A new cannabis initiative has been launched by the University of Pretoria to help speed up cannabis reform. The Cannabis Organization of the University of Pretoria (Coup). Coup has been working with Fields of Green for All and is a potential foundation for the research pillar in the National Cannabis Master Plan.
This report by Rick Nelson of Times Media, with additional reporting from Bloomberg
SA’s fledgling cannabis sector is crying out for the speedy adoption of a regulatory framework to govern it, saying there is a danger the country could be left behind by more nimble emerging competitors in the rest of Africa and elsewhere.
Speaking on the sidelines of a webinar recently hosted by the Cannabis Organisation of the University of Pretoria (COUP) to focus on cannabis entrepreneurship in SA and the constraints facing the sector, industry experts said it was essential the government, through the agriculture, land reform & rural development department, finalises its draft cannabis master plan so the industry can be formalised and make the most of SA’s competitive advantage.
Pretoria University pulls off weed “coup”
As it now stands, cannabis production for private personal consumption is allowed thanks to the landmark Constitutional Court ruling in September 2018, but no formal regulatory framework has been introduced by the government to enable a local cannabis sector to function formally.
Sibusiso Xaba, co-founder and CEO of ACA Group, an investments and advisory business focused on the African cannabis market, says the government has definitely taken some of the “right steps” but that “the speed with which we have to move is definitely quite urgent”.
“Not only because of our economic situation but also because we want to build a globally competitive, sustainable industry, and the earlier we are able to begin moving towards a mature industry locally, the better we can position ourselves at a global level.”
He says hemp, grown specifically for industrial uses such as the production of fabrics, is “low-hanging fruit” as far as a first step in regulation is concerned because it does not possess the psychoactive ingredient THC that other forms of cannabis such as marijuana contain.
He says regulation around marijuana for recreational use is a “lot more complicated, but this shouldn’t delay the introduction of a commercial hemp industry, which has incredible potential to create jobs and stimulate the economy”.
“The department of agriculture has to now expedite the introduction of a regulatory framework by which people can apply for licences and grow hemp.”
IN NUMBERS: 2018
The year in which the Constitutional Court legalised the use of cannabis for personal consumption.
Another ingredient of cannabis that is used for medicinal and other health purposes, and from which THC can be removed, is cannabidiol, or CBD.
Xaba says the introduction of a regulatory framework to govern the production of this ingredient could also be classified as “low-hanging fruit”.
Thoko Didiza, the minister of agriculture, land reform and rural development, said this week an inter-ministerial committee, which includes the ministers of health, social development, justice and police, along with herself, was working on the cannabis master plan. The issues include how to grow the industry while balancing that with the problem of substance abuse, as well as addressing the legal and regulatory issues.
Didiza did not give a timeframe for when the master plan would be completed.
Xaba says a key to the success of the cannabis sector in SA is the establishment of a domestic industry that provides finished products for the market so the country doesn’t end up just being an exporter of the raw materials used for producing CBD oil and other products.
“What we noticed throughout Africa is that a lot of countries have legalised cannabis but not with the intent of building a domestic cannabis industry. They are looking to leverage the low-cost production advantage that good climate regions, which are common in Africa, bring in order to sell to Europe or Australia to make better margins as it is a lot more expensive to produce cannabis, for instance in Canada, where it is colder.”
The longer it takes to get a regulatory framework in SA, the faster we lose our competitive edge.
Trenton Birch, CEO of cannabis company Cheeba Africa
Trenton Birch, co-founder and CEO of Cheeba Africa, a cannabis health and wellness company that launched Africa’s first cannabis academy to provide courses on cannabis, agrees that a formalised master plan is urgently required, saying it should have been developed two-and-a-half years ago, when the September 2018 Constitutional Court ruling allowed for the personal use of cannabis.
He says while he understands that the Covid-19 pandemic has contributed to delays, it is essential the regulatory framework is introduced as a matter of urgency.
“We are losing potential market share and we have been losing it for a long time. The international market is flying at the moment. They are not without their own challenges, but as Mexico comes online and Asian countries come online, it makes our opportunities to export a lot more difficult.”
