Picture: John Locher/AP/African News Agency (ANA)
Picture: John Locher/AP/African News Agency (ANA)

Sars would benefit if growing cannabis is legalised, says Tito Mboweni

By Duncan Guy Time of article published Jan 18, 2020

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Durban - Finance Minister Tito Mboweni’s tweet about pushing for it to be legal to grow cannabis - for the SA Revenue Service’s sake - is a step in the direction towards including small growers, although it is more likely they will remain in the informal economy.

This is the view of GG Alcock, informal economy expert and author of Kasinomics and Kasinomic Revolution, who said: “We need a policy which is like fair trade coffee where companies like Starbucks invest in small farmers in Costa Rica and central Africa, supplying them with seed and plant stock and then buying the coffee from them.

“This should be the model we explore, investing in small farmers and then aggregating their crop via large commercial entities. Like the massive informal economy I write about in Kasinomic Revolution, the problem is that government models do not currently consider this type of model.

“The dagga legalisation and commercial model is one such example.”

Alcock said that, ironically, commercial models worldwide, especially in places like Canada, had struggled to make money despite massive injections of capital.

“So it appears that despite the hype, the large-scale commercialisation of dagga is not the right economic route to follow.”

He said he understood that in California, despite legalisation, most dagga was still traded on the black market because of the reluctance to pay tax and other penalties.

“This begs the question of whether despite legalisation of farming under strict and difficult and expensive licensing criteria in South Africa, the small growers in Msinga and the Eastern Cape will remain under the radar and will continue to be successful after a short time of turbulence and hype. My belief is that the informal (or illegal) small farmer will continue to operate in a shadow economy very successfully just like the informal kasinomic economy currently operates in other sectors.”

He said that so far “research licences” issued and legislation proposed was for commercial farmers and required a R500000 licence fee, huge paperwork and prerequisites such as high fencing.

“Clearly no small farmer gogo in Msinga can do that,” said Alcock who grew up in the area with his parents, who were involved in a grassroots development programme. The government has a dismal record of supporting small farmers of any type, they just don’t know how to do it. Plus there is no proposed legislation or any White Paper that I have seen which has the objective of bringing in the small grower or legalising them.”

Alcock said it was easier and typical of the government to tax large corporations or entities rather than small ones. “Witness the attempt to regulate Airbnb with a blunt object!”

He said, already, small growers in Msinga had reported pressure on prices and smaller, more marginal - and more needy - growers were being marginalised and knocked out of the system.

“I have witnessed smaller growers not replanting this season. The more established small growers who have more scale, such as irrigation pumps and fencing, will be and are more sustainable, but are losing margin.”

Mboweni’s tweet read: “I found this growing at the farm! Cut it down or allow it to grow? How did it get here? Should we just legalise this thing once and for all? I can see the responses!! Say it!!”, followed by “My neighbour found this thing too! The soil is ready in Makgobaskloof to grow it LEGALLY!! The economy of Lusikisiki and Tzaneen is waiting for legal growth of the stuff!! R4bn plus!! Tax money!!”

Further tweets read: “I can see the three medical doctors in the Cabinet say (OMG emoji). And “On this one, the majority says: LEGALIZE IT!! I will put the proposal to legalize it at the Cabinet Lekgotla this January. The People have demanded it. But those medical doctors (OMG emoji).”

In 2018, the Constitutional Court decriminalised the use, growing and possession of cannabis in private and for personal consumption.

Also reacting to Mboweni’s tweet was Caro Smit of South Africans Against Drunk Driving (Sadd) who said although the increased production of cannabis would increase revenue for Sars, the increased number of crashes and resultant injuries and deaths would also cost the country dearly.

Independent on Saturday

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