Cannabis: A rush to corporate capture?

The South African domestic market for cannabis and related products will be worth around R27 billion in three years. Will the ordinary growers benefit?

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Finance minister Tito Mboweni expects the newly legal cannabis industry to pour an estimated R4 billion into the government’s dwindling tax coffers while simultaneously unlocking the country’s stagnant rural economy, he said in a tweet earlier this year. But will this potential windfall benefit ordinary people? Sinesipho Tom investigates.

Three years from now, the South African domestic market for cannabis and related products – excluding consumer cannabidiol (CBD) products, will be worth around R27 billion, according to the pro-marijuana consultancy Prohibition Partners in a new report.

Many South Africans are excited about the opportunities presented by this new market, since the Constitutional Court decriminalised the use, possession, and cultivation of the plant for private and personal consumption in September 2018.

But there is a strict and costly bureaucratic red tape preventing most people from penetrating it.

Small-scale entrepreneurs, farmers and academics that Food For Mzansi spoke to about what is being called “the cannabis rush” are concerned that small-scale operators will be passed by.

A decriminalised industry could bring wealth and development to the rural areas where the plant is traditionally grown, says Hein Gerwel, lecturer at the department of agricultural economics at Stellenbosch University. However, he warns of the danger of “corporate capture” of this market. He says this dynamic is already in motion globally.

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The long road to legalisation

A draft law that describes the elements of legal dagga posession in South Africa, known as the Cannabis for Private Purposes Bill, has now also been published ahead of its submission to Parliament.

The Cannabis for Private Purposes Bill was previously called the Regulation of Cannabis Bill, when it was introduced in 2019.

The new draft, now approved by cabinet, has seen no substantial structural changes, but sets different limits on what will be considered too much dagga to qualify as being for personal use. The draft law simultaneously criminalises smoking dagga in public or selling it and sets limits on how much dried dagga individuals may own for private use.

In its current form, the law allows homes to have dagga stashes of 1.2 kilograms – if at least two adults live there. Singletons are limited to 600 grams. South Africans will be allowed to give one another 100 grams of dried dagga at a time, or 30 seeds, if they do so for free. In public places, possession is set to 100 grams of cannabis or one flowering plant.

The Bill set a maximum jail term of 15 years for anyone who deals in cannabis or provides it to a child. Anyone who smokes dagga in public, or too close to a window, or “in the immediate presence of any non-consenting adult person” may be jailed for up to two years. Smoking dagga around children, on the other hand, can come with up to four years in jail.

Rules on medicinal use

South Africa has not yet carved concrete laws around the use of medicinal cannabis, however there are guidelines that were created by the South African Health Products Regulatory Authority  (Sahpra).

The Sahphra guidelines establish a system where growers, producers and researchers can apply for a license to grow cannabis for medicinal use. Professionals who obtain a marijuana license can create medicine available to patients via prescription. Patients would not need to apply for a permit themselves — they would only need to go to a pharmacy to get their medication.

Under the guidelines, licensed workers can use marijuana plants to create “herbal medicine” such as tinctures, resin, oils, extracts and more. All medicinal cannabis products must meet a set of standards that make them fit for patient consumption. Industry employees must also follow procedures that ensure quality medicine.

To acquire a license, you need to have a site plan and site master file, prior to construction of the facility and all facilities will be inspected for compliance by Sahphra. Some of the requirements include fenced land, a resident funnel system and lighting approval from the department of health.

The licence application fee is currently R23 980.

Small-scale farmers excluded

Ludwe Majiza, started his small-scale permaculture farm in his home village uMkhubiso, in the Eastern Cape.

According to Ludwe Majiza, an Eastern Cape–born permaculturalist, the average black person or farmer has slim to no chance of attaining a license for commercialised use of cannabis. Majiza attended a cannabis exhibition in Cape Town last year to find out the processes involved in attaining a license for the commercial use of cannabis. He was told he needs at least “four million (rands) to apply and get the ball rolling,” he says.

