The formal cannabis industry has the potential to create up to 25,000 jobs and could be worth around R28 billion – but it still faces major hurdles in South Africa.

“We need to destigmatise the use of cannabis, whether it’s for recreational, medicinal or religious purposes – the Constitutional framework allows us as adults to use it without prosecution.”

This was said by the chairperson of Parliament’s Portfolio Committee on Small Business Development, Faiez Jacobs, who called for coherence in government to create an environment that ensures that small cannabis and hemp businesses are able to participate in the entire value chain.

However, despite commitments from the government to amend stringent cannabis laws to create a thriving commercial cannabis industry in South Africa, private businesses, growers, and entrepreneurs face immense obstacles in getting their products onto the market.

“Starting any business in these tough economic times is challenging, but raising investor capital is especially difficult for industries with so much red tape and confusion surrounding it,” said attorney and cannabis business consultant Danmari Duguid.

But, the snail’s pace of opening up the legal market has not curbed the enthusiasm for the cannabis market in the country, with many private businesses, growers, and entrepreneurs in the cannabis sector actively working to demonstrate to the government the benefits of this plant, which they say offers limitless possibilities.

Background

In 2018, the Constitutional Court upheld a ruling finding that sections of the Drugs and Drug Trafficking Act were unconstitutional, leading the way to the decriminalisation of private cannabis use in South Africa.

Back in 2021, South Africa released a National Cannabis Master Plan, outlining that the formal cannabis industry would be a game-changer for the country’s economy.

According to the master plan, the formal cannabis industry has the potential to create up to 25,000 jobs and could be worth around R28 billion.

Legislation as it stands

Currently, the only established legal commercial sectors in South Africa are medical cannabis and hemp.

These each presents unique challenges for potential businesses when it comes to obtaining licences, funding and navigating the complexities of strict legislation around the plant.

“Medical cannabis operations face stringent regulations and high financial and infrastructural demands, while hemp cultivation offers simpler licensing and cheaper methods, [but stringent] restrictions on THC (the psychoactive component of the cannabis plant) levels pose difficulties for farmers,” who want to find themselves on the right side of the law, said Duguid.

Currently, THC is classified as a Schedule 6 drug, which requires a prescription from a medical doctor and South African Health Products Regulatory Authority (SAHPRA) registration for dispensation by a pharmacy.

CBD, another component of the plant that is not psychoactive, can be prescribed as Schedule 4 or obtained over the counter as Schedule 0 if it meets certain concentration thresholds. THC products can seen as Schedule 0 if they contain up to 0,001% THC and do not have any health claims.

The recently passed Cannabis for Private Purposes Bill allows for cannabis plants, when privately cultivated or consumed by adults, to not need regulation by SAHPRA. However, it cannot be obtained through an exchange of goods.

While progress has been made over the past several to open up legislation to allow for the commercial medicinal cannabis and hemp sectors, nothing has changed for the commercialisation of a major portion of the cannabis market – the recreational sector.

“The absence of a legislative framework for the recreational market further complicates matters, fostering varied interpretations of the 2018 Constitutional Court Judgement, which has yet to enable a formal recreational market,” said Duguid.

As a result, the black market has been “flourishing” in South Africa, she added.

The private sector push

There have been numerous instances showing the eagerness of South African growers and businesses to be part of building a comprehensive and competitive cannabis industry in the country.

An example of this is the annual Cannabis Expo, which according to founder and event organiser Silas Howarth, “provides a platform for the industry to showcase its economic and health benefits to government and to the public.”

The expo has been around since 2018 (after the Constitutional Court ruling) to promote the medicinal, agricultural, financial and lifestyle benefits of the plant by displaying hundreds of products and food stalls derived from the cannabis plant from over 150 exhibitors in all of South Africa’s major business districts.

“There is so much excitement around, and interest in, the local cannabis industry because of the huge potential we have as a region for producing quality cannabis and cannabis products at an affordable price, to supply an ever-growing local and international demand,” which can greatly contribute to job creation, said Howarth.

Duguid agreed with this, saying, “Regardless of the stereotypes that may surround cannabis, we cannot deny that South Africa needs to desperately create jobs and sharpen its economy.”

“New industry creates the potential to do exactly that – we have to demand government takes this opportunity seriously before we are once again left behind in the global race for economic participation. Other countries are jumping on this opportunity, and so must we – before it’s too late,” concluded the expert.

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