Western Cape has high hopes for marijuana market
Medical marijuana has the potential to become SA’s new growth industry — if it could just overcome regulatory obstacles and the government’s lack of enthusiasm
The Western Cape believes the medical cannabis market has significant potential to boost the local economy and is moving fast to position itself as the country’s main hub for this new industry.
Following the rapid legalisation of medical cannabis around the world, many of the big Canadian producers are actively pushing their exports and seeking to invest in manufacturing capacity in parts of the world where operating costs are lower.
Canada, which legalised medical cannabis in 2001, is heading for a huge oversupply by 2020, having licensed more than 70 companies to cultivate and sell medical cannabis in recent years.
Wesgro, the Western Cape’s investment facilitation arm, is talking to three big Canadian pharmaceutical companies interested in investing in the nascent industry in the province.
But Colombia, Israel and Switzerland are among the countries also actively positioning themselves as industry hubs, Wesgro chief research officer Cornelis van der Waal told a packed workshop in Cape Town last week.
Despite growing competition and the rapidly dropping retail price of cannabis, Van der Waal thinks there is still significant money to be made.
In 2014, a gram of marijuana flower in Washington state retailed for $23. By 2017, that had fallen to $8/g — which still translates into more than R100,000/kg — and each marijuana plant is capable of producing 750g-1.5kg of product a year.
Van der Waal doesn’t think SA has already lost first-mover advantage, arguing it will ultimately be cost which determines where production is located.
Medical cannabis must be grown in a controlled environment that can only be achieved in greenhouses, but these still rely on the sun. The Western Cape has 15 hours of sunlight a day in summer.
This means SA growers will need to use electricity to generate light for only a further three hours a day (marijuana plants require 18 hours of sunlight a day). SA also experiences particularly high ultraviolet radiation, which means a more concentrated active ingredient at a lower cost of production.
The Western Cape has a supportive government, a strong biotech industry, significant research skills located in three universities, and substantial agricultural infrastructure and export capabilities.
However, there are several constraints that could impede the industry from taking off locally. These include the national government’s lack of enthusiasm, the slow pace of clinical trials and the fact that production is expensive because medical cannabis must be produced under controlled conditions.
SA’s pharmaceutical licensing and registration regime is also stringent and cumbersome, while the laws that govern recreational use of cannabis are in a state of flux.
The Constitutional Court has given the government 24 months to bring sections of the Drugs & Drug Trafficking Act and the Medicines & Related Substances Act in line with its September 2018 ruling, which decriminalised the personal, private use, cultivation or possession of cannabis.
Several multinational pharmaceutical companies — including Supreme, Rhizo Sciences and Aphria — have already invested in Lesotho, not only because the quality of the mountain kingdom’s weed is legendary but also because the regulatory environment is more enabling than that of SA.
SA’s pharmaceutical regulatory regime is on par with those of developed countries. Despite this, there has been an explosion of self-styled medical cannabis products coming onto the SA market in the past few months. Most are distributed by small operators via the internet, bypassing the regulatory framework laid down by the SA Health Products Regulatory Authority (SAHPRA) in 2017.
The Afriplex cannabis laboratory in Paarl estimates that 120 new products have been peddled online in the past six months alone. It has tested samples of many of these and found no traces of cannabis components, but high levels of toxic solvents, pesticides and insecticides.
"The danger is not the cannabis but the unsafe levels of contaminants," says Afriplex MD Danie Nel. "The public is unaware of this and is being exploited by unscrupulous operators. It’s the Wild West out there … a complete free-for-all."
Afriplex, a R200m pharmaceutical company with 17 years’ experience in developing plant-based medicines, applied to SAHPRA two years ago for a licence to cultivate and manufacture medical cannabis. Since then it has been working with regulators to bring its cannabis processing facilities up to required standards.
Of the 27 licence applications made to SAHPRA so far, industry experts expect Afriplex’s to be the first to be granted.
The danger is not the cannabis [in new products being peddled online in SA] but the unsafe levels of contaminantsDanie Nel
At the Wesgro workshop, much impatience was expressed from the floor at the slow pace of licensing. This appears to be as much due to incapacity at SAHPRA and fear about security issues — given the potential for cannabis intended for the medical industry to end up on the recreational market — as to confusion among regulators about how the plant works.
The chief gripe is that the authorities want to standardise and legalise one product, medical cannabis, whereas there are many varieties of cannabis, with varied medicinal and nutritional value.
Cannabis is what’s known as a polypharmacy plant. It contains more than 460 compounds, at least 80 of which are cannabinoids and phytocannabinoids that interact with cannabinoid receptors in the human brain. As of 2012, more than 20 cannabinoids were being studied in the US.
This means a wide range of different medical cannabis-related products will be produced. It will also be possible to develop particular plants to treat particular medical conditions.
The University of the Free State’s (UFS) department of pharmacology is studying the benefits of cannabis in treating cancer, gangrene, Alzheimer’s, hypertension and pain.
In one study, UFS researchers compared the efficacy of medical cannabis sourced from 16 different countries in inhibiting breast cancer growth in the laboratory.
According to the programme director, Dr Motlalepula Matsabisa, there were some "very positive results" in which the cannabis successfully restricted the growth of blood vessels feeding the cancerous tumours.
The best results were from cannabis sourced in Pondoland in the Eastern Cape. "That has driven us to go to Lusikisiki to see if we can develop our own cannabis as an anti-cancer treatment," Matsabisa told the Wesgro audience.
The UFS wants to support the emergence of a local medical cannabis industry and assist in devising a beneficiation model that draws in local communities.
SA has a thriving illegal cannabis industry, but little idea how to turn traditional growers into people with the means to extract active ingredient for the more lucrative medical market.
Many delegates expressed the fear that all the profits from medical cannabis would go to big pharma, and argued that traditional communities should be cut in and empowered through structured initiatives and training.
"I don’t think we should let multinational companies take over. This should be a locally driven industry," said Matsabisa.
But commercial and regulatory lawyer Altair Richards of ENSafrica fears this is exactly what will happen.
What it means
SA failed to produce its own anti-retrovirals; it shouldn’t make the same mistake with cannabis
Richards believes the first medical cannabis product registered in SA will probably be one already registered overseas and imported, ready-made, by a multinational pharmaceutical company.
This is because very few local operations are compliant with international best practice and also have the capability, experience and infrastructure to produce extractions from plant materials.
To meet SAHPRA’s manufacturing licensing requirements, a firm will have to comply with the good manufacturing practices required of a full-blown pharmaceutical company producing conventional allopathic medicines.
"This means you’re unlikely to get a manufacturing licence unless you are an established pharmaceutical manufacturer and hold an existing registration on a product," Richards explains. "This is not something you can do with a R1m-R2m investment."
Granted, it would be easier to get a cultivation licence just to grow the plants, as one wouldn’t need to have an existing registered product. This suggests there is scope for established manufacturers to join hands with new cultivation licence holders.
Afriplex is confident it can beat the multinationals to produce the first registered medical cannabis pharmaceutical product in SA.
"It will be a pity if the first products are imports because we need to create our own industry, our own capabilities in the value chain and create jobs," says Nel. "We need the support from the regulators to achieve this goal."
SA failed to produce its own antiretroviral medicines; it shouldn’t allow the same thing to happen with cannabis.