufacturers. The BGF model is designed that emerging industries are able to integrate and evolve, and there are many Cannabis commercial and industrial use opportunities in the model.
  4. Retail Sectors consist of front-line consumer supply businesses supplying consumers with end products. Pharmacy outlets, clinics, health shops, treatment centres, medical institutions and Medical practitioners (not including traditional healers), veterinary outlets
  5. Dispensaries – Non medicinal products, Edibles, recreational use extracts.
  6. On consumption outlets (“Coffee shops”) and recreational user taverns and cannabis clubs.
  7. Industrial and Commercial products suppliers – Hemp textiles, bio fuel suppliers, Hemp based and processed non consumable product suppliers
  8. Seed Suppliers
  9. Hospitality and Tourism related industries, tour operators, medical tourist providers and treatment centres.
  10. Educational Institutions and Research facilities
  11. Transport & logistics, Industry related training and skills development providers (SETA Accreditation)
  12. Biofuel Refineries
  13. Other- As defined by the Minister and industry regulatory bodies – Includes retail outlets
  14. Exporters

We do not say that the model is perfect, but it’s a working model which is evolving. It’s a working model, and will give insight to legislative bodies when it comes to defining trade regulations in the future. 

 

STRUCTURE OF SUPPLY CHAIN IN KZN

KZN Cannabis Supply Chain

 

 

CONCLUSION

This model is currently working in KZN, and this document is a summarized version of it. 

Currently, the only element that is hindering a potentially huge industry from evolving into an economy changing commodity, is legislation pertaining to the trading of Cannabis and cannabis products on the markets. Notwithstanding SAHPRA regulation on medicinal products, the rest of the commercial and industrial cannabis complex is thriving in KZN, and is providing upliftment for many poorer subsistence farmers. 

Sheldon Cramer

Aka Bobby Greenhash ( bobby@tbghf.com )

 

2 Responses

  1. Hi i am looking at getting a medical cannabis license to grow cannabis and sell to the market, what are the steps that i need to follow to get the process in order

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