Following the Constitutional Court’s 2018 ruling in Minister of Justice v Prince (Case CCT 108/17), which decriminalized private use, possession, and cultivation of cannabis by adults, the absence of a comprehensive retail framework creates ambiguity for industry participants.

This proposed retail licensing and industry vetting framework addresses this gap, detailing its alignment with the Cannabis Masterplan published by the Department of Agriculture, Land Reform and Rural Development in 2021.

Proposed Retail Licensing and Industry Vetting Framework

The following framework is proposed to establish a regulated cannabis retail sector:

1               Industry Vetting and Participant Standards

2               A vetting process would require individuals and entities entering the retail cannabis market to meet the following criteria:

3               A clean criminal record, excluding legacy cannabis-related charges eligible tiefor expungement under proposed legislative reforms.

4               Tax compliance and valid business registration with the Companies and Intellectual Property Commission (CIPC), as required under the Companies Act (Act 71 of 2008).

5               Transparency of ownership and operational roles to align with anti-money laundering regulations under the Financial Intelligence Centre Act (Act 38 of 2001).

6               A standardized application process requiring documentation, including IDs, business plans, and safety compliance protocols.

Proposed Retail Licensing Framework Tier 1: Entry-Level / Exempt Retail Store

A tiered retail licensing model is proposed to accommodate varying levels of operational readiness and compliance:

Tier 1: Entry Level/Exempt Retail Store

•               Operates under conditional exemption from the Department of Health, pending enactment of the Cannabis for Private Purposes Bill and strict compliance control.

•               Complies with health and safety standards under the Occupational Health and Safety Act (Act 85 of 1993) and participates in registry and monitoring systems.

Products limited to wellness-based items (e.g., CBD, non-THC dominant, with THC levels below 0.2% as per hemp regulations) and includes educational materials.

Tier 2: Transitional Retail Store

•               Offers expanded products under compliance with quarterly audits.

•               Adheres to labelling, dosage guidelines, packaging standards, and adverse reaction reporting, consistent with South African Health Products Regulatory Authority (SAHPRA) guidelines for medicinal cannabis.

Tier 3: Full Recreational Retail Store

•               Offers expanded products under compliance with quarterly audits.

•               Adheres to labelling, dosage guidelines, packaging standards, and adverse reaction reporting, consistent with South African Health Products Regulatory Authority (SAHPRA) guidelines for medicinal cannabis.

•               Complies with proposed cannabis legislation, once enacted, including full auditing and traceability.

•               Includes high-THC products, pre-rolls, edibles, and other psychoactive formats under oversight aligned with the Medicines and Related Substances Act (Act 101 of 1965).

Registry and Track & Trace Requirements

Licensed retailers would:

•               Register with an official industry database managed by a designated regulatory authority.

•               Participate in track-and-trace systems for inventory and sales, consistent with supply chain standards in the agricultural sector.

•               Maintain records of sourcing from licensed suppliers, as required for hemp under the Plant Improvement Act (Act 53 of 1976).

•               Record customer age verification and adverse reactions, aligning with consumer protection under the Consumer Protection Act (Act 68 of 2008).

Alignment with the Cannabis Masterplan

The Cannabis Masterplan, launched in 2021 by the Department of Agriculture, Land Reform and Rural Development, aims to develop a competitive cannabis industry, targeting 25,000 direct jobs, inclusive growth for rural and marginalized communities, and global market participation. The proposed framework supports these objectives as follows:

•               Economic Development: The tiered licensing model enables small and medium enterprises to enter the market, supporting Masterplan’s target of creating jobs and fostering agro-processing, with a focus on rural economies.

•               Regulatory Compliance: Vetting and track-and-trace systems ensure a transparent supply chain, aligning with the Masterplan’s goal of meeting international standards, including the UN Single Convention on Narcotic Drugs (1961), to which South Africa is a signatory.

•               Social Equity: Excluding legacy cannabis convictions from vetting supports the Masterplan’s emphasis on empowering historically disadvantaged individuals, addressing inequities from prior enforcement under the Drugs and Drug Trafficking Act (Act 140 of 1992).

•               Public Health and Safety: Product standards and adverse reaction reporting align with the Masterplan’s commitment to responsible market development, ensuring consumer safety as overseen by SAHPRA.

•               Export Potential: A regulated retail sector with clear standards positions South Africa to meet global demand for cannabis products, supporting the Masterplan’s vision of establishing the country as a leading exporter of hemp and medicinal cannabis.

The Constitutional Court’s 2018 ruling mandated Parliament to amend laws within 24 months to regulate private cannabis use, but the Cannabis for Private Purposes Bill remains pending as of May 2025.

The Masterplan identifies regulatory delays as a barrier to industry growth, projecting that a fully regulated market could contribute significantly to GDP through job creation and exports.

The proposed framework addresses these challenges by providing a structured approach to retail operations, complementing existing hemp regulations under the Plant Improvement Act and medicinal cannabis oversight by SAHPRA.

The proposed retail licensing and industry vetting framework provides a structured pathway to regulate South Africa’s recreational cannabis sector, aligning with the economic, social, and regulatory objectives of the Cannabis Masterplan.

All compliance measures within this framework, including vetting, licensing, and track-and-trace requirements, are designed to be strictly monitored to ensure adherence to regulatory standards, protect public health, and maintain market integrity.

Charl Botha B.Proc (S.A)

H3 Legal Solutions (Cannabis Strategic Specialists)

Email: charl@h3legal.co.za