HERSCHEL MAASDORP: Lip service not enough to unleash economic potential of cannabis and hemp

SA already knew of hemp’s potential back in 1997. At the time, the Council for Scientific & Industrial Research had conducted a feasibility study on hemp that found the plant was economically viable when its use is extended from the production of fibre into other potentially lucrative uses such as textiles. Researchers also estimated that its production costs were on par with maize and cotton.  ’

It has taken about 24 years for government to finally acknowledge cannabis and hemp’s potential as a major contributor to SA’s economy. The department of agriculture, land reform & rural development presented its cannabis master plan to parliament last August to unlock the plant’s potential. And President Cyril Ramaphosa echoed the sentiments in his state of the nation address in February. 

It is a precarious exercise for both mainstream business and government to take a once illegal resource into the formal economy. It requires a shift in perception — to show the public the social, healthcare and economic benefits of cannabis and hemp.

If industry role players get it right they will unleash a billion-rand industry into the economy. But if there is a malalignment of the implementation in the industrialisation process, cannabis and hemp will remain nothing more than potential.

The industrialisation of cannabis and hemp can have a supportive effect on our economic recovery objectives. Ideally, the point of departure should be premised on the recommendations for the implementation of cannabis and hemp policy reform aligned with international human rights standards, the 2030 Agenda for Sustainable Development Goals and the 2016 UN General Assembly special session outcome document, paving the way for the next decade in cannabis and hemp policies.

Social and health benefits 

SA is considered the most unequal country in the world, with the financial gap between rich and poor widening because of Covid-19. This is characterised by a lack of housing and the rising prices in food and medicine, making these out of reach for the majority of the population. Hemp and cannabis can help the country move out of this quagmire. 

Hemp and cannabis — which belong to the cannabis sativa species and differ only in tetrahydrocannabinol (THC) content and height — can be beneficiated into products ranging from foodstuffs to hempcrete. The latter can be made into bricks that are resistant to pests and fire, regulate interior temperatures, store and release moisture, and absorb carbon emissions. While not as cheap as most bricks, hempcrete can be cost-effective when it comes to insulation, meaning businesses and residents would not spend as much on temperature control systems as they usually do. 

A more widespread adoption of hempcrete — as in government housing — will surely bring down the cost of building materials. It promises to be a cost-effective and sustainable solution to the government’s housing predicament. 

Hemp seeds are considered a superfood, being rich in protein, fibre and healthful fatty acids, including omega-3s and omega-6s. The plant can be beneficiated into flour — perfect for those who prefer to consume gluten-free bread. And with food security becoming shaky, adding cannabis and hemp to the national staple can be a cheap and much-needed intervention.

Numerous studies have shown that cannabis can help patients suffering from autoimmune diseases like lupus and Hashimoto’s disease by suppressing their overactive immune systems; managing pain in cancer patients; and benefiting those with autism, wasting syndrome and other ailments. Cannabinol’s sedative effects can assist those struggling with insomnia and other sleeping disorders.

The fatty acids in hemp seed oil alleviate low blood pressure. It can also help with skin disorders, certain levels of inflammation and pain, and degenerative cardiac conditions.

Economic benefits

One statistic stood out from the president’s state of the nation address: that the hemp and cannabis sector has the potential to create more than 130,000 new jobs. This is just in the formal sector. 

According to the World Health Organization SA, as the world’s third-largest producer of illegal cannabis, already employs more than 1.2-million people in the industry. Indicative of the high employment absorptive capacity, the illicit sector includes 900,000 cannabis farmers and 350,000 traditional healers, the latter growing the plant for medicinal reasons. 

Policy interventions will go a long way to degenerating the informal trade and transforming it into a robust formal sector complete with the regulations and compliance measures that are required. A Prohibition Partners report from 2019 stated that licensed cannabis cultivation in Africa could generate as much as $7.1bn (R107bn) a year. With KwaZulu-Natal having the perfect conditions to grow healthy cannabis and hemp, farmers from that province stand to benefit the most.

The cannabis and hemp industry’s success will largely depend on the buy-in from local and foreign investors as well as integrated value chains that help businesses take their ideas into the real world. Agro-processing businesses and secondary manufacturers are essential to this value chain for the beneficiation and production of a multitude of products.  

Creating the right business environment

For hemp and cannabis to truly enter the mainstream market, a policy overhaul is needed as of yesterday. It was encouraging to hear the president say his government will “review the policy and regulatory framework for industrial hemp and cannabis to realise the huge potential for investment and job creation”. But this industry cannot survive on government lip service. It needs to swiftly create an environment in which hemp and cannabis businesses can thrive.

Government policymakers and businesses can work together to create the regulations and compliance measures that would usher cannabis and hemp into the mainstream economy. Some simple interventions include: 

• Compulsory registration of cannabis and hemp businesses across the value chain.

• Certification schemes that ensure all role players comply with regulations regarding seed quality.

• Import and export controls.

• Variety controls and listing that ensure their distinctiveness, uniformity and stability before they are released for sale.

• Seed testing that will ensure only high-quality seeds are chosen for local use and exports.

While the leadership of the country undoubtedly understands that the cannabis and hemp industry can contribute to economic development, job creation, inclusive participation, rural development and poverty alleviation, the right policy interventions must be put in place. Without these the government’s cannabis master plan will be a non-starter, and SA will miss out on these prolific plants’ potential social, economic and healthcare benefits.

• Maasdorp is Labat group executive for business development.