South Africa’s ‘R100 billion a year’ hope falls flat

 ·28 Aug 2023

Progress on building a major cannabis industry in South Africa – with the potential to deliver over R100 billion a year to the economy – is critically slow, and significant interventions are needed to get things back on track.

This is according to the latest Operation Vulindlela review for the second quarter of the year, which lists promised reforms by president Cyril Ramaphosa in the industry as having hit the “orange” zone – where reforms face significant challenges.

Cabinet decided in 2019 to commercialise the sector – but little has been achieved since then, and the president’s reform team says not to expect anything until 2024.

Promises made by Ramaphosa in both his 2022 and 2023 State of the Nation Address (SONA) raised expectations that South Africa would adopt a more liberal approach towards cannabis becoming a fully-fledged industry; instead, laws remain murky, and moves to build the industry have dragged on.

Studies have shown that South Africa is primed to become a major player in the cultivation and export of the plant, with the medicinal applications alone having the potential to create a R100 billion-a-year boost to the economy creating over 130,000 desperately-needed jobs in the process.

However, despite being headlined as a major potential growth area, the government has struggled to get the various stakeholders in the sector on the same page – including health regulators, legislators, and the private sector.

Seeing the pressing need to make progress on this particular reform, Operation Vulindlela, together with the Department of Agriculture Land Reform and Rural Development convened a “Phakisa Action Lab” in June 2023 to get everyone on the same page.

The forum was intended to secure policy coherence and agreement on the urgent implementation of the Cannabis Master Plan, the group said.

“Participants collectively agreed to the regulatory reforms required to enable sector development and investment, including reviewing the schedules to the Medicines Act to allow for cannabis grown for industrial purposes; to explore mechanisms to fast-track the removal of cannabis from the Drugs Act; and to reinforce previous instructions to all South African Police Services (SAPS) members to respect the privacy rights of cannabis cultivators and users,” it said.

The detailed programme of action emerging from the Phakisa is being finalised, Operation Vulindlela said, adding that further analysis of the cannabis sector and its potential is being drafted by the Department of Trade and Industry which should be published by the end of the year.

The key reforms being targetted in the sector include:

  • Scaling up support for the existing projects to support and enable private sector investment in product aggregation, processing, and manufacturing technology for end-user demand.
  • Securing an optimal financing framework that enables private-sector investment with some public sector financing support
  • Deploying a set of pragmatic interventions concerning investment promotion, export support and standards and conformity assessment.
  • Working with all provinces to further the activities currently underway and ensure alignment across government.

Meanwhile, the government is also working on enabling legislative and regulatory reform such as:

  • Reinforcing that no arrests for personal and private cannabis cultivation or possession takes place;
  • Removing cannabis from the ambit of the Drugs Act (although trading will remain illegal); and
  • Amending the schedules to the Medicines and Related Substances Act such that the South African Health Products Regulatory Authority (SAHPRA) will only regulate cannabis cultivation with the specific intention to manufacture active pharmaceutical ingredients (APIs), while the Department of Agriculture, Land Reform and Rural Development (DALRRD) will regulate cultivation of cannabis in terms of the Plant Improvement Act and amended Regulations for other demand pathways.

“The OV team is finalising the outcomes agreed to at the Phakisa Action Lab, and resultant detailed programme of work.

“This includes finalising the foundational policy framework for the hemp and cannabis sector and overarching, whole plant-all purposes hemp and cannabis legislation, together with the legal team appointed by OV to support short- and longer-term regulatory reform,” it said.

Despite these promises, however, there has been no visible progress on the plans – leaving South Africa waiting a little bit longer for a path forward.

Read: Ramaphosa’s big cannabis plans could go up in smoke

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