Half an hour into a State of the Nation address punctuated by familiar measures to combat a gloomy economic situation, South African President Cyril Ramaphosa flashed a wicked smile at his Cape Town audience.
“We will review the policy and regulatory framework for industrial hemp and cannabis – which will come as sweet news for our people in the Eastern Cape and KwaZulu Natal – to realise huge potential for investment and job creation.
To further his point, he highlighted Lesotho – the small independent kingdom locked within South Africa’s landmass – as a shining example of a country already grasping the enormous opportunities of cannabis cultivation.
“Our immediate neighbour in Lesotho has moved ahead in industrialisation of cannabis in leaps and bounds, and products that can be eked out of hemp and cannabis are in great demand around the world.
South Africa is just the latest country to turn decisively in favour of a sector which has witnessed an astonishing transition from a global shadow industry to an agro-industrial powerhouse.
By 2023, the value of Africa’s legal cannabis market could be at least $7.1bn across nine key African countries if they legalise recreational and medical use, according to The African Cannabis Report from industry analysts Prohibition Partners.
As of late 2021 only Uruguay, Canada and a handful of US states had fully legalised cannabis for adult use, but Mexico and Israel are primed to do so this year, and the Netherlands and Switzerland are preparing legal trials.
“Africa has been a leader in global production for several decades.
Furthermore, companies wishing to operate in the sector must navigate high startup costs, strict and ever-evolving regulations, and country-by-country legislation.
Nestled on a gentle plain amid the dramatic mountains of Lesotho, the Kolojane facility is the kind of place Ramaphosa had in mind when he talked about the enormous cannabis progress of South Africa’s neighbour.
In the current cycle, the firm will harvest 11 hectares, which managing director Mark Corbett expects will yield some 8.5 tonnes of THC .
What we have as an advantage, especially as an outdoor grow, is we have cheap labour and we’ve got lots of space, lots of sun, a high altitude.
In mid-March, Akanda, a London-headquartered firm which owns the Bophelo Bioscience & Wellness cultivation campus in Lesotho, announced the completion of its initial public offering of 4m shares on the Nasdaq Capital Market.
The medical cannabis and wellness company, which owns an importer and distributor that supplies pharmacies and clinics in the UK, says it will use the proceeds primarily for property, plant and equipment, operations and working capital.
It’s been a country apart and I think they’ve seized this opportunity to be a leader and by doing so at that stage, the country attracted a lot of capital.
But finding a generous host country in which to cultivate is only part of the challenge of operating in a complex global cannabis supply chain defined by tangled regulation, exacting export standards and industrial-scale competition in the developed world, particularly North America.
“I wish they would get some kind of global regulatory framework because it would make our lives a lot easier.
While CBD-infused supplements tend to come under novel foods regulations in the UK for example, in South Africa such products may be listed as a complementary medicine with dosage limits restricting how much an individual can purchase.
The result, says Duvall, is a “neocolonial” industry in Africa that largely services the export market but is divorced from the cultural context of historical cannabis cultivation and expertise in Africa itself.
“In places that aren’t capital intensive it basically takes away that comparative advantage that Africa has of being able to grow multiple crops all year long.
For Highlands, which last year merged with Goodleaf, a South African CBD brand with a portfolio of 30 products that are distributed in retail stores, coffee shops and online, the answer is a focus on specialised consumer and medical products rather than cannabis specifically tailored to the international medical smoking market.
“This is much more geared around providing input into extraction, which is where the value chain is… I just don’t see old people with chronic pain rolling a joint.
A way to increase opportunities that is favoured by cultivators both large and small would be to free up African markets for domestic consumption.
South Africa, however, may be a harbinger of things to come.
“I don’t believe that we’ve got a sustainable model when we are talking export only.
“Let the agricultural guys worry about the hemp production, put the recreational side the same as alcohol and tobacco, and the guys that want to create medicines, treat them as medicines.
The justice and constitutional development portfolio committee hopes to pass the bill by the end of April before it is sent for ratification by the upper house of the South African parliament.
In a more flexible legal and regulatory environment, those countries could push for some kind of geographical indication in the same way that France protects champagne.
“There is potential that people in Africa can produce local varieties based on local knowledge,” says Duvall.