Marijuana. Picture: ISTOCK
Marijuana. Picture: ISTOCK

There’s nothing inconspicuous about 420 Café, the restaurant in the heart of SA’s most important financial district that openly sells marijuana. The café — located a stone’s throw from Sandton Central Park — brazenly advertises its presence with neon signage along Sandton Drive.

Inside, patrons are greeted with a sign that says "Welcome to Sandterdam" — an obvious play on the names of SA’s business hub and Amsterdam, the weed capital of the world.

Aside from food and nonalcoholic beverages, the double-storey café sells a range of marijuana products, which guests can enjoy in-house or at home. The bar is kitted out with graffiti, Bob Marley insignia, bean bags and other such seemingly obligatory furnishings for an establishment of this kind.

It attracts possibly the most eclectic crowd in Joburg’s northern suburbs. Bikers, hippies, tourists, inquisitive passers-by and polished corporate types make for an otherwise unlikely collection of people.

But the café shouldn’t really exist.

420 Café is one of several businesses that have conveniently expanded the meaning of a 2017 court ruling that’s left weed smokers across the country — one in 12 adults, according to a 2002 UN report — in limbo. In practice, these organisations are living as if they’re in a post-legalisation world — except we’re not there yet.

The high court in Cape Town effectively said last year it is unconstitutional to ban the private use of cannabis — a ruling that enthusiasts consider a viable defence against prosecution for private cultivation and consumption. But the road towards full legalisation — particularly for commercial traders and growers — is still long and uncertain, even if it seems inevitable.

Smart businesspeople who prepare now [for the legalisation of marijuana] will be looking at a once-in-a-lifetime opportunity to build a new kind of industry
Arcview Market Research and BDS Analytics

Two of SA’s neighbours have already taken the step: Zimbabwe early this year said it will legalise cannabis cultivation, and Lesotho did so last year.

Further afield, Canada is moving towards becoming the first G20 nation to legalise the recreational use of marijuana. As in SA, a number of first-movers have for years been operating in that market on the presumption that legalisation is on the horizon. Canopy Growth, for example, has become the world’s first US$5bn cannabis company, according to a research report by Arcview Market Research and BDS Analytics.

The report, "The State of Legal Marijuana Markets", says the world’s legal cannabis industry grew 37% in 2017 to reach $9.5bn in consumer spending. It is likely to triple to $32bn by 2022.

In SA, legalisation could provide a relatively meaningful fillip for the economy, tax coffers and export industry.

As Arcview and BDS note, with increased legalisation around the world, prices will drop, the availability of marijuana in attractive retail environments will expand, "and smart business people who prepare now will be looking at a once-in-a-lifetime opportunity to build a new kind of industry".

But forecasting SA’s gains is a difficult task. Because marijuana remains illegal, no real studies have been done on the local industry; unsurprisingly, its worth is completely overlooked by Statistics SA. That’s because the UN Statistics Division — the official rule maker in measuring economies — says no illegal activity can be included in GDP calculations. chief economist Mike Schüssler thinks the industry would probably add 0.4%-0.5% to SA’s economy, if legalised.

What it means

If legalised, marijuana could add between 0.4% and 0.5% to SA’s economy

"I believe it would add about a quarter of the value the tobacco industry does, and it can be taxed and it can then become part of the economy," Schüssler says.

Considering that the tobacco industry accounts for about 2.14% of consumer spending, he estimates that marijuana would likely add about 0.6% to SA’s consumer spending. Given that consumer spending makes up about 60% of GDP, just the consumption aspect of the marijuana industry would add about 0.36% to GDP.

"But, of course, the dagga farmland and the farmer also become legal and employed," says Schüssler. "The farmer is then able to get a loan from the bank, and the buying of seeds and selling also become part and parcel of GDP. So I think there will be a knock-on impact too. [It] may be very small, but it would add something as, say, dagga gets transported and shops open up and so on."

Julian Stobbs and Myrtle Clarke — known as the "dagga couple" — have been fighting for legalisation of marijuana since 2010, when they were arrested for smoking and growing weed at home.

They are irked by the lack of research on marijuana in SA.

"As activists, we have our views on how the existing cannabis economy can evolve after the end of prohibition, but it is difficult to pin down any credible work that has been done in this area in SA," Clarke tells the FM.

Looking to international role models such as Canada is unhelpful, she says, because they "are completely out of synch with anything that could work here".