Government leaves cannabis farmers high and dry in South Africa

 ·8 Mar 2024

Despite promises of creating a fully-fledged cannabis industry in South Africa, small businesses hoping to enter the market exhibiting a “gold rush” continue to be left high and dry when it comes to obtaining licenses and funding.

These challenges were outlined in a presentation to parliament‘s Portfolio Committee on Small Business Development on Tuesday (6 March) by emerging businesses and the South African Health Product Regulatory Authority (SAHPRA)

Back in 2021, South Africa released a National Cannabis Master Plan, outlining that the formal cannabis industry would be a game-changer for the country’s economy – as the industry that is predominantly operated underground and traded on the black market is currently worth an estimated R28 billion.

In 2022, Ramaphosa that the sector has the potential to create more than 130,000 new jobs. His plan released three years ago said that it would focus on integrating small growers into formal cannabis value chains and addresses licensing, technical and financial support.

However, the slow pace of legislative progress has resulted in several hurdles for businesses seeking to enter the market legally.

“I do not think the cannabis industry receives enough support at all by government, and I do not believe the government has been doing its job in assisting the industry move forward,” said the CEO of Cheeba Cannabis Academy, Trenton Birch, in an interview with Food for Mzansi.

Small businesses looking to be part of this “fully-fledged industry” have been unable to secure funding, given that many government departments have been on different pages and paces when it comes to amending existing and introducing new legislation and policies for cannabis in the country, ultimately leaving private industries in limbo.

The Cannabis for Private Purposes Bill, which was introduced in 2020 and passed by the NCOP in 2024, is yet to be signed by the president.

Although legislation for the private use and possession of the cannabis plant has been outlined, and the scheduling of the plant has been amended, there is no legislation when it comes to its commercialization.

“The illegality of the industry has flourished due to a lack of clear regulations and a lack of movement with the legislation,” said Birch. “In terms of the government and the cannabis industry to date, I think they [government] have failed us because all the talk has just been hot air,” he added.

Presenting its view to parliament, SAHPRA called on the government to take action to allow optimal participation by small growers.

This includes expunging criminal records associated with illegal possession and trading of cannabis and hemp, bringing the industry into the mainstream economy, and protecting localisation for the small growers.

The incoherent legislation has meant that getting private funding (bank loans) for cannabis and hemp is currently close to impossible.

One of the business owners presenting to parliament, Ben Sassman from Hemp4Life, said that despite having multi-million rands’ worth of purchase letters of intent for his CBD products – which would see a large farm employing many people from the community – he could not get funding.

Reasons from the private sector ranged from cannabis and hemp being a “high-risk sector” to saying that it is “not a recognized crop.”

Many government entities have their doors closed on these businesses as well, with reasons for the refusal of financial support of cannabis and hemp businesses ranging from “their budget is depleted” to “they do not support start-ups.”

Additionally, while there have been reports of licences and permits issued, small businesses say that these are difficult to obtain.

Sassman said that his presentation was a ‘cry for help’ for him and his colleagues in the industry, advocating for the relaxation of the licensing and permit requirements in order for people to be able to break into the market.

SAHPRA reiterated the need to support small businesses in the farming and manufacturing sectors of the cannabis and hemp industries. It said that at the moment, opportunities are only exploited by big businesses with a monopoly of the market.

Read: Big change for cannabis use in South Africa

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