Big changes for South Africa’s R28 billion cannabis plans

South Africa’s Cannabis Masterplan has now been transferred to the Department of Trade, Industry, and Competition (DTIC).

An official Cabinet statement following a meeting in September said that the DTIC “concluded situational and value chain analysis on the Hemp and Cannabis sector in South Africa [and the department] will soon commence consultations on the Cannabis Commercialisation Policy.”

In a recent presentation to Parliament’s Portfolio Committee on Trade, Industry and Competition, the DTIC confirmed that, from September 2024, it had become the coordinating entity of the country’s ambitious Cannabis Masterplan.

Like the plans that have been in place since 2018, the master plan seeks to establish a comprehensive framework for the different elements of the industry.

However, many in the industry have thus far been largely hindered by limited funding, complicated and expensive regulatory processes, and inconsistent regulatory reforms.

In its presentation to Parliament, the DTIC emphasised that numerous legal, regulatory, and licensing matters need to be resolved before the commercialisation of the cannabis industry in South Africa can be realised.

As a result, legislation to create a more enabling commercial environment for cannabis is expected to be tabled in Parliament.

Trade and industry spokesperson Yamkela Fanisi told the Mail & Guardian that “the department is working on the commercial strategy within the legal parameters.”

“Where there is a need to amend legislation to optimise full commercialisation, a due process will be followed,” added Fanisi.

Brief background

Over recent years South Africa has seen significant legislative changes regarding cannabis.

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

In 2018, the Constitutional Court decriminalised private cannabis use, followed by a call from the Cabinet for a national commercialisation strategy in 2019.

The government’s National Cannabis Master Plan was published in 2021, and promised to be a game-changer for the economy.

It highlighted the potential for the creation of over 130,000 jobs for a country plagued by high unemployment and that the industry is a veritable goldmine 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, making South Africa the first African nation to legalise the use of marijuana.

“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), private use in small quantities without any economic gain for the cultivator,” added the legal experts.

Conversely, hemp – a close genetic relation to cannabis – has been extensively cultivated for commercial purposes in South Africa and other African countries for several years now.

This broad cultivation has expanded opportunities in crop production, presenting significant potential for growth in the agricultural sector.

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

DTIC taking the reins

Thus far, nine government departments have been involved in the process, resulting in delays due to bureaucratic drag and a lack of a common vision for developing cannabis policy and its entailments.

Now, the DTIC will be leading the charge and is said to be focusing on (but not solely) manufacturing and market development, enterprise support and supplier development.

Supporters of the move contend that this decision was crucial for formulating and enforcing a comprehensive national policy to regulate the cannabis and hemp industries, as well as to encourage the growth of a budding sector.

Calls for legislative alignment

Although the DTIC oversees the master plan now, the Agriculture Department plays a critical role in it and has called for comprehensive legislative amendments.

Agriculture Minister John Steenhuisen recently told BusinessTech that bureaucratic obstacles are stunting the masterplan’s potential.

“There are conflicting laws, so there needs to be legislative alignment,” said the minister.

This view was echoed by attorney and cannabis business consultant Danmari Duguid, who also 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.

Steenhuisen confirmed 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.

• BusinessTech consistently attempted to get inputs and responses from the DTIC. We received a delayed acknowledgment of receipt of the queries, but nothing else by time of publication. Comments will be added if received.

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