Potential for lucrative cannabis industry in South Africa
In 2018 the Constitutional Court – South Africa’s highest court – unanimously ruled to decriminalise the private possession, consumption and cultivation of cannabis. The government has until September 2020 to bring legislation on cannabis in line with the constitution.
Since 2018, the manufacture, import and sale of cannabis-related products other than those containing tetrahydrocannabinol (THC) has taken off. This is partly due to a 12-month exemption published in the Government Gazette that will expire in May 2020 in which cannabis health supplement products were de-scheduled if they:
- contain a maximum daily dose of 20mg cannabidiol (CBD) with an accepted low-risk claim or health claim which refers only to:
- general health enhancement without any reference to specific diseases;
- maintaining general health; or
- relief of minor symptoms (ie, not relating to a disease or disorder); or
- consist of processed products made from cannabis raw plant material and processed products where only the naturally occurring quantity of cannabinoids found in the source material are contained in the product and which contain no more than 0.001% of THC and no more than 0.0075% ofCBD.
In 2018 Health Minister Aaron Motsoaledi amended the Medicines and Related Substances Act 1965 (the Medicines Act), such that products which contain only cannabidiol – when intended for therapeutic purposes – were rescheduled from Schedule 7 to Schedule 4. Such products can now be obtained from a pharmacist by prescription, rather than via the tedious and time-consuming special application procedure involving the South African Health Products Regulatory Authority (SAHPRA), which must be followed for Schedule 7 drugs. Notably, certain cannabis products are still classified as Schedule 7 substances (for further details please see “Medical cannabis: growing pot-ential“).
The decriminalisation of cannabis has changed the IP protection landscape for rights holders of patents, designs, trademarks and plant breeds which were previously illegal or contrary to public policy or morality and therefore unregistrable. In August 2019 the South African Trademarks Office published updated Guidelines on the Examination of Trademark Applications, which specifically provide that cannabis-related trademark applications will now be accepted on the condition that applicants ensure that the products comply with the standards set by the health minister. Non-compliance with these standards would render the sale of the product and its trademark application(s) illegal.
South Africa has ideal conditions for growing cannabis, particularly in the provinces of KwaZulu-Natal, Limpopo, Eastern Cape and Western Cape, although with modern growing techniques, including hydroponics, the crop could ostensibly be grown anywhere. According to the United Nations, South Africa produces about 2,300 tons of marijuana annually and is the third-largest producer in Africa. These provincial governments have all expressed a desire to facilitate cannabis cultivation in their provinces, and it will be interesting to see what specific programmes to support the industry will be developed.
It is presently illegal to cultivate cannabis commercially without a licence from SAHPRA and at the time of writing, only four licences have been approved for the cultivation, import and export of medicinal cannabis. However, these licences do not allow the local manufacturing or sale of medicinal products and, to date, SAHPRA has issued no such licences. In addition, there have been no medicinal product registrations to date. At present, the plants cultivated on these farms are exported for processing into various cannabis products – clearly a revenue stream opportunity that is for now being missed in South Africa.
A licence to cultivate currently costs R23,000 (about $1,600) in official fees. However, the ultimate cost would likely be far higher if it includes the additional requirements set out in the current draft guidelines issued by the Department of Health, including training of personnel, security measures required and additional approvals that may be required for good manufacturing, laboratory, agricultural and collection practices relating to the cultivation, harvesting and primary processing of cannabis plants intended for medicinal use.
It seems likely that South African legislation relating to cannabis will evolve quickly to untap the significant market potential associated with the cannabis industry.
For further information on this topic please contact Joanne van Harmelen at Edward Nathan Sonnenbergs Inc by telephone (+27 21 410 2500) or email (email@example.com). The Edward Nathan Sonnenbergs Incwebsite can be accessed at www.ensafrica.com.