Ramaphosa has high hopes for South African cannabis industry

President Cyril Ramaphosa said in his State of the Nation Address that South Africa has the capacity to significantly capitalise on global cannabis sales, which are set to reach R1.8 trillion by 2026.

“Last year, we committed to unlocking investment in the hemp and cannabis sector. We are moving to create the enabling conditions for the sector to grow,” said Ramaphosa in his address last week. 

“The department of agriculture land reform and rural development and the department of health will address existing conditions for the cultivation of hemp and cannabis to allow outdoor cultivation and collection of harvests from traditional farmers,” Ramaphosa said.

In December 2022, the deputy minister of trade, industry and competition, Nomalungelo Gina, identified the cannabis sector’s “huge potential for the small, medium and micro enterprises (SMMEs) in rural areas where poverty is concentrated”. 

At the Agriculture and Land Summit in Bergville, KwaZulu-Natal, Gina said the government estimates that “the cultivation and commercialisation of cannabis production in South Africa can generate an estimated R28 billion and could create between 10,000 to 25,000 jobs across the sector”.

A recent report by Prohibition Partners estimated that global cannabis sales could be worth more than $101 billion (R1.8 trillion) by 2026, and South Africa has the capacity to significantly capitalise on this growth.

However, the sector is held back by regulatory uncertainty. 

“South Africa’s government has been amongst the most vocal about its intentions to prioritise the cannabis industry for economic growth, rural development and job creation,” said the report. “However, progress has been frustratingly slow for local stakeholders.”

South Africa’s “lack of a coherent policy” has made local investors apprehensive about investing in the sector.

“South Africa’s cannabis industry growth potential is hampered by not allowing for broad access to the medical cannabis supplied by local cultivators.”

“Small-hold traditional growers and other legacy market growers in South Africa have not been explicitly integrated into the current legal cannabis framework, causing continued discontent.”

“South Africa leads the way as Africa’s largest cannabis and industrial hemp market, and it is well positioned to be a globally competitive international player should the government put into action its plans for the sector”.

South Africa has around 900,000 traditional cannabis growers, and should this industry have the effect on the economy that the government hopes for, the inclusion of these stakeholders is critical.

Johann Slabber, CEO of biotech company OI Holdings, said in an interview with Business Day TV that almost 90 cultivation and manufacturing licenses have been issued since the South African Health Products Regulatory Authority released its guidelines for the cultivation of cannabis in 2017. 

However, South Africa is yet to be seen as a commercial player in the cannabis space, he said.

“We need to focus on driving the ship and creating market access for the already existing market,” he said.