South Africa
South Africa is seeing a significant amount of activity involving cannabis in two primary spheres – medical cannabis production for export, and ‘grey market’ production for domestic consumption.
On the medical production and export side, there are approximately 70 facilities in the country geared towards the cultivation and export of medical cannabis. These producers currently face significant challenges in achieving the right quality and volume in their harvests. A common issue is access to genetics, which are suitable for the local environment. Top-performing strains from the US and Canada react differently to the South African climate in comparison to where they are grown and bred in North America. This results in local producers often having to go through several months of research and development (R&D) with purchased genetics, thus driving up costs. Stability issues are nonetheless commonplace, even when work is done to adapt these strains to the local environment, through breeding.
Despite some genetics seeing widespread success in South Africa, such as Black Cherry Punch, a large gap for suitable genetics exists in the market. Some plans to centralise efforts and invest in breeding and genetics’ R&D communally, have been discussed by producers in South Africa, however no concrete activity has materialised on this front. Once suitable genetics are developed, they could be licensed to cultivators across South Africa, and both quality and yields of harvests will improve across the country.
The main destination for South African exports thus far is Australia, where exporters have found more success in exporting, as compared to Europe. Six times the medical cannabis export volume went there in 2023 from South Africa versus that which went to Europe. This is, in large part, because compliance barriers for exporting medical cannabis have been lower there, than in Europe. This has allowed products to flow in volumes which are not yet manageable for exporters to Europe. A recent change in Australian import regulations for cannabis products raised the quality requirements for international producers exporting to the Australian market, so the barriers to entry are higher than they have been in the past, and they could yet be raised again.
Achieving and maintaining compliance in both production and logistics involves time and resources, and many producers are still in the developmental process. Many producers are ultimately aiming to export to the European market, however, significant challenges exist in terms of product quality, as well as in the navigation of the logistics and networks involved in getting product into the European market. Of all the South African producers, the most successful in exporting to Europe so far, has been SafriCanna, partly because they own the only facility with European Union Good Manufacturing Practices (EU GMP) Part I certification for cannabis in the country. This has allowed them to be a gateway to the European market for other South African producers, because, through toll manufacturing, they can convert cannabis cultivated by others, to EU GMP-certified status through packaging operations. This toll manufacturing is also being done on the European side, through certified facilities in Portugal or Germany.
Medical cannabis production is scaling steadily in South Africa, and producers are amassing sizeable inventories. Products which are not up to standard for the European market have been shipped to Australia in the past, though this is a less straightforward backup for producers after the change in regulations there. Many products, which are not being exported however, are ending up in the domestic ‘grey market’.
In the past year, there has been a significant rise in the number of cannabis dispensaries established in South Africa, and these are now commonplace across major cities, numbering in the thousands. Though many offer the possibility of legally acquiring cannabis, and dispensing cannabis for medical purposes to those holding prescriptions, the overwhelming majority of sales are to the ‘grey market’. Due to cannabis no longer being classified as a narcotic in the country, personal use is decriminalised.
Though the sale of adult-use cannabis through dispensaries is not fully licensed, the practice is widespread. Production for these dispensaries is likewise widespread, and with the legacy of cannabis production in South Africa long pre-dating recent changes in its legal position, there are many thousands of small-scale cultivation sites throughout the country.
Overall, the outlook for the South African cannabis industry is good – exports are steadily increasing in tandem with the quality and volume of yields. Barriers remain in terms of the lack of suitable genetics for the local environment, and with producers navigating compliance in quality and logistics, but, on both counts, progress is being made. The domestic market is booming, though in future, further regulation will be required to control quality and capture tax revenue.
Other Countries
- Medical cannabis exports from Lesotho and Uganda are still progressing, with Lesotho’s MG Health seeing success in exporting to Europe, while Israel’s Together Pharma, which grows in Uganda, has seen exports primarily to Israel.
- Morocco is gearing up to leverage its significant cannabis heritage and legacy production to become a key player in the global legal cannabis industry. It is some years behind, however, with the right regulatory and operational development, along with enough well-placed investment, conditions in the country are well-suited to establishing large-scale production. The government has issued 3,000 licences for cannabis cultivation and production, and pardoned over 4,800 farmers who had previously been growing cannabis illegally. Establishing commercial exports, at scale, will be a challenge however, with only low-THC exports of approximately 200 kilograms having taken place so far.
- Zimbabwe, Malawi and Zambia have legal frameworks in place for the production of medical cannabis for export, however, none have yet seen an organisation progress to the point of seeing commercial export, though activity and licensing is ongoing.
