The legalisation of the private and commercial use of cannabis forms part of the country’s plan to revive its ailing economy which has been further battered by Covid-19. Decriminalising cannabis has previously been touted by Finance Minister Tito Mboweni as one of the ways the country could plug in the hole in dwindling tax revenues.
Once legalised, South Africa will join other countries such as Australia, Canada, Chile, Colombia, Croatia, Cyprus, Finland, Germany, Greece, Israel and Italy which all have legalised the medical use of cannabis.
Medical use only
Use of cannabis in South Africa is regulated by the Medicine and Related Substances Act, the Drugs and Trafficking Act and various other international laws prohibiting the use of the substance.
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The draft cannabis master plan, seen by Moneyweb, foresees the Cannabis for Private Purposes Bill (which is currently before the National Assembly) to be made into law by 2023. The bill gives effect to the Constitutional Court judgment which was handed down in 2018. The apex court ruled that adults may use, cultivate and possess cannabis in private for their consumption and any prohibition of cannabis for private use limits the rights to individual privacy.
Although the Constitutional Court decriminalised the private use of cannabis, the buying and selling of cannabis, cannabis oil and cannabis seeds remain illegal.
The master plan sets out various deadlines for the gradual implementation of the legal use of cannabis in South Africa including the legislative, agricultural and commercial requirements.
By 2023, the country ought to have declared hemp as an agricultural crop, made amendments to the Drugs and Drug Trafficking Act, and developed a new policy and legislation for the commercialisation of cannabis.
This will be overseen by an executive oversight committee (comprising manufacturers, farmer associations and various government departments including Trade, Industry and Competition, Justice and Correctional Services, and Agriculture, Land Reform and Rural Development), task teams and provincial cannabis committees.
Big market
The cannabis industry in the country is estimated to be worth R27 billion by 2023 according to the Cannabis Development Council of South Africa. Globally, the industry is estimated to be worth $30 billion, increasing to $100 billion by 2030.
The draft plan, citing research from Interpol, says South Africa is the fourth-largest producer of dagga in the world with 3.5 million users. Most of the users of the substance do it for recreational purposes although “medicinal marijuana is gaining traction both within the medical fraternity and with the general population”.
The domestic industry is characterised by over 900 000 small-scale farmers, mostly in the Eastern Cape and KwaZulu-Natal. The draft plan notes most of the buyers of dagga are situated in Cape Town, Johannesburg, Durban and also other South African towns and cities.
Since the Constitutional Court ruling, the small scale farmers have raised concerns that private use and cultivation of cannabis will lead to massive profit losses brought on by the decrease in the number of buyers.
Once decriminalised, there is also a risk that small scale farmers lose out on business to big corporations that have the financial and structural muscle to weed out smaller players.
“It will be important for [the] government to use competition laws to deal with this challenge to create an inclusive cannabis industry. Legalising cannabis will open opportunities to all interested stakeholders, including big business,” the draft plan says.
Unseeded
Farmers also face challenges related to the unregulated supply of seeds because the substance is an illegal commodity.
“Seed is currently obtained via informal markets and networks. This creates a regulatory challenge in that it is virtually impossible for [the] government to regulate and guarantee the quality of seed that is traded. The farmers are therefore at risk of being sold poor quality seed with low germination percentages,” the plan reads.