“You can grow cannabis for personal use – that’s growing it at home. Then there are also grey areas about how much you can grow and that is what I and many people from informal organisations on digital platforms are contesting ,” says Majiza.

“We want the plant to be fully legalised, we are fighting for full legalisation without any restrictions. Don’t tell me how many plants I can grow, don’t tell me I can only carry x amount and can’t carry x amount,” Majiza says.

Majiza has had to collaborate with the Agricultural Research Council (ARC), Walter Sisulu University (WSU) and Cape Peninsula University of Technology (CPUT) to qualify for a permit to pursue his research work in the field. Penetrating this industry as a sole farmer is nearly impossible, he says.

“If you are going to go commercial, rather collaborate with different bodies and institutions. In that way they can also fast track the process because they have got a bit of weight and they can help you with the application process,” he advises.

Also Read: Land grabs: Small-scale farmer’s future on the line

Corporate threat

Hein Gerwel, a lecturer at Stellenbosch University’s department of rural development and agrarian reform.

Hein Gerwel, lecturer at the department of agricultural economics at Stellenbosch University, believes that the decriminalisation of cannabis could open a flood gate of opportunities for cannabis and hemp farmers in South Africa. However, he warns of the danger of “corporate capture” of this market. He says this dynamic is already in motion globally.

“Three of the big companies in South Africa who have been granted licenses have agreements with big European companies and it appears as if the old pattern of extractive exploitation is occurring. That is something we are going to be extremely cautious about,” he says.

Gerwel and Dr. Ethel Phiri, lecturer at the department of agronomy at Stellenbosch University, believe that the booming cannabis market should benefit the traditional growers and the large elderly group of women who have been growing cannabis in the Eastern Cape before it became fashionable.

“It is crucial for the traditional growers who have been suffering the brunt of police brutality and the negative connotations associated with this medicinal plant to benefit from this market,” says Gerwel.

Dr. Ethel Phiri, lecturer at the department of agronomy at Stellenbosch University. Photo: Supplied

Phiri adds that she is afraid that the traditional women that have been growing the plant for centuries will be left out of the commercialisation of this market.

Eastern Cape youth well suited to exploit this market

Agricultural economist Lunathi Hlakanyane believes that the Eastern Cape is opportunely positioned to exploit this market. This is thanks to its absolute advantage of a suitable climate for cannabis growing and a vibrant youth base – much of which resides in urban areas.

He says the cannabis rush presents a unique incentive for attracting a youth influx into rural areas as a binary strategy to guarantee the long-term sustainability of agricultural systems, while reviving the rural economy through private capital investments.

Lunathi Hlakanyane, an agricultural economist with Stellenbosch University. Picture: Supplied

“Young people are often ambitious, with a characteristic inclination toward entrepreneurship. The cannabis rush also bears with it the opportunity to forge a new breed of farmers whose productivity is driven not by seasonal variations alone, but by market signals and economic indicators.

“In other words, in the cannabis rush, we have the once-in-a-lifetime opportunity to create the ultimate farmer… an agrarian capitalist,” he says.

Trevin van der Walt, an organic gardener from Port Elizabeth and owner of Urban Gardens, says he has been working on research in the past four years to upskill himself in the field of medicinal cannabis.

Trevin van der Walt organic farmer in Port Elizabeth. Photo: Supplied

Van der Walt creates organic gardens all over the Eastern Cape. He says he wants to learn how to build small units for small-scale farmers who want to venture into the trade of medicinal marijuana.

He believes “a new dawn” is coming that could open a huge opportunity for the small-time Eastern Cape farmers to become involved.

“I just hope they don’t bring the Chinese in and mess up the whole thing. This would be a great opportunity for small-time farmers to be able to supply a processing hub and at the same time have a cash income. Also, to create a medicinal production facility for people. That can help a hang of a lot of people with all sorts of illnesses,” he says.

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