Skip to main content

PLEASE NOTE: For everyone’s safety, Fasken recommends anyone on-site at our Canadian offices be familiar with the COVID-19 recommendations in place which may include one or more of the following: social distancing, hand sanitizing, wearing a mask in common areas and proof of full vaccination. These measures apply to lawyers, staff, clients, service providers and other visitors.

Article

The (Green) Gold Rush

Fasken
Reading Time 4 minute read
Subscribe

Overview

In his 2022 state of the nation address, President Cyril Ramaphosa said that the cannabis and hemp sector has the potential to create more than 130 000 jobs and he announced that government will streamline ‘regulatory processes so that the hemp and cannabis sector can thrive’.

The President’s statement has been a long time coming. The Department of Agriculture, Land Reform and Rural Development estimates that the industry is currently worth R28 billion in South Africa and, while already making up 70% of the African market, can compete on a global scale.

But where is South Africa at the moment as far as the legal framework for the hemp industry, the medicinal harvest of cannabis and its private use are concerned?

Hemp Industry

Hemp is a low THC concentrated strain of cannabis and has a number of uses, including food (high protein hemp flour and hemp oil), fibres for clothing and industrial textiles, animal feed, medicinal uses in CBD products and industrial applications like building materials and paints.

Last year October, hemp was declared as an agricultural crop under the Plant Improvement Act, 1976 which allows its importation, exportation, cultivation, sale and research. This means that anyone can cultivate hemp if their crop has THC levels less than 0.2% and they comply with the requirements for a permit issued by the Department of Agriculture.

Cannabis Medical Use

The medical use of cannabis in South Africa is regulated by the Medicines and Related Substances Act, 1965 (Medicines Act).  Under the Medicines Act, the South African Health Products Regulatory Authority (SAHPRA) is empowered to issue licences to manufacture, import, export, act as a wholesaler of or distribute substances listed in the schedules to the Medicines Act.

CBD is a schedule 4 substance, meaning that you generally need a prescription to purchase CBD products. If certain thresholds of concentration are met however, CBD products can be sold on the open market. THC is currently listed as a schedule 6 substance and will almost always require a prescription for medicinal use.

Cannabis Private Use

In September 2020, parliament published the draft Cannabis for Private Purposes Bill for public comment. The Bill in its current form sets out prescribed quantities for both personal use and cultivation, namely:

  • unlimited seeds and seedlings;
  • four flowering plants for those living alone, or eight for homes with two adults or more;
  • 600 grams of dried cannabis if you live alone, or 1.2 kilograms in homes with two or more adults; and
  • 1.2 kilograms dried cannabis or cannabis equivalent per dwelling, which two or more adult persons occupy.

What we know is that the Bill has been tabled in parliament and public comment on the document has closed.

The Department of Health supports the introduction of the Bill but stated that the Bill needs to do more to address concerns regarding children, second-hand smoke and the impact of cannabis on road users. The Bill creates certain offences which address these concerns however the Department of Health asked that specific distances for second-hand smoke protection be included, that focus be placed on adolescents and their exposure to cannabis and that more be done to assist Police with detecting cannabis impaired driving.

It is unclear when a revised draft of the Bill will be tabled following the public comments provided last year, but going on the word of the President, we should see some movement on this soon.

Notwithstanding the draft Cannabis for Private Purposes Bill, over the past two years a number of Grow Clubs have started to germinate around the country. The traditional Grow Club allows members to lease small, subdivided plots on a large grow space and have their very own cannabis grown on their individual plots. The company leasing the plot then provides agricultural services to each member while the plants remain the members’ property.

Early last year, the Haze Club (THC) launched an application in the Western Cape High Court to have THC’s grow club model, which entails members buying their own seeds and then giving the seeds to THC to grow, declared legal. Should the court find THC’s grow club model legal, we might just see the next gold rush.

The National Cannabis Master Plan (NCMP) was published on 25 August 2021 and details that the hemp and cannabis industries have huge potential to develop SMMEs, attract domestic and foreign investment and create much needed jobs in relation to the processing and manufacturing of various products. From the date the NCMP was published, we have already seen a huge spike in growth. And it’s not just the private sector that’s taking an interest – a state agency has already put out tenders for the supply of low THC cannabis seeds.

The cannabis industry is budding, but a proper legal framework is needed to take full advantage. All eyes will be on the lawmakers’ next moves after the president’s bold statement.

South Africa will ultimately reap what the legislature and the courts sow.

This article was prepared by partner Ludwig Frahm-Arp and associate designate Wesley Fletcher.

Authors

    Sign up for updates from this team

    Receive email updates from our team

    Subscribe