SA needs to act now to maximise benefits of cannabis sector
There is so much potential in a legal cannabis sector in South Africa, but we are being left behind in this emerging global industry when we should, and could, be leading it.
We also have the opportunity to ensure that this sector, unlike so much of the South African economy, really is equitable, and creates jobs and a wide range of ownership opportunities for farmers and other entrepreneurs. These were the key messages of a webinar hosted by the Cannabis Organisation University of Pretoria (which I am part of) on 8 April 2021.
The event focused on cannabis entrepreneurship and featured a panel of speakers who have been making strides in developing the sector and who brought a range of perspectives to the discussion, from investment to media and training.
They agreed on the economic potential of cannabis, and the need for regulation and clear business principles to be applied; they also agreed on the need for collaboration and taking forward positive values linked to cannabis as we build the sector.
Challenge to make canabis a legal industry
Cannabis is best known for its use as a recreational drug. This application uses tetrahydrocannabinol (THC), which is the main psychoactive cannabinoid (active constituent of cannabis). This is likely to continue to be one of the largest and most lucrative cannabis-based businesses. The challenge is to make this a legal industry that can grow, contribute to much-needed government revenue, and be well regulated to be safe and equitable.
We are slowly becoming more aware of the many other applications, including the use of the fibre (hemp; cannabis with lower THC levels) in a wide range of applications, as well as the many medicinal uses that we have only begun to scratch the surface of.
For years I have bought my partner hemp-based lotion that works well for her sensitive skin. This is imported into SA by the Body Shop and is made in Germany from hemp seed oil produced in France.
In the webinar, Sibusiso Xaba pointed out that every year SA imports millions of rands' worth of CBD oils for health and wellness applications, and hemp for the automotive industry. Yet we are well positioned and able to produce these perfectly legal products in SA, if only our regulations would allow for it.
READ | SA could take a chunk of R83 billion medicinal marijuana business
A wide range of other support services and opportunities are available beyond the obvious production, processing, and distribution parts of the cannabis sector. This includes investment, marketing, publishing, logistics, training, even work for electricians. I can see how, as a university, we can contribute to (and benefit from) a wide range of work needed for the sector spanning research, technology development, policy and legislative work, and human capital development, all of this across a range of disciplines.
The fact that we are importing products that we could be producing here illustrates that we are indeed being left behind in this fast-growing global business.
Canada has extremely poor conditions for cannabis growing, yet has become the investment centre for the industry and one of the main places that the few farmers who have licences for cannabis production in southern Africa export to.
Closer to home, Lesotho started licensing the production and export of medical cannabis in 2017 and has issued over 200 licences, whereas SA has issued fewer than 30 such licences, and has still not clarified its policy and legislation.
However, the licensing conditions in Lesotho make it very hard for most Basotho to start such businesses. Many cannabis operations there are driven by international companies, and small-scale cannabis growers continue to be left outside the system.
The same thing is being repeated in SA, where the current requirements for getting a licence, which is available only for medicinal production, are such that the lowest-cost start-ups have needed a minimum of two to three million rand to get into operation. At the same time, banks are extremely sceptical of financing anything to do with cannabis.
There is growing frustration that despite the Constitutional Court ruling making certain private use of cannabis legal in 2018, there is still no legislation in place to give proper effect to that. The draft Cannabis for Private Purposes Bill, currently under consideration by Parliament, takes a punitive approach that still criminalises most cannabis activities, including any sale of cannabis. If passed, the Bill will severally constrain the emergence of a legal cannabis industry.
Price taker
Slow progress is already putting SA in the position of being a price taker, exporting cheap raw materials and importing expensive finished products and technology.
We run the risk of a colonisation of the industry, with the rest of the world determining where Africa fits in and most value and benefits staying in Europe and North America. Moving fast in opening up the sector, and investing in research and technology and skills development that builds on our existing seed strains and widespread (currently illegal) production, knowledge, and values could counter this. But none of this can happen effectively with the current legal uncertainty and policy vacuum.
However, there is hope.
The Department of Agriculture, Land Reform and Rural Development has released a draft Cannabis Master Plan, which was discussed in an online consultation on 30 March 2021. This is based on a July 2019 Cabinet decision that SA needs a national strategy to commercialise cannabis. It starts from the positive position of realising the potential of cannabis and setting out to create a framework that can enable cannabis, "... to contribute to economic development, job creation, inclusive participation, rural development and poverty alleviation". There are, however, weaknesses in the current draft.
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Among other gaps, it does not give enough attention to the crisis of inequality and the opportunity to make a new sector like this much more egalitarian. We have to take robust measures to avoid corporate capture and to ensure the space is opened for millions of small-scale farmers and entrepreneurs. Relying on competition laws, as the draft does, is not enough, as that has not stopped an extreme concentration of ownership in other sectors.
Climate change and related environmental destruction are also overlooked.
This misses the opportunity to ensure cannabis production is done in a sustainable, regenerative way. Agro-ecological production practices - if made central to regulation and research and development from the beginning - could make a major contribution to carbon capture and soil regeneration. It could also be a strong selling point for South African cannabis products in what are increasingly environmentally conscious national and international markets.
Importantly, the master plan acknowledges an estimated 900 000 small-scale farmers are growing dagga in the country and, "... millions of people depend on income from dagga".
This constituency, from small-scale black farmers to matchbox dagga sellers at taxi ranks, needs to be brought into consultations and become primary beneficiaries of the final plan when implemented.
This remains very difficult as their activities continue to be illegal, even as international pharmaceutical companies and investors are participating in policy consultations and positioning themselves to benefit from a fast-growing industry based on the very same crops.