With Africa being one of the largest producers of cannabis globally, there is a window of opportunity for African countries to export cannabis to the rest of the world. However, exporting cannabis is a complex and highly regulated process, and farmers need to be well-informed and compliant with the laws and regulations in both their home country and the destination country.
Shaad Vayej, CEO of Onlyfarms and Attorney at Cullinan & Associates, shares some key considerations for farmers about exporting cannabis. Several African nations have already legalised the cultivation and export of cannabis, positioning the continent to play a significant role in this quickly expanding sector.
Cannabis exportation landscape
There are several ways that African nations might benefit from the international cannabis trade, including earning much-needed foreign currency revenues, starting new enterprises and jobs, and fostering economic growth. Africa is a perfect market for the cannabis sector, with a huge and youthful population. Additionally, cannabis has been used traditionally on the continent for generations.
“South Africa is poised to be one of the global leaders in cannabis cultivation for export. When we are talking about cannabis, there are different sides to it: industrial, medical and of course recreational. However, there’s a more uncertain value proposition internationally,” says Vayej.
When you look at just medical exports to Europe, currently South Africa only supply 3.8% of the total European demand for medical cannabis. However, the capacity, the quality of cannabis coming out of South Africa, the invocation that is currently taking place, and the low costs of labour, including sunshine, makes the country the ideal destination to export around the world.
Legalities: import and export
Cannabis as a whole plant and any portion thereof remains listed as an undesirable dependence-producing substance under part 3 of Schedule 2 of the Drugs Trafficking Act.
This means it is still illegal to buy and sell, but subject to certain sections. There are three broad classes that factor exceptions to this, such as the Medicine Act that permits the cultivation of cannabis under Section 22c.
Medicine Act permits are issued for:
- Cultivation import
- Export
- Testing
- Packaging
- Distribution of medical cannabis
On the other hand, there is hemp that is regulated under the Plant Improvement Act and the frameworks there under. The department of agriculture, and land reform and rural development began issuing hemp permits for the cultivation, processing, and transport of low-THC cannabis for industrial purposes.
“Bear in mind that the plant improvement framework isn’t mentioned as an exception to the Drugs Act but can be seen as an exception to the Medicine Act,” Vayej says.
Key requirements
Entering the medical cannabis market can be a complex process because the industry is highly regulated and can be competitive.
“The main requirement being that the cultivar you are growing must not exceed point 2% THC (Tetrahydrocannabinol), which is particularly difficult to do under the South African climate, purely because of the incredible UV that we have out here,” says Vayej.
Other requirements include:
- You need to have a cannabis cultivation facility set out.
- Needs to be audited by SAHPRA.
- The off-take destination needs to be in place.
- A hemp permit license is not expensive to obtain, there are license criteria.
- Fencing has been relaxed.
- Audit requirements.
- Reporting requirements and testing requirements on cannabis.
Licensing costs
Another factor to consider is the cost of a hemp license. Additionally, keep in mind that hemp license costs can change over time, so staying up-to-date with current regulations is essential when budgeting for your hemp cultivation or processing venture.
“With the hemp license, you are limited with what you can grow and what you can do with what you can grow. That is not for human consumption, that is for industrial purpose, that is for biomass and low THC flower is also being looked at closely,” Vayej says.
Differences in license costs:
- Hemp R700
- High THC license between R20 000-R25 000
Market research, finance support
Knowing what your end destination requires, is important, so you need to look at the cultivars that are most in demand and which cultivars can be moved.
“I recommend consulting with guys in the market who are working with buyers, who do know what the demand is and where to go from there,” says Vayej.
Cannabis is still contained in the Drugs Act of South Africa; therefore development finance and finance houses are uncertain whether they can and want to start funding these large-scale operations.
“In June 2023, there was a meeting of various role players in government as to how the cannabis industry will be taken forward. And there is a significant increase in support behind farmers, from a rural standpoint who are cultivating outdoor cannabis and existing business,” he says.
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