South African government hints at compromise over cannabis deadlock

07.03.2019

In September 2018, the Constitutional Courts of South Africa legalised the private use of recreational cannabis. The move went against government policy and the executive branch of the government has thus far failed to update the laws which will allow citizens to consume “dagga” (the South African term for cannabis).

However, the government is loosening its hardline opposition to cannabis reform, health officials have told Prohibition Partners, as industry lobbying and pressure from the courts begins to sway ministerial thinking.

Constitutional Countdown
Parliament has until September 2020 to update the law and reflect the ruling that it is no longer criminal for adults to use cannabis “in private for personal consumption”.
A spokesman for the South African Ministry of Health said the country was studying recreational cannabis policies in the US and Uruguay and their impact on mental health and crime with a view to updating its laws.

“We were given 24 months to create a law that will hopefully give people a clearer view in line with the ruling,” the spokesman, Popo Maja, told Prohibition Partners. “We do recognise the medicinal benefits of the plant, and have been researching hemp, but it is much too early in the process to talk about full industrialisation.”

Maja acknowledged the difficulty firms had faced acquiring medical cannabis licences, and said the government would look at the requirements again following widespread opposition.

A new report by Prohibition Partners reveals that South Africa would be one of the highest value markets in Africa for cannabis by 2023, should it fully legalise production and distribution for both medical and recreational use.

However, a strict and obtuse licensing process, along with political ill-will, has limited the allocation of permits for private companies seeking permission to produce medicinal cannabis. Experts believe recreational licenses could endure the same bureaucratic headache unless the ruling executive fully embraces reform.

"The government needs to liberalise its laws significantly, which we hope that they will do in the next 18 months. For now, the red tape is so strong as to handbrake anything that strays close to what is possible and good for the country.” said Paul-Michael Keichel, partner at Schindlers Attorneys in Johannesburg

A Licence to Grow?
World Health Organisation experts estimate South Africa is the third largest illegal cannabis producer in the world, cultivating some 2,500 tonnes of cannabis per year.

Should South Africa embrace reform and legitimise the production process the country could immediately become a key regional market for export, having hundreds of years of experience via the infrastructure of its existing black market.

The process of obtaining a production licence in South Africa is “incredibly tough” and puts off many firms who have expressed interest, said Keichel. “The multinationals, or local elites, are seemingly the only ones with sufficient impetus and deep enough pockets to run the gauntlet,” he said. “This is a major pity, as we really could, through conscious liberalisation of our laws, grab at the opportunity to create a viable industry for the poorest in our population.”

We do recognise the medicinal benefits of the plant, and have been researching hemp, but it is much too early in the process to talk about full industrialisation

Popo Maja, South African Ministry of Health

South Africa’s government has formed an inter-departmental team to draft up the new regulatory framework for hemp, which is made up of health, trade, environment and justice officials, and the South African Police Service.

Legal experts say they are not optimistic the group will come to a rapid consensus on a new framework for recreational cannabis given the ruling executive’s historic stance.

“The government fought us tooth and nail when we were forced to sue them for reform,” said Keichel. “They now have two years to pass reactive laws, but there’s no saying (yet) what those laws will be. Certainly, at this stage, they still take a hard line with enforcing prohibition.”

Shifting Priorities

In his budget speech to Parliament, South Africa’s Minister of Finance, Tito Mboweni, said the government must be willing to shift policy and back the cannabis industry so it could become a potential source of revenue, and support domestic agriculture and farming.

In line with developments across Europe, North American and Israeli firms are taking the most interest in what has happened in South Africa, the Schindlers confirmed. Canadian giants Tilray and Canopy Growth have both been actively partnering with local firms and investing heavily in the region.

Tito Mboweni, South Africa’s Minister of Finance

“I would think, for now, that Canadian and Israeli firms would be the most interested in buying our exported cannabis, but that’s not to say they’re the only ones with an appetite,” said Keichel.

South Africa is the third country in Africa to legalise the growth of medical cannabis, after Lesotho in September 2017, and Zimbabwe in April 2018; should total legalisation occur, the value of Africa’s legal cannabis market would be upward of $US7b, research conducted for The African Cannabis Report™ shows.

The African Cannabis Report™ is published by Prohibition Partners this month, providing a comprehensive study of the cannabis market across the continent. If you are interested in partnering on the release of this major new report, contact partnerships@prohibitionpartners.com

South African government hints at compromise over cannabis deadlock

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