top of page
SA Landraces with Cannabis Plants. and species-min.png

CANNABIS INDUSTRY 

BREAKING  NEWS

Major Banks Interested in Cannabis Sector But Legislation Prevents Them From Investing

Major Banks Interested in Cannabis Sector But Legislation Prevents Them From Investing

South African mainstream banks can't invest in cannabis because the current legislation inhibits financial institutions from putting money into the industry. The Mail and Guardian got the views of Absa, Firstrand and Nedbank on the cannabis sector

By Anathi Madubela, Mail and Guardian with additional reporting by Sarah Smit

1 May 2024 at 09:00:00

Under the Drugs and Drug Trafficking Act cannabis is still outlawed but new legislation would decriminalise the stimulant, allowing for money to flow into the industry.


Major banks, including Nedbank, FirstRand and Absa, have said they have followed the sector with interest, but have not been proactive in financing it because of the restrictive legislative framework.


“The company is looking at this industry and assessing where it would be appropriate for us to support it, but at this stage we haven’t had any meaningful involvement,” said Sam Moss, head of investor relations at FirstRand.


He said clarity was needed on how the industry would be regulated to ensure the product was used appropriately, in the case of medicinal use, and how the risks of potential abuse would be mitigated.


“If the regulation proves to be robust, we expect to support projects in the value chain, perhaps initially on a relatively restricted basis as the industry matures,” Moss added.


Absa said it had noted the latest legislative developments regarding the cannabis industry and would monitor and adapt the bank’s policy positions in response to the changes in the external environment and ­client needs.


“Absa recognises the growing focus on the cannabis industry in South Africa to unlock economic opportunities, including job creation. We are committed to participating in the provision of financial products and services within the enabling legislative framework and internal policy positions,” the bank said.


Nedbank’s agriculture head John Hudson highlighted the rigorous regulatory and approval processes that acts as a barrier for the bank to invest in the cannabis industry.


“While cannabis as a sector has potential, it requires proper planning, adequate funding, access to relevant expertise and having an offtake,” he said.


The process of passing enabling legislation and developing policy has dragged on since the constitutional court overturned the laws banning cannabis in 2018.


At present, cannabis can only be grown commercially for the medical export market in terms of a licence issued by the South African Health Products Regulatory Authority.


The cannabis bill, drafted in response to the court’s order, was meant to have been passed by 2020, but has been sent back several times.


In its present form, the law continues to prescribe jail sentences for trading in cannabis, leaving the ­creation of a framework for a legal cannabis industry to the passing of further legislation.


“The government has been disastrous in terms of its delivery of legislation. It’s been five years since the cannabis for private purposes bill was tabled and it is still sitting on [President Cyril] Ramaphosa’s desk. If it does not get signed off before the elections, another six months could be added before it is even looked at,” said Trenton Birch, the chief executive at Cheeba Africa Cannabis Academy.


“While it’s not a perfect piece of legislation, what it will do is decriminalise cannabis and allow cannabis to be removed from the Drugs Act. Which means cannabis becomes legalised to some degree and investors will more likely be willing to put money into the industry,” he said.


Birch said the banking sector still views cannabis as a narcotic and so it is not interested in reforming its own internal policies to facilitate investment into the sector.


“They have protocols and legislation that they need to adhere to as financial institutions, so they are very risk averse. The last place I would go to for funding as an entrepreneur trying to enter the cannabis space is a bank,” he said.

Birch said the government has also committed minimal financial support, especially for training.


Ramaphosa has made reference to the cannabis economy in several of his State of the Nation addresses. In 2023, the president reiterated the government’s commitment made in 2022 to unlock investment in the hemp and cannabis sector.


“We are moving to create the conditions for the sector to grow,” Ramaphosa said in his speech.


In 2022, the president announced plans for the growth of the cannabis and hemp industry, recognising the industry’s potential for investment.


According to Ramaphosa: “The legal hemp and cannabis sector has the potential to create more than 130 000 new jobs in South Africa.”


In 2021, the South African cannabis industry had an estimated worth of R87.7 million. This figure is projected to reach R406.3 million by 2026, with a projected growth rate of 28.4%.


None of this has happened yet and according to Birch the only way to start a cannabis business right now is to fund it by asking friends and family.


Darryl Weisz, chief executive of investment fund Silverleaf Investments, said looking at global case studies, he’s seen best practice in terms of financing the cannabis industry when the government is integrally involved in the legalisation of cannabis.


“The lack of legislative reform is inhibiting investments into the cannabis industry,” he said.

Weisz noted that marijuana that is not registered as medical cannabis, which can only be offered to the public with a doctor’s script, is still contained in the Drugs Act.


“Nedbank, Absa and FNB would have difficulty financing the sector. Medical cannabis facilities have struggled to get funding from the banks. The legislative hurdles need to be overcome for the industry to be unlocked,” he said.


“The banks are very hesitant. Their hands are tied.” — 

A year on, the Presidency's ambitious cannabis plans are yet to materialize

The Phakisa 'Non-Action' Cannabis Plan! The Presidency’s Bold Initiative Appears to Have Fizzled Out

A year on, the Presidency's ambitious cannabis plans are yet to materialize

Grain sector expresses interest in cannabis sector but is standing on the sidelines until the right laws are enacted.

Mealie Farmers: “The Cannabis Thing – We Are Watching With Interest’: Biggest Challenge is the Legal Framework”

Grain sector expresses interest in cannabis sector but is standing on the sidelines until the right laws are enacted.

Cannabis Bill one of 27 pieces of impending legislation sitting on the President's des.

Time Fast Running Out For Pres Ramaphosa to Sign. Cannabis Bill into Law Before May 29 Elections.

Cannabis Bill one of 27 pieces of impending legislation sitting on the President's des.

5.cannabiz-africa Hemp -min.png

Cannabis in South Africa: The People’s Plant

We are a civil society organisation with the interests of the existing Cannabis industry and the Human Rights of ALL citizens at heart.

WE’RE BRINGING A NEW STANDARD

We are more than just a cannabis retail company. We are about a lifestyle that promotes vitality, balance & good health.

Resources & Equipment

Explore cannabis growing equipment for growing weed at home. 

Whether you’re just starting out, or you’re looking to enhance your outdoor or indoor weed grow setup – we have the perfect range of cannabis growing equipment to match your marijuana growing ambitions. 

Find everything from LED grow lights, grow tents, fans, and hydroponic setups, to environmental equipment and controls, harvesting accessories, extraction equipment and plenty more. 

Design your ideal cannabis growing setup with high quality growing equipment available in South Africa. 

Explore cannabis growing equipment we’ve curated from reliable online suppliers in South Africa

bottom of page