Birch says SA is recognised internationally as having some of the best cannabis in the world due to its sunny climate and that at one stage Interpol estimated that one in every four illegal cannabis hauls could be traced back to this country.
“The longer it takes to get a regulatory framework together in South Africa, the faster we lose our competitive edge overseas. The longer we take to come online, the more other African countries come online, and the more other developed countries come online.
“The price per gram then comes down. We have a strategic advantage at the moment because we can grow outdoors. We don’t need massive, expensive indoor facilities to grow year-round like in colder climates like Canada.”
Marc Wegerif, a lecturer in development studies in the department of anthropology and archaeology at the University of Pretoria, who is one of the organisers of COUP, says the group sees “enormous potential” for a legal cannabis industry in SA, and that it could create hundreds of thousands of job and ownership opportunities.
He says COUP consists of a group of academics at the University of Pretoria who are doing research and work associated with the cannabis industry.
He says that currently, farmers are allowed, under strict conditions, to produce cannabis for medicinal and health uses for the export market. The biggest export market is Canada, which has become one of the leaders in processing and developing cannabis products.
However, because of the strict conditions, cultivation is very expensive — for instance, farms have to be surrounded by 2m-high fences, at great cost — which puts the industry out of reach of many small, emerging black farmers.
“Clearly there is a lot of potential, and a lot of black farmers in poor rural areas grow cannabis as an important cash crop. How do we build on what is there and bring these farmers into what would be a new sector?” asks Wegerif.
“We have to protect these emerging farmers. It will be quite tragic if that economic activity gets destroyed in the legalisation process and we only see large commercial farmers and pharmaceutical companies benefiting.”
Wegerif says it is also essential that SA does not fall into the trap of “just exporting raw materials” to other countries and end up importing finished CBD and other related products as this would lose it thousands of job and ownership opportunities for entrepreneurs.
Firms see boom in cannabis consumer
Additional reporting by Sam Mkokeli
Companies across industries are chasing an attractive new demographic. These dream customers are more likely to own pets and to love fashion, to want kids and to consider starting their own business. They also make quite a bit of money — and are still spending it during the pandemic.
Who is this ideal mystery consumer? None other than the cannabis user, once viewed as an anti-materialistic layabout. They’re so attractive a demographic, in fact, that some consumer goods and technology companies are actively courting them.
That’s been the case at Uber Technologies, which hired cannabis advertiser Fyllo late last year in its first attempt to specifically target dagga users when advertising its food-delivery service, Uber Eats.
And it’s not just about serving people who have the munchies after smoking marijuana, said Uber’s global head of media, Travis Freeman.
“A cannabis consumer is younger than the normal consumer, has more disposable income; they are busier than most, they are working all the time, exercising all the time, going on adventures all the time,” Freeman said. The results have been good: Uber has found that cannabis users are more likely to watch and complete video ads than the average consumer.
Fyllo said other companies from outside the marijuana industry are also trying to tap into this enticing demographic. The growing interest helped Fyllo close a $3m (R42.8m) funding round last week.
“We’re seeing a lot more mainstream brands,” said Fyllo chief operating officer Katie Ford. “Some of the biggest alcohol companies want to target the cannabis consumer. Our platform allows them to do that.”
Gone are the old clichés about washed-up stoners. An MRI-Simmons survey from 2020 showed that people who consumed cannabis are 22% more likely than non-cannabis users to seek out variety in their everyday lives, 32% more likely to want to be first to try new products and services, and 25% more likely to make impulse purchases. They’re also good at influencing: they’re 27% more likely to keep social media feeds updated and 25% more likely to share their opinions by posting ratings or reviews.
That has corporate America’s attention. A November survey by Forrester Consulting, commissioned by Fyllo, that talked to marketing executives at large US companies showed that 82% were interested or very interested in having more insights into medical cannabis consumption. Likewise, 77% would be interested in understanding recreational cannabis consumption and 76% would be interested in CBD product consumption insights, showing just how crucial this demographic is becoming across industries.
Of course, some consumer-goods companies are targeting cannabis consumers for a different reason: they’re looking for a way to recoup losses. “A beverage or liquor brand would want to target them because they’re losing market share,” said Fyllo CEO Chad Bronstein. “This is a way for them to keep talking to the consumers.” — Bloomberg