Earlier in May this year, the Department of Health published an update on regulations surrounding cannabis in South Africa. They have seemed to deregulate certain components of the plant.
The cannabis plant consists of two main compounds – Tetrahydrocannabinol (THC) and Cannabidiol (CBD). The psychoactive component of cannabis (dagga) is the one making a big difference. THC is commonly known as a psychoactive component, while CBD is not affiliated with psychoactive outcomes. CBD is not forming any habits, nor does it create dangerous side-effects. It helps some forms of anxiety and pain relief, and is used by both people and animals.
To be clear – so far, both THC and CBD were listed as Schedule 7 substances in term of the Medicines Act. So, they were treated equally as heroin and considered highly regulated drugs. These substances could be supplied or used exclusively by the director-general of Health permit and under specific circumstances.
Removing CBD from the List
By removing CBD from Schedule 7 list, CBD became a substance that may be sold by pharmacists when presented with a written prescription, just like antibiotics. The government went even further and excluded preparations containing CBD from the schedules to the Medicines Act.
Now, anyone – not just pharmacists, can sell legally and without prescriptions these CBD preparations, as long as they fulfill these conditions:
- CBD preparations must contain a maximum daily dose of 20 milligrams and cannot claim to treat or cure any medical condition. Anything from “general health enhancement” to “relief of minor symptoms” is acceptable.
- Products must contain a very small amount of THC (not more than 0.0001%) and CBD (not more than 0.0075%).
These changes are offering significant evolvement in the sphere of commercialization of CBD related products. We’re talking not just CBD oils, but also pet products, skin crèmes, beer and more.
The South African dagga-associated products could be worth billions in just a few years from now. Africa is sadly known by its cheap land and labor, so, why not using it as a comparative advantage in order to attract investments?
Another advantage might be that African continent already (illegally) produced tons of cannabis past years, according to the data provided from the UN. Looks like farmers in South Africa, have the skills and experience in growing cannabis successfully.
There must be a catch
The emerging South African market would look for some basic quality prepositions, such as irrigation infrastructure not very common on the continent.
Water and irrigation is essential to any mass scale operations in the region, no matter the cultivation method. The production scaling and the required cannabis quality are directly connected to water and irrigation infrastructure.
Another question that emerges is how to get the best of the post-harvest processing of cannabis. This goes beyond the agricultural skills of South African farmers, and demands a comprehensive approach to branding and business innovations.
Creating a Premium Product
There is no need to create another “raw material” market. By offering a quality product and a compelling story to the consumer investors could establish local brand identity and command a price premium. This could lead to diversification of dagga-related products, but also play a key role in boosting the cost per gram in the recreational market.
You know – there is “a whiskey”, but there is also a “premium Scotch Whiskey”, if you see our point. Just like Malawi Gold and Swazi Gold cannabis is wrapped in banana leaves adding a unique color and flavor, there could be lots of other innovations in the production and placement process.
We’ll see if South African investors and entrepreneurs are up to the challenge. It would be such a pity to pass this (still) one-year opportunity.
