Cannabis strategist Charl Botha OF H3 Legal Solutions has quantified some of the losses endured because of delayed regulatory reform. In a letter dated 19 May 2025, written to the President and several government departments, Botha calls for urgent ‘inter-ministerial’ action to get the cannabis sector up and running.

He says Government needs to put a timeline on the table for an all-purpose Cannabis Act to replace existing legislation and provide regulatory guidance and a commercial framework.

“With respect, we urge coordinated, time-bound government action to stabilise a sector in crisis and unlock its constitutional, economic, and developmental potential” he writes.

Botha argues that since the historic Constitutional Court ruling of 2018 (Minister of Justice and Constitutional Development and Others v Prince) the lack of clear, harmonised cannabis regulation has led to serious economic and legal consequences.

“While policy discussions have continued, delays in aligning national legislation and regulatory frameworks are now causing irreversible damage—licensed facilities are closing, hundreds of jobs are being lost, and investment confidence has declined” he says.

This is an excerpt from the letter, dated 19 May 2025.

“As of February 2025, the South African Health Products Regulatory Authority (SAHPRA) has issued 93 licenses for the cultivation of cannabis for medicinal and research purposes. However, out of 130 operational sites, 37 have closed or entered business rescue due to regulatory uncertainty and market inaccessibility.

These closures have resulted in over R1.48 billion in capital losses—many in rural areas where infrastructure investments ranged from R3.4 million to R40 million per facility.  An estimated 740 direct jobs have been lost, with secondary impacts affecting supply chains, services, and dependent households.

Furthermore, around R2.13 billion in potential wholesale revenue is being lost annually because licensed producers are unable to trade within South Africa’s borders. Fewer than 10% of SAHPRA-licensed entities are successfully exporting cannabis, and many face overstock and compliance costs that cannot be recovered.

The March 2025 ban on edibles, though later reversed, temporarily placed over 130 small businesses at risk. This instability has deepened sector vulnerability and underlined the need for coordinated, rational regulation.

The cannabis sector plays a critical role in youth employment and rural development, especially in underdeveloped provinces such as the Eastern Cape and KwaZulu-Natal. Yet, an estimated 20,000 traditional cannabis growers remain excluded from the legal economy due to licensing barriers and regulatory complexity.

This perpetuates rural poverty and further entrenches dependence on state support.

In parallel, the R36 billion illicit market continues to flourish—undermining public safety, weakening regulatory legitimacy, and discouraging lawful enterprise.

Urgent Areas for Inter-Ministerial Action

We respectfully propose the following coordinated interventions to safeguard the industry and enable inclusive reform:

1.     Legal Reform and Legislative Alignment We request a clear update on the timeline for removing cannabis from the Drugs and Drug Trafficking Act, in line with the Constitutional Court’s ruling. Legislative clarity is essential for legal certainty and industry legitimacy.

2.     Domestic Market Access We request the development of an interim regulatory framework enabling licensed SAHPRA cultivators to lawfully trade within South Africa. This would reduce stockpiling, restore investment interest, and boost legal revenue streams.

3.      Compliance Standards for Cannabis Clubs and Informal Growers We urge the publication of practical compliance guidelines and public health protocols for cannabis clubs and small-scale cultivators. This would allow the responsible evolution of this segment under state oversight.

4. Inclusion of Traditional Growers We request structured programs to simplify licensing, provide technical support, and offer financial assistance to traditional growers. Recognition of existing expertise in rural communities is essential for inclusive growth.

5. Promotion of Sustainable Cultivation and Innovation We recommend funding allocations and the creation of public-private research partnerships to promote sustainable, eco-friendly cultivation methods adapted to local conditions.

6. Access to Financial Support and Tax Relief We seek confirmation of financial support mechanisms and tax relief measures for compliant small producers, who are currently excluded from general enterprise support schemes.

7. Stronger Enforcement Against Illicit Operators We request an updated enforcement strategy targeting large-scale illicit operations while protecting law-abiding, licensed businesses from criminal disruption and unfair competition.

Request for Interim Permit Framework

While long-term legislation is under development, we propose the urgent introduction of a nationally recognisable cannabis permit, issued by the Department of Health in collaboration with SAHPRA. This permit would:

•               Provide limited, lawful operating exemptions for qualifying producers;

•               Establish reasonable, enforceable compliance guidelines;

•               Permit domestic distribution and research under strict conditions;

•               Enable transparent monitoring while supporting public health goals.

Such a measure would offer interim legal certainty, unlock market access, and safeguard investment—without compromising regulatory control

“Request for Response and Collaboration

We respectfully request that each relevant department respond by 30 June 2025 with the following:

•               A brief outline of actions currently underway or planned, including anticipated timelines;

•               Details of any ongoing or upcoming public consultations and engagement platforms;

•               A designated contact person for continued collaboration and industry input.

We also express our support for the formation of a Multi-Stakeholder Cannabis Industry Task Team, as proposed in the President’s 2025 State of the Nation Address. This Task Team should consolidate reforms under a single, unified Cannabis Regulation Act by mid-2026.

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