PUBLISHED BY TURKER KURUN
15 OCTOBER 2022
Cannabis in South Africa: Learning from a partially crippled industry.
South Africa is a rich and multicultural country with a deeply rooted traditional and recreational landscape for cannabis. The ‘rainbow nation’ is dictated by corruption and poor decision-making, spurring a playground for lack of foundation and malpractice. Cannabis has the potential to uplift the country and eradicate decades of inequality for generations to come. But is the current prospect working for us?
Progression of cannabis in South Africa
After the Cannabis for Private Purposes bill passed in 2018, many South Africans had hope for an ever-expanding market and were interested in cannabis as an industry. The bill kickstarted a revolution to transform the South African economy. Over the coming years, several facilities popped up under high scrutiny and near-impossible provisions by SAHPRA.
THC production in the country is considered a substantial feat by many. The preponderance of the product is currently for export to countries such as Germany, Switzerland, Israel and Australia, making up the majority of the market. Being a ‘cutthroat’ sector it is perplexing to navigate the landscape with facilities not having capacity, lack of foundation and requirements for different markets. Some will swear that GMP is the way to go, while most can only afford a GACP production, hindering and limiting certain players in the industry from expanding into other markets. To import into certain countries requires a GACP certification, some European countries require EU-GMP standards, and Australia requires GMP regulation.
Global pricing in cannabis is dropping dramatically. High saturation of available products on the market forces producers to facilitate the offtake offerings or risk sitting with products for extended periods. Over the past few months, we have seen a dramatic reduction in purchase agreement pricing while production costs remain the same. More competitiveness is seen across the board in our country as more facilities start production. Some refuse to drop their price offerings. In retrospect, a margin of facilities is accepting the market woes.
South Africa has tried different models as an entry point into the market. Although the cannabis club model has been around for many years in Europe, we have had a poor adoption of it. After the two-year battle with the state, THC (The Haze Club) lost its battle, leaving all clubs insecure and deemed illegal. Grow One Africa, the most successful club model hasn’t given up the fight. Key industry players have taken on the government’s promise to move the agenda forward after stagnating for four years. Welcome to the Trial of the Plant part two.
Regardless, let us not forget the promise of 130 000 jobs to the cannabis industry from South African president Cyril Ramaphosa. The ever-so-elusive pledge for local inclusion has been an abyssal implementation. With unemployment at record-high volumes, why have we not seen more inclusivity? Simply the government is taking its time to regulate the market. It’s about controlling every aspect with the promise of inclusion as a byproduct of regulation. The current outlook involves exorbitant international investment and requires highly skilled workers, undercutting the opportunity for community upliftment.
What is South Africa missing? What does the international market have to offer from their implementations?
COA-driven market
Prohibition has left its mark accordingly. The THC-driven market is wreaking havoc on the industry. Other phytocannabinoids are buried, causing many headaches in the industry. Lack of education and research does not help in battling the inaccuracy of the issue. It is purely a numbers game. Good luck if your product didn’t test above 23%. Producers have to play by the rules or face foreclosure. Have facilities and producers forgotten about the importance of the plant? No. To put it bluntly, the market is led by the end user and the investors who equate high THC to a more ‘potent’ experience.
Unfortunately, this leaves South Africa to follow suit. It is what the market demands, but producers in the country are aware of the issue. Adjustments of true medicinal cultivars are slowly being developed by a niche group of cultivators. South Africa doesn’t need to be left in the dust but rather steer the market in the right direction, albeit a difficult task. Cornell from White Lion Holdings and Will from Cradle Genetics are influential players in the industry, working hard to transform genetics in our country. Their passion-centric development and duty to the plant yield massive potential to put South Africa on the map.
Lack of protocol
Viral infections and other pathogens are spreading rapidly through the industry. But are restrictions tight enough? Some might answer yes, with regulations suffocating operations with costly and punctilious measures. Despite limitations, the current directives are not stopping this plague anytime soon. Regardless of what is said, there has already been a case of an Aspergillus-related death in an immuno-compromised patient. Last year alone, up to 15% of the tested product failed to meet the criteria in the US. Last week a worker at a facility died from inhaling ‘cannabis particulates’. We express the need for protocol enforcement. Expect more issues to arise as we traverse this new industry.
With a few reports of HpLv in South Africa as of 2021, among other pathogens, we mustn’t underplay the issue at hand. We are staring down a dark hall of the current industry. Strict regulations should be in place and exclaim preventative measures. But with positive pathogen tests comes the increased use of pesticides, another plague in the industry. Once, again not the eternal Grim Reaper knocking on the door but an opportunity for South Africa to innovate and apply new industry standards. There are gaps in the current market for us to explore and improve. More companies should focus on providing valuable services to our industry in South Africa. Understanding foresight is crucial for the success of our economy.
Corporate Failure
The corporate ladder is seeing its demise. With the poor performance of Tilray and the disastrous scandal of Juicy Fields, is the cannabis industry hanging on a thread? The answer is no. We are witnessing the growing pains of a transitional market. Call it anti-capitalism at its finest. With consumers tired of capital gains, poor preforming products, false COAs and many other issues, it is hard to justify the current playing field. Several facilities are attempting the ’boutique’ cannabis model as the market demands it, but it doesn’t come without issues.
South Africa is no exception to this kind of manipulation. With most investors and offtakes being foreign, we are forced to conform to the norm. As the legal market switches in South Africa, we still have the opportunity to look at which method works best. Do we follow America? Or do we follow Thailand? The ball is in the government’s hands but we must shape the industry as it follows along.
The future of cannabis in South Africa
Cannabis in South Africa is still a relatively young market. With issues arising from cannabis sectors across the globe, we have a great opportunity to expand and broaden our horizons as a country that did it right. There is plenty of room for exploration and innovation although the journey will be a painful and challenging one. No one said it would be easy, but we have brought the industry here thus far and it is important to have a tough stance against poor decision-making precluded by our government.