In September 2018, South Africa’s Constitutional Court decriminalised the personal use and cultivation of cannabis. Though the ruling’s specifics still need to be clarified, it has opened up a massive business opportunity.
By 2023 the SA domestic market for cannabis and related products could be worth up to R27 billion, according to pro-marijuana consultancy Prohibition Partners, and this excludes the lucrative consumer cannabidiol (CBD) products segment, which could be worth billions more.
With countries all over the world relaxing laws on the use and sale of cannabis, the business opportunities are global. The cannabis consumer research team at Seaport Global Securities believes the world cannabis market could reach more than $630 billion in market value by 2040. So what is SA doing to take advantage of this massive opportunity?
Yes, we cannabis
House of Hemp made history in April this year when it was granted the first license for the commercial production of medical cannabis by the South African Health Products Regulatory Authority (Sahpra).
“The first proposal I wrote for government was in 1992, arguing in favour of cannabis and its potential to reduce poverty and create opportunities; more than 20 years later here we are now,” House of Hemp founder Dr. Thandeka Kunene said in an interview with 702. “I’m excited for South Africa because the government has essentially created a new industry.”
The company’s research has focused on hemp, which is a strain of cannabis grown for industrial uses of its derived products. Its concentrations of THC, the psychoactive constituent of cannabis, are too low to get you high. But it does have high concentrations of CBD, a cannabis extract which preliminary clinical research has shown to relieve anxiety, movement disorders, and pain.
“Our plan is to produce active pharmaceutical cannabinoids, which we will grow partly ourselves from hemp and partly from CBD purchased from farms within the country,” says Kunene, the self-proclaimed cannabis queen of the South.
House of Hemp is by no means the only company trying to seize the cannabis business opportunity. This was on full display when the first Cannabis Expo was hosted in Pretoria in December last year. This year it’s already been hosted in Cape Town (April) and will also be hosted in Durban (June). It’s all leading up to a big expo and conference taking place in Johannesburg at the Sandton Convention Centre in November.
“The expo doubled in size from the one in Pretoria to the next,” says Silas Haworth, Cannabis Expo co-founder. “There were 110 exhibitors, most of them local, and 16 500 people in attendance at the Cape Town Cannabis Expo. We didn’t realise how established the cannabis industry already is in SA and how quickly it’s growing. Plus, there are so many South Africans that are interested in learning about cannabis and what this amazingly versatile plant can do.”
Exhibitors ranged from the agricultural side, with companies that sell soil and fertiliser specifically for cannabis, growing lights and tents, hydroponic systems and commercial farming tunnels to the medicinal side with products such as CBD oils. There was also the recreational side with vapes, bongs, cannabis beer, energy drinks and even baked goods and of course hemp, which is used to make paper, textile, clothing, biodegradable plastics, biofuel and even bricks for sustainable housing.
“I really believe attending the expo changes peoples’ perceptions about cannabis,” says Haworth. “I’ve seen people who were completely anti-cannabis take one walk through the expo and have their minds completely changed.”
Many entrepreneurs stumble onto the benefits of cannabis. One such individual is Simone Bezuidenhout, whose entry into the industry started with a personal battle against depression and anxiety. In 2006 a psychiatrist prescribed two sets of Schedule 5 drugs for depression and anxiety, but she struggled with side effects such as irritable bowel syndrome (IBS).
Decriminalisation for private use might not be where the commercial value lies.
In 2016 she started taking the so-called full extract cannabis oil (as it's known in the US, known as full plant extract in SA), which contains no THC, after a friend recommended it. “I immediately felt less anxious, less stressed,” says Bezuidenhout, who weaned herself off the prescription drugs and replaced them with the CBD. “I also stopped having issues with IBS and my skin and hair started looking healthier.”
“My body almost felt a little high but that’s from the absence of anxiety in your body,” she says. “We all live an anxiety-fuelled lifestyle so none of us knows what it’s like to completely relax and be free of anxiety. So when I started giving it to people, they said it made them feel weird and I said, 'That’s because you don’t have any anxiety,” and they started realising that indeed when they take it, they feel calmer in a way they haven’t experienced.” Bezuidenhout established the company Stone River Wellness to sell CBD products.
The grass ceiling
It’s not all good news, though, as many experts believe more research is needed into the consequences of decriminalisation and people need to be educated on the safe use of cannabis.
“People don’t realise that while you can’t overdose on cannabis in its natural form, the oil you extract from is concentrated so it’s dangerous if used improperly,” says Dr. Kunene.
“We need a public education and awareness-raising drive on how to grow and use cannabis properly. Those who want to go into enterprise must come together and standardise the product so that it’s safe for everyone.”
Independent journalist and cannabis activist Kevin Bloom believes decriminalisation was a mistake as it has disenfranchised thousands of black farmers. “My concern is the 900 000 traditional growers of cannabis in Pondoland and the Eastern Cape who, ironically, were doing way better when the plant was illegal because they were selling through the black market and supporting 3- to 4-million people,” says Bloom.
“Now, the market has been flooded with every chancer growing ‘weed’ in their backyard, so these farmers are increasingly being excluded from the system. None of the legislative progress matters if traditional growers can’t sell their crop. Despite the lip service the Department of Trade and Industry and certain politicians have paid to supporting small-scale farmers there is nothing being done on the ground to ensure these farmers can continue to sustain themselves and their communities.”
Wandile Sihlobo, the chief economist of the Agricultural Business Chamber of South Africa, agrees that if the cannabis opportunity is pursued, neglected farming communities need to be at the centre of the conversation.
“KwaZulu-Natal, the Eastern Cape and Limpopo would be the ideal provinces for the cultivation of cannabis as they have favourable climatic conditions and boast about 1.6-million to 1.8-million hectares of underutilised land between them,” says Sihlobo. He is also sceptical about whether recent legislation was a step in the right direction. “The decriminalisation for private use might not be where the commercial value lies. The focus should rather be on exploring the possible benefits for the country through the controlled, international trade in cannabis and its products, and also medicinal use purposes in the domestic market.”
“Overall, I am not arguing for any particular policy position regarding cannabis, but rather for increased research which would assist policymakers in evaluating the benefits, and possible unintended consequences of growing and trading cannabis. This should take stock of the changing perceptions surrounding this crop globally, and its growing demand and commercial value.”