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The grass is greener
The grass is greener
Growing the economy through the cannabis industry
The cannabis industry has been earmarked as a key economic differentiator by the South African government, as it has the potential to increase both jobs and economic revenue.
To enable this sector, the government is in the process of developing essential items of legislation that will regulate the use and growth of the plant.
THE POTENTIAL OF CANNABIS PRODUCTION
President Cyril Ramaphosa committed in his State of the Nation Address to fast-track regulations for the local cannabis industry. The industry has the potential to be a significant economic driver, with hemp and cannabis production having the ability to create as many as 130 000 new jobs for the country.
The global CBD and cannabis market has seen exponential growth in recent years, and some estimates say it will be valued at close to $180-billion by 2030.
Last year the global CBD market was calculated to have a market value of $4.5-billion, by 2028 the value of this market is expected to reach $20-billion. Europe and North America are the biggest players in the market, but other regions are also beginning to claim their share. According to the African Cannabis Report, the continent is likely to see the value of its legal cannabis rise to at least $7.1-billion in the next few years. One of the nations that is capitalising on this rising market is Lesotho, which has been one of the first African nations to award licenses for cannabis cultivation for scientific and medical purposes. It now serves as a model for other countries looking to begin cultivating cannabis – such as South Africa.
President Ramaphosa has called Lesotho a shining example of a country already grasping the enormous opportunities of cannabis cultivation.
South Africa has a rich heritage of medicinal plants and the cultivation thereof, and there are around 100 cannabis-related companies in South Africa (many of them cultivation businesses) that are investment ready. An estimated R5-billion has already been invested in the South African industry.
FAST-TRACKING REGULATORY CHANGE
To fully unlock the potential of this industry, the South African government has embarked on a journey to change legislation around cannabis use and cultivation.
Government plans include the signing of the Cannabis for Private Purposes Bill during the 2022/2023 financial year.
The Bill, which follows a 2018 ruling by the Constitutional Court that the use, possession, and cultivation of cannabis in private homes is not illegal and should be allowed in South Africa, will ensure South African laws are in line with the court decision.
The Bill, if passed by the National Assembly, will make amendments to the Drugs and Drug Trafficking Act. The Bill does not make provision for the commercialisation of cannabis, but the government’s Cannabis Master Plan provides a regulatory framework to overcome other legislative hurdles.
The Cannabis Master Plan details how cannabis can be incorporated into South Africa’s business sector. In the master plan, the Department of Agriculture, Land Reform, and Rural Development has proposed legislative measures to remove the restrictions on the commercialisation of cannabis and hemp.
President Ramaphosa says that cannabis products will now be industrialised, to allow the country to harness the economic benefits they bring, and that policy and regulations will be fast-tracked. According to the master plan, the government will develop and support the growth and development of the manufacturing and product development capacity of the cannabis industry. The Cannabis Master Plan includes legislative reform and the development of a national seed supply system, and education initiatives.
Assistance for growers is also covered by the master plan, and the focus rests on supporting smallscale and traditional cannabis farmers, as well as formalising growers that were previously operating illegally. They will be offered both technical and financial support.
The Department of Small Business Development will be tasked, under the master plan, with developing and implementing special incubation programmes for new suppliers, as well as facilitating off-take agreements between cannabis growers and manufacturers.
The master plan will see the implementation of breeding programmes for new cannabis and hemp cultivars and will support research and development programmes for the cannabis industry. It will also look at ways to develop both local and export markets.
But the economic effects of encouraging the cannabis industry go beyond just supplying cannabis produce – as the industry grows, so will the demand for services such as greenhouses, nutrients, plant growers, quality control systems and software.
This leaves investment opportunities in cultivation, processing, laboratories and manufacturing, with each sector bringing the potential for economic growth and job opportunities. The Cannabis Master Plan aims to provide a broad framework for the development and growth of the South African Cannabis industry in order to contribute to economic development, rural development and poverty alleviation.
