President Cyril Ramaphosa recently restated his intentions to industrialise the country’s cannabis and hemp sectors but red tape is holding small-scale farmers back from participating in the booming industry.
“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,” he said in his recent state of the nation address.
Ramaphosa is pushing for the outdoor cultivation and collection of cannabis harvests from traditional farmers.
“This will unlock enormous economic energy in the country’s rural areas, especially in the Eastern Cape, KwaZulu-Natal and Mpumalanga,” he said.
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 can capitalise on this growth.
However, Brian van Rooyen, CEO of cannabis company Labat Africa Group, said outdated laws and regulations prevent small-scale cannabis farmers from entering the booming industry.
“The legal context within which small-scale farmers have to operate is making it difficult for them to enter the sector,” said Van Rooyen.
“Laws governing the cultivation of cannabis and hemp remain strenuous and restrictive, raising barriers to entry and making it difficult for independent producers to participate equitably in the cannabis economy.”
The government legalised cannabis and hemp for medicinal use in 2018.
However, legislation and regulations surrounding the industry have lagged, making it difficult for small businesses to participate in the sector.
“One of the biggest concerns is the lack of clarity on whether smaller farmers will be left behind if the government eventually delivers on its promise to industrialise the production of cannabis,” said Van Rooyen.
One particular hurdle small businesses in this sector face is licensing.
Licenses to produce and sell cannabis are issued by the South African Health Products Regulatory Authority (SAHPRA).
This license is mandatory to cultivate, process, extract, test, and manufacture cannabis products in South Africa.
However, SAHPRA only issues permits to applicants who have established fully compliant cultivation, processing, extraction and/or testing facilities.
“This naturally favours large-scale producers that have the capital to get started but leaves independent producers out in the cold,” said Van Rooyen.
“Given that small-scale farmers produce approximately a third of the world’s food crops – and can arguably produce a similar proportion of South Africa’s potential cannabis crop – this is profoundly short-sighted.”
The Prohibition Partners report also points to a problem in the requirements for hemp production permit approval.
One requirement for a permit is to have fencing around the cultivation areas, which adds high set-up costs for farmers.
“This is particularly challenging as financing support for emerging hemp farmers is currently limited in South Africa,” said the report.