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CANNABIS INDUSTRY 

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Alarm Bells Ring Loud! SA Hemp Industry May Not Be Viable Under Current Regulations!

Alarm Bells Ring Loud! SA Hemp Industry May Not Be Viable Under Current Regulations!

South Africa’s fledgling hemp industry may not be feasible under current regulations. That’s the grim view contained in the Global Cannabis Report 2022. It says while SA has taken a step in the right direction in setting up a hemp regime under the Department of Agriculture, the 0,2% THC restriction in the definition of hemp is deeply problematic.

Brett Hilton-Barber/Global Cannabis Report 2022

11 December 2022 at 09:00:00

The Global Cannabis Report 2022 estimates about 300 hemp permits have been issued by

South Africa’s Department of Agriculture, Land Reform and Rural Development (DALRRD) since it began issuing them in April 2022. DALRRD began accepting applications for commercial hemp cultivation permits from October 2021.


The Report says: “The number of approved hemp cultivation permits is not made public, however, based on engagement with industry participants, we estimate that over 300 permits have been granted to date.


“With the growing season for hemp in South Africa being from September to May, the delay in establishing the permit regime has meant that most farmers will only begin scale commercial cultivation from October 2022.


Although this is a step in the right direction, concerns remain about the viability of the hemp industry under current regulations.


The Report highlights four main problematic areas:
 

  • The 0,2% THC limit for hemp products, which is unrealistic for the South African climate which causes THC levels to “spike” naturally;

  • The requirement for fencing, which raises the barrier for entry and locks out legacy growers;

  • Challenges around hemp seed registration;

  • The limit of 50 ha per permit which limits production at an agri-industrial level;

The authors of the Global Cannabis Report 2022, Prohibition Partners and the ACA Group, pick up the story from here:


Firstly, hemp in South Africa is defined as ‘cannabis plant material’ containing less than 0.2% THC. This is considered to be a low threshold for South Africa’s climate where cultivation has historically seen higher average levels of THC based on farmer engagements.


This would make it difficult for producers to harvest compliant hemp crops and could result in significant quantities of a harvested crop not meeting regulatory approval for further use.


A 1% THC threshold similar to the Czech Republic and Switzerland has been proposed by the Cannabis Research Council of South Africa, and feedback from the Department of Agriculture seems to indicate that this may be implemented.


Secondly, the requirement for fencing around the earmarked cultivation areas adds significant set up costs that limits the ability of previously disadvantaged and cash strapped farmers to enter the industry.


This is particularly challenging as financing support for emerging hemp farmers is currently limited in South Africa.


Thirdly, due to the fact that cannabis is still regulated under the Drug and Drug Trafficking Act, there are significant limitations to the development of hemp, including challenges with registering local hemp seeds.


All hemp seeds need to be imported. The lack of testing and data on the performance of these seeds across South Africa increases the risk of failed or suboptimal harvests.


Lastly, the permits only allow for cultivation on a maximum of 50 hectares. Due to hemp being a high volume, low margin crop, cultivation on such a limited space may make hemp extremely difficult in terms of commercial viability at this stage.


The local hemp supply chain is also still in its infancy, with very few local industries having any knowledge on how to integrate hemp material into their businesses.


This could pose a challenge for when hemp is grown and processed at scale, with limited established demand for the processed biomass. However, as more participants and potential buyers of hemp-based end products are educated on its use, and benefit from government-led incentives, (some proposed in the National Cannabis Master Plan), there is significant potential for the hemp industry to contribute meaningfully to economic growth over the next few years.

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