South Africa's cannabis industry, dubbed the “green rush”, is on course for new highs as a combination of its ability to produce a quality product for global pharmaceutical producers, and making important strides in the regulatory frameworks, assist it to catch up with countries already leading the market.
At the delivery of research by the European Union Delegation to SA (through its EU-SA Partners for Growth project) to understand the state of play for South African cannabis growers and wannabe cannabis growers, and to identify opportunities for trade and investment in medical cannabis and CBD products, it has emerged that while the market is still new, exporters, nevertheless, already have distinguished themselves from cheap suppliers of raw material in a market dominated by Colombia, Uruguay and Jamaica.
Stephen Murphy of Prohibition Partners, the leading market intelligence firm providing strategic consultancy services, insights and data on the global cannabis industry, has said the South African market is gaining status for its focus on the quality and consistency of products, and complying with the European Medicines Agency’s Guideline on Good Agricultural and Collection Practice, which is seen as the highest international production standard.
The industry, mainly focusing on cannabis and hemp, is acknowledged by President Cyril Ramaphosa to be worth more than R28 billion a year and has the potential to create at least 130 000 new jobs. The South African Health Products Regulatory Authority (Sahpra) has thus far issued 55 cannabis cultivation permits.
Murphy said: “In this market, it is not about being the largest or cheapest producers, but about delivering the required product at the right price, with off-takers in Europe, Israel and Australia primarily on the lookout for new offerings in terms of quality and consistency of supply.”
The country’s climate adds value to the“grown in South Africa” brand, though challenges still remain with the limited access to the legal medical market for patients, equity concerns with regard to traditional farms, and the scope of hemp licences.
“The market has become increasingly competitive, with margins coming under increased pressure. Partnerships will become a key ingredient to market success in the future,” Murphy said.
Zaid Mohidin, the founder and chief executive of HempVest Africa, a black-owned company that acquired a licence in 2019, said yesterday its next strategic phase was to acquire a Section 22C Sahpra licence to leverage key opportunities within the hemp and marijuana medicinal markets.
“We believe that for the green rush, the current widespread optimism within the cannabis industry, to continue and be successful, inclusive participation needs to be prioritised to ensure that everyone can reap the benefits,” Mohidin said.
“Having a licence is the easy part. Focusing on producing a world-class product, at the lowest possible price, that will enable us to be globally competitive and take advantage of downstream prospects is what it’s all about,” he said.
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