The South African government has finally surfaced its National Cannabis Master Plan for public input. After months of increased pressure from community organizations and the private sector, the Department of Agriculture, Land Reform and Rural Development has picked up the ball and announced a virtual workshop for all stakeholders on Tuesday 30 March 2021.
The move will be welcomed by the industry as a step in the right direction, but as yet it’s not clear exactly who in government is in charge of the proverbial “cannabis desk”. In a parallel process the Department of Trade, Industry and Competition has been inviting inputs into a national cannabis strategy, while an entirely different discussion is happening in the corridors of parliament about the controversial Cannabis for Private Purposes Bill.
State of the Cannabis Nation
Meanwhile, a snapshot of SA’s cannabis landscape as of the end of March 2021:
- The police continue to make arrests that will be outlawed in the proposed bill and are mired in a “war against drugs” mindset;
- There’s a motion before the Cape High Court to legalize private cannabis clubs;
- Illegal recreational cannabis suppliers have reached new levels of product sophistication and are flourishing;
- Interpol ranks South Africa as one of the top 5 exporters of illegal cannabis in the world;
- CBD importers are outraged that despite all the requisite paperwork, close on R2 million worth of legitimate product is stuck at points of entry; because of official bungling;
- Despite this the CBD market has taken off in SA, online and in the proliferation of retail outlets, particularly the Cannafrica franchise model;
- Only 16 cannabis cultivation licenses have been issued to date by South African Health Products Regulatory Authority (SAHPRA);
- The current SAHPRA licensing system has provoked an angry backlash from traditional cannabis growers and aspirant black farmers who feel that they are being deliberately excluded by the high-cost barriers to entry;
- Local medicinal cannabis growers are not permitted to sell product to local medicinal cannabis processors;
- Local hemp product manufacturers have to import hemp and are not allowed to source locally;
- The main beneficiaries of cannabis deregulation thus far are “big pharma and big agri” who can afford the capex to set up export operations;
- Most of the medicinal cannabis being exported from SA is high-THC;
- The provincial governments of Eastern Cape and KwaZulu Natal are developing community licensing models that are currently outside the scope of current regulatory legislation;
- Wesgro in the Western Cape has taken the lead in developing the broader Cape Town area as the foremost cannabis hub in SA by facilitating R170 m in investment;
- The Department of Agriculture, Land Reform and Rural Development has taken over the issuing of hemp licenses from SAHPRA even though this has not been publicly announced;
- The hemp licenses are ostensibly for research purposes only, but they enable product to be exported’
- The Cannabis for Private Purposes Bill coming up on the parliamentary agenda is riddled with contradictions and at this stage the only beneficiaries are likely to be the legal profession as it is unlikely to see the light of day outside of a courtroom;
- SA’s finance minister, Tito Mboweni, remains the lone voice in the cabinet pleading for legalization, but he’s now keeping quiet;
- Despite this he’s closed down one of the main incentives to cannabis investors: section 12J of the Income Tax Act;
- Against this backdrop it’s clear that the cannabis boom is underway in Africa with 8 countries legalizing production for export, at least four of which are looking at how medicinal marijuana could be incorporated into public health care systems;
- Corporate SA has taken the plunge into the CBD market in the form of the Rupert family and Distell buying into local CBD company Trueleaf; while two JSE-listed companies – Labat and Nutrihold – have made cannabis part of their core strategies.
For more information about the cannabis marketplace and growth, read Birguid’s reports on the cannabis industry in Southern Africa.