South Africa is to focus on developing the medical cannabis value chain and unlocking industrial hemp opportunities according to a new Country Investment Strategy released by the Presidency for public comment.
South Africa is ideally placed to cater for the global medical cannabis market. The country’s natural environment, low production costs, stringent quality control and a track record in agricultural innovation are all factors that make it an attractive investment destination.
That’s according to the Country Investment Strategy (CIS) released for public comment by the Presidency on 27 May 2022.
For the first time, cannabis has been included as a category in the CIS, recognising it as a legally, and globally traded commodity. In analysis of the CIS, law firm Cliffe Dekker Hofmeyer, notes that the “state still regards the commercial cultivation of cannabis for recreational use as a highly uncertain value proposition, both locally and internationally, requiring extensive legal and institutional evolution”.
The law firm notes that “considering South Africa’s agricultural competitiveness profile, the CIS concludes that cannabis grown and processed for medicinal use is the most viable competitive sales channel to pursue at an industrial scale and that capabilities developed for medicinal production can be rapidly deployed to service recreational demand from either local or international markets.
“Given the above, the CIS proposes that the state enable the finalisation of a common cannabis regulatory framework geared towards industrialisation for export, with a focus on the medicinal value chain. Accordingly, what is being prioritised is the development of a supportive legal framework which both streamlines export-scale production and opens up domestic market access through clear, sensible regulation of medicinal cannabis coupled with investment mobilisation and enabling activity by the state.”
The CIS says local production has been primarily geared towards raw cannabis flower and extracts for export to foreign markets as bulk active pharmaceutical ingredients. It assumes demand is set to increase as pharmaceutical product development pipelines approach commercialisation globally.
Internationally, more than 60 countries have legalized medical cannabis in some form or another, whether that be in the production or use of medical cannabis, or the import of pharmaceutical cannabinoid medications. Germany has adopted a free-market approach for GMP-certified medicinal cannabis products, even allowing public healthcare reimbursement for these products. The UK has also adopted a free-market approach to medical cannabis, however reimbursement is restricted to private healthcare providers only. France is also seemingly set to legalize medicinal cannabis after the completion of a two-year trial programme concluding in 2023.
These and other developments globally point to an increasing demand in the nearby future for quality-certified medical cannabis.