Hershel Maasdorp/Cannabiz Africa
Writing in The Mail and Guardian, the Labat director says the cannabis industry is touted as a potential saviour of South Africa’s ailing economy. He says unless Government urgently puts in place enabling laws, “we will run the risk of becoming the backyard of the global pharmaceutical cannabis industry.”
Labat Healthcare CEO Herschel Maasdorp wrote in the Mail and Guardian on 30 January 2023 that the “legal cogs are grinding achingly slow” in getting a framework for the local cannabis industry off the ground and this could cost the country dearly.
“The absence of a sophisticated policy framework is an absolute indictment on government and state agencies” he said. “In South Africa, we should have, by now, a recommended price per gram of different profiles of cannabis, for different markets and purposes. And from the specific price point each constituent in the value chain gets their share.”
He said there was R107 billion of value in the local industry waiting to be unlocked, but unless the regulatory environment was “urgently addressed”, cannabis would not contribute as a “potential saviour of the country’s ailing economy”.
‘All levels of government are saying how much money can be made out of cannabis. But they will not make that money if the legislation is not changed” he said.
“The country is poised to become a leader in this dynamic space. South Africa enjoys a strong head start compared to others, a good reputation internationally for the quality of its product, and is rated as number one in Africa for technical competence and cost of production.
“But it remains in the very early stages of ironing out the various legal, political, economic, regulatory and social obstacles standing in the way of its potential. Its favourable climate, loosening laws, arable land and pre-existing experience in farming and hemp production makes it a formidable force to reckon with.
“Some advanced economies and sophisticated markets have not been shy to bestow their faith in South Africa’s medicinal cannabis industry as it grows around the world. Germany, for example, has recently become the most developed market to allow the use of cannabis to treat medical conditions, with recreational cannabis (adult-use) to be ratified within the next 12 months. A number of European countries have also relied on South African producers to source medical cannabis products” he wrote.
“An enabling framework needs to be developed as soon as possible so that growers can be involved in every part of the value chain. South African businesses can obtain a licence to grow, cultivate and export cannabis.
“The sluggish regulatory process is due to cannabis’s stigma as a narcotic tied to illicit trading. Development banks and potential financiers are reluctant to invest in cannabis because of its legacy reputation which is not yet dealt with as a new and emerging economic sector. They do not yet have a clear picture of what the commodity can bring to the economy.
Changing legislation means amending a number of laws, for best regulatory reform. Cannabis can be regulated through the Drugs Control Amendment Act or decriminalised through safety and security legislation, among others. All of these different regulations were amended and can be reissued specifically for the cannabis sector to inform the commodity’s commercial trajectory.
The warned that new auditing metrics for cannabis could potentially land the industry in the same dilemma as the wine industry whereby high-quality products were under-priced for the international market.
“South African companies should not allow the international market to dictate the price of our commodity. We should not booby trap ourselves by compromising on an abject price point to suit their needs.
“We will run the risk of becoming the backyard of the global pharmaceutical cannabis industry.
If we can get the laws right, market enablers and the regulations aligned, we can attract the ideal investors. When that happens, cannabis can begin to navigate its way out of the dark alleyways of the illicit trade and into the formal economy, as a legitimate economic category.
The country needs to get serious about the industry. Fostering enabling legislation across the value chain should fuel the cannabis sector to new highs, and in doing so, boost the economy and assist with economic recovery.
South Africa needs to urgently address the constraints standing in the way for the country to begin reaping the fruits of the local industry’s potential.