This article first appeared in BussinessLive on 21 February 2023.

President Cyril Ramaphosa's State of the Nation Address (SONA) on 9 February 2023 confirmed mounting industry fear that the government’s efforts to develop the cannabis economy are simply smoke and mirrors.

The address was thin on policy insights and an outstanding departure from the grandiose promises delivered in Sona 2022, which sent waves of euphoria through the industry.

In last year’s Sona, Ramaphosa pronounced that government would fast-track the growth and processing of the plant to make it a major job-creating sector. Yet this year the president barely scratched the policy surface and only mentioned that government was still working towards creating an enabling environment for the development of the sector. Nothing substantial was said with regard to how and when this would be achieved.

It has been stated many times that SA’s cannabis industry is plagued by regulatory difficulties. In the past few years government has attempted to develop the sector through a patchwork of legislation overseen by several different departments and state entities. These include the department of health and the SA Health & Products Regulatory Authority (Drugs & Drugs Trafficking Act), the Department of Justice & Correctional services (Cannabis for Private Purposes Bill, yet to be finalised), and the Department of Agriculture (Plant Improvement Act). 

Worryingly, government departments have not emulated the necessary synchronisation, and as such there exists deep policy incongruencies and regulatory misalignments.

Matters are made worse when considering that in the corridors of various government departments that ought to be champions of the sector there now  persists an unwavering ideology that views cannabis as a substance that ought to be regulated as a public health risk. This is clearly visible across policies that call for tight controls and provide for limited avenues for the production, manufacturing and sale of cannabis in SA.

Regrettably, not only does this prohibitionist culture stigmatise the plant, but it also guarantees the continued existence of unscientific apartheid-era laws prohibiting cannabis cultivation and use. In a recently published historical study, University of Johannesburg associate history professor Thembisa Waetjen “reveals how an apartheid-era drug law incited a war on drugs that was in effect a war on cannabis”. 

The study shows how the 1971 Anti-Drug Law, which subjected the cannabis plant to the strictest of controls and formed the basis of the current 1992 Drugs & Drugs Trafficking Act, set in motion a structurally racist policy of prohibition that continues well into the postapartheid era.

In such a context developing the sector will continue to prove difficult — and perhaps explains why government has moved rather lethargically in doing so. In addressing this challenge all key stakeholders, particularly government, must be conscious and critical of prohibitionist cannabis policies that are not only outdated but are frankly devoid of any scientific fact.

If government dares to develop the cannabis sector, state departments must completely abandon prohibition and instead adopt, unequivocally, bold developmental thinking. This is necessary to generate growth imperatives. A critical first step will be to ensure that the governance structure is fit-for-purpose and enabled to produce forward-looking policies that are grounded on thorough research, emerging global market trends and effective intergovernmental collaboration.

I recently read a thought-provoking opinion piece by economist Sifiso Skenjana regarding the ongoing regulatory difficulties in SA’s telecommunications industry. In his piece, “SA must build regulatory sandboxes, not sand houses — including Icasa”, Skenjana presented a detailed argument on the necessity for a regulatory sandbox in the telecommunications industry, similar to what the National Treasury, the Financial Sector Conduct Authority and the SA Reserve Bank had created in the fintech industry with the establishment of the Intergovernmental Fintech Working Group (IFWG).

In the financial service industry the IFWG has proved valuable in pushing the boundaries of existing legislation, providing opportunities for market innovators to test new products, addressing important questions regarding the policy and regulatory landscape, and providing for learning and knowledge transfer between financial sector regulators. Such an intergovernmental working group specific to cannabis, and charged with a joint mandate from the government departments involved and relevant regulatory authorities, could prove valuable in overcoming the many regulatory and policy challenges the industry now faces.

A focal consideration of the intergovernmental working group on cannabis must be the effective and accelerated commercialisation of the sector. Over the past few years, on different platforms, I have presented several innovative policy initiatives for government to consider in its efforts to develop the sector. Even though the cannabis economy is limited to growth through an incomplete patchwork of legislation, there are several significant initiatives government can establish to generate much-needed quick wins.

For example, SA has not yet begun to assess how special economic zones (SEZs) can be used for developmental acceleration in the cannabis sector. In short, SEZs are areas within the jurisdiction of a country where business and trade laws are different to that of the rest of the country and are aimed at increasing the trade balance, investment and employment, and improving administration. SEZs are also useful in building important market linkages with the broader economy and can support global value chain participation, industrial upgrading and diversification.

In 2021 Lesotho took the courageous step to establish the world’s first cannabis-centred SEZ (the Mafeteng Special Economic Zone) for purposes of attracting investors in cannabis agriculture and pharmaceutical industries. The SEZ has created a growing job market and enabled effective knowledge transfer, which has supported the overall development of Lesotho’s cannabis economy, making cannabis the largest cash crop in the country. Simply put, if SA does not take decisive action the country will rapidly be overtaken by other emerging African economies.

Ultimately, no significant progress can be made without the necessary political will to drive innovative policy that creates purposeful interfaces between research and development policy, and a framework conducive for growing SA’s market for cannabis products.

Siseko Maposa is a business adviser to Inkwazi Farming Group. He writes in his personal capacity.