In the past week, legal cannabis activist Eddie Botha has written to the President, urging him to end the decriminalization of investors and small scale growers and ensuring financial institutions provide services without fear of prosecution.

Banks are interested in sustainablity

At the same time, it’s emerged that Standard Bank is seeking to increase its lending to entrepreneurs and companies in the ‘ natural and organic sector’ in South Africa which says is worth about R1 billion annually “and continues to expand as consumers increasingly prioritise health, sustainability and locally produced goods”

“What makes this sector particularly exciting from a banking perspective is the diversity of business models emerging,”  says Standard Bank’s, head of Provincial Enterprise Banking, Qaanitah Dollie.  “From farm-to-table organic food producers to innovative natural cosmetics manufacturers, these businesses are creating new value chains while addressing growing consumer demand for products that are both environmentally and socially responsible.”

One of the companies that has been financed by Standard Bank is Haylur Organics, which uses cannabis in a variety of its skincare products. “Our raw materials are sourced across South Africa, which includes our hemp and sativa plant extracts found in a variety of our products” says the Haylur website, so there is no ambiguity that cannabis is part of the product mix.

Drugs Act Still With Us in Spirit

The main problem facing investors in the cannabis industry is the continued presence on the statute books of the Drugs and Drug Trafficking Act 140 of 1992, which classifies cannabis as a narcotic. Although the Cannabis for Private Purposes Act 2024 removes cannabis from the Drugs Act, it has not yet been gazetted into law because the Justice Department has not yet decided on the regulations that will empower the Act.

The Drugs Act therefore remains on the statute books like a bad smell that won’t go away, a technical hitch in cannabis legislative reform that serves no logical purpose. Even though the NPA no longer appears to be relying on the Drugs Act for the ad hoc cannabis prosecutions that are taking place, and the Medicines Act is being used instead.

In the wake of the furore around the cannabis in foodstuffs ban, Government has undertaken to consult stakeholders before publishing the regulations for the CfPPA, which means that the Act will remain in abeyance for several more months.

In the meantime, Attorney Botha has called on the President to urgently deschedule cannabis from the Drugs Act to “elimate legal barriers to commercial activities and enable financial access”.

He writes that “the Drugs Act’s scheduling conflicts with the Prince ruling’s decriminalization of private use and the 2024 Act’s intent to deschedule cannabis, perpetuating the perception that cannabis proceeds are illegal. Descheduling will provide legal clarity, allowing banks to offer accounts, loans, and payment systems to compliant operators, fostering economic growth.”

He says “the Drugs Act’s criminal penalties deter investment and exclude small businesses, violating the right to freedom of trade (Section 22). Clear legal assurances will enable financial inclusion, supporting job creation and equitable participation in the cannabis industry.

The DTIC should intervene

“South Africa’s cannabis industry represents a vital opportunity for economic advancement, yet it is hindered by financial barriers rooted in outdated legislation.”

Darryl Weisz, director of Silverleaf Investments, South Africa’s first dedicated cannabis investment fund, says he hopes that Government's new found willingness to engage stakeholders, will bring some urgency to fixing the regulatory vacuum. Writing in Cannabiz Africa in response to the lifting of the cannabis foodstuff ban, Weisz said: "Hopefully, this rapid turnaround will create the momentum needed for the cannabis industry—and those who have invested significant capital, resources, and commitment over the past 5 + years—to finally see the same urgency from the Presidency, the Department of Trade, Industry and Competition (DTIC), and other key ministries to finalise legislation pertaining to the Industry." 

Weisz has long called for the Department of Trade, Industry and Competition to publish a set of interim regulations that would guide the cannabis industry pending the finalization of a cannabis commercial framework

He says legitimate investors in the cannabis industry have been disadvantaged by the lack of regulations which in turn has allowed the ‘grey zone’ to proliferate.

Government in the meantime is working on its own model of funding the cannabis sector. The Eastern Cape Development Corporation has launched a 'blended finance scheme' for small-scale farmers in general. The Agri Blended Finance Scheme is part loan part incentive grant that is aimed at 'derisking' the recipients. Over R50 million has been disbursed by the ECDC over the past two years, and among the 30 farmers who received the funding, several were legacy cannabis growers.

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