Massive ‘green gold’ problem for South Africa

The Department of Agriculture says that implementing the Cannabis Master Plan is a critical priority during the seventh administration’s term. However, it is being hindered by the lack of legislative alignment around cannabis in South Africa, which needs urgent attention.

This was outlined by Agriculture Minister John Steenhuisen, speaking to BusinessTech this week.

Over recent years South Africa has seen significant legislative changes regarding cannabis, allowing private, small-scale recreational use for adults. Despite this, commercial use is still limited to strictly regulated medicinal and industrial applications.

Medicinal marijuana was legalised in South Africa in 2017, with cultivation limited to licensed manufacturers due to THC’s psychoactive effects.

In 2018, the Constitutional Court decriminalized private cannabis use, followed by a call from the Cabinet for a national commercialisation strategy in 2019 to boost the economy and create jobs.

The government’s 2021 National Cannabis Master Plan highlighted the potential for the creation of over 130,000 jobs for a country plagued by high unemployment.

The industry is a veritable goldmine for South Africa, worth an estimated R28 billion, currently operating mostly in the black market.

In May 2024, President Cyril Ramaphosa signed the Cannabis for Private Purposes Act, establishing a legal framework for private use and cultivation.

“Is [the passing of the Cannabis for Private Purposes Act] good news for the agricultural industry? Not quite yet,” said legal experts at Cliffe Dekker Hofmeyr, Belinda Scriba, Clauida Grobler and Luke Kleinsmidt.

“The Act currently imposes significant restrictions on the legal cultivation and commercial trade of cannabis, mirroring trends observed in several other African countries.

“As the legislation and anticipated legislation currently stand, the cultivation of cannabis remains limited to farming for either medicinal use (licensed), or private use in small quantities without any economic gain for the cultivator,” added the legal experts.

Some industry insiders argue that slow legislative progress towards commercialisation and poor enforcement have hindered businesses and left the master plan unfulfilled, pushing many hopeful growers towards the illicit market.

They say that there is still conflict as the restrictive commercial regulations do not align with the more permissive recreational use policies, leading to inconsistencies, regulatory challenges and hurdles to commercialisation.

Eastern Cape Premier Oscar Mabuyane echoed this, saying that the province (which wants to be South Africa’s ‘cannabis capital’) is “concerned by the slow progress of the country’s policymakers in expediting the full implementation… of an enabling cannabis regulation framework that encompasses the commercial exploitation of whole plant, all purposes legislation.”

Department of Agriculture’s response

Steenhuisen acknowledged that these issues persist and need to be addressed.

He explained that the Department of Trade, Industry, and Competition (DTIC) oversees the Cannabis Masterplan. However, the Agriculture Department plays a critical role in it, given that much approval needs its stamp of approval.

“The bureaucratic obstacle at the moment is that there are conflicting laws, so there needs to be legislative alignment,” said Steenhuisen.

This view was echoed by attorney and cannabis business consultant Danmari Duguid, who recently told BusinessTech that “starting any business in these tough economic times is challenging, but raising investor capital is especially difficult for industries with so much red tape and confusion surrounding it.”

“Medical cannabis operations face stringent regulations and high financial and infrastructural demands, while hemp cultivation offers simpler licensing and cheaper methods.

“[But stringent] restrictions on THC (the psychoactive component of the cannabis plant) levels pose difficulties for farmers,” who want to find themselves on the right side of the law, added the expert.

In response, Steenhuisen said that the justice portfolio and the DTIC have embarked on a process to align various Acts which conflict in detail around cannabis use, cultivation and commercialisation.

“Cannabis for personal use has been passed in one piece of legislation, but it is still a criminal offence to do much with other pieces of legislation, so the government is putting together a ‘legislative sandbox’ to discuss how we can amend legislation so that it is streamlined,” said Steenhuisen.

Very broadly, a regulatory sandbox in South Africa is a controlled environment that allows businesses, particularly in emerging industries like cannabis and fintech, to test innovative products and services under regulatory supervision.

It enables firms to experiment with new ideas while ensuring consumer protection and compliance with regulations, allowing regulators to assess risks and adapt policies accordingly.

Looking at immediate priorities, Steenhuisen said “From my perspective, I want to make sure that small growers are protected.”

He said that because it is such a catalytic industry, big international companies come in and buy up the licences and ice out small-scale, local growers.

“The Agriculture department wants to find a way to protect small growers – particularly those in rural areas where traditionally the growers have been women and possess a huge amount of the local knowledge of the varieties and strains and what grows where, etc.”

“They need to be protected [and empowered by the Department] so that they don’t end up being crowded out of a sector that has an opportunity to really empower those rural local communities and people who have the knowledge,” added the minister.

Steenhuisen said that what his department is looking to do while regulatory conflicts are addressed is set aside parts of the value chain to ensure a long-term and sustainable livelihood for small-scale growers.

Read: The big plan to grow South Africa’s economy by at least 3%