Picture: 123RF/ ERIC LIMON
Picture: 123RF/ ERIC LIMON

The City of Cape Town says it will explore all avenues to ensure its residents benefit from a growing legal cannabis industry, including releasing land for its cultivation.

In his state of the nation address last week, President Cyril Ramaphosa announced that the government will in 2020 formulate policy on the use of cannabis products for medicinal purposes, and open up and regulate the commercial use of hemp products, providing opportunities for small-scale farmers.

Hemp, or industrial hemp, is a strain of the cannabis plant species that is grown specifically for industrial uses. Hemp typically has lower concentrations of tetrahydrocannabinol (THC), the psychoactive component of cannabis.

The global industrial hemp market size is expected to reach $10.6bn by 2025, according to US-based market research and consulting company Grand View Research.

According to the Agricultural Research Council, hemp can be used to make more than 25,000 consumer products, from clothing and accessories to homeware and cosmetics. At the moment it is illegal to cultivate hemp in SA, and its production is authorised for research purposes under special conditions granted by the director-general of the national department of health.

James Vos, Cape Town’s mayoral committee member for economic opportunities and asset management, said on Sunday the city council has already released several parcels of land in Atlantis for purchase by the private sector for the production of medical cannabis.

“This set the foundation to unlock Cape Town’s potential in this untapped sector. We have identified foreign investment interest and the possibility of it bringing in significant income, jobs and skills,” said Vos.

He said Cape Town has already attracted significant investor interest based not only on its strength in agriculture, but also because it is fast becoming Africa’s leader in biotech and pharmaceutical research & development. Wesgro, one of the city’s special business partners, has also been conducting research to seek out investment in the cannabis sector.

Vos said he will write to health minister Zweli Mkhize and the Medicines Control Council to request an update on the progress made to allow for the farming of hemp. He will also approach the SA Health Products Regulatory Authority, as the body that adjudicates applications for medicinal cannabis, to ask for an update on the registration of medicinal cannabis and its cultivation.

A report released in 2019 showed that Africa’s legal cannabis industry could generate more than $7.1bn a year by 2023 if more of the continent’s big markets open up and follow the trend of legalisation seen in the US, Canada and Europe.

According to the report by Europe-based market intelligence and strategic consultancy Prohibition Partners, while cannabis remains illegal in most African countries, many nations are keen to embrace cultivation as a way to boost their economies.

“Cannabis is already widely grown and consumed across the continent, with production currently standing at around 38,000 tonnes and consumption rates at 13.2%,” according to the report.

African governments have not yet followed the trend of legalisation seen in Europe and the Americas. Just a handful of African countries have taken steps towards legalising cannabis use, including SA, Lesotho and Zimbabwe, which recently approved its use for medical purposes, but recreational use is still illegal.

The report by Prohibition Partners says while any path towards a legalised and regulated cannabis industry presents a number of significant challenges due to opaque laws and inconsistent enforcement, Africa’s climate, affordable land and low-cost labour offer enormous opportunities in a market that could exceed $7.1bn by 2023.

phakathib@businesslive.co.za