Marijuana. Picture: ISTOCK
Marijuana. Picture: ISTOCK

Meet Grant McCulloch, a designer-watch and diamond salesman who is branching out into selling accessories for SA’s well-heeled dope smokers. He’s punting finely milled wooden boxes for storing weed, along with vaporisers and a sleek device that grinds marijuana and is used to fill joints.

"You can even use it to grind your rosemary to put on your lamb chops," he says with a perfectly straight face from his exhibition stand at a recent cannabis expo in Cape Town.

McCulloch is one of a growing cohort of business people hoping to capitalise on the recent decriminalisation of the personal use of cannabis in SA, effected by a judgment handed down by the Constitutional Court last year.

The ruling — that it is no longer illegal for individuals to use cannabis in the privacy of their own homes — has sparked a surge in businesses offering products that target every conceivable step in the mini-supply chain, from the domestic greenhouse to a puff on the porch. There is a flourishing and increasingly open trade under way in dagga-growing kits, lights, growing mediums, storage devices, products with which to mix the harvest, and a host of smoking paraphernalia that ranges from decorated rolling papers to rainbow-coloured silicone pipes.

Sahpra is not taking action against anyone. The market is ripe for exploitation. It is the perfect place for scamsters to make moneyHarris Steinman
Harris Steinman

At stake is a slice of the global legal marijuana market, which is estimated to reach $146.4bn by the end of 2025, according to Grand View Research.

"We definitely smoked a lot of the good stuff coming up with this," says Smokey
Treats CEO Adam van Wyngaarden, holding up a box of Woodland Craft cigarettes made from organic tobacco. The company markets its cigarettes as an environmentally friendly
alternative to conventional tobacco products, punting them on its website as "making your dirty lil’ habit a lil’ greener".

While there is a big hustle to make a buck from recreational cannabis users, there is an even bigger rush to capitalise on customers seeking the medical benefits of cannabis. Snake-oil salesmen and science-driven players alike are moving in at high speed, with a particular focus on cannabidiol (CBD), a compound found in marijuana and hemp.

CBD has made its way into oils, cosmetics and foodstuffs, with its advocates claiming an extensive range of medical benefits, ranging from pain relief to
curing cancer.

However, there is scant evidence for most of the claims, and little is known about how cannabis interacts with other medicines. This is largely because the historic criminalisation of pot has until very recently made research extremely difficult.

The US Food & Drug Administration only approved its first drug derived from marijuana last June; Epidiolex contains CBD, and is used to treat severe epilepsy in children. None has yet been approved by SA’s medicines regulator.

The SA Health Products Regulatory Authority (Sahpra) has made it clear that any product that makes medicinal claims must be registered with the authority as a medicine, in terms of the Medicines Act. This means all the unregistered CBD products in SA that are being marketed for their medical properties are illegal.

But Sahpra’s lack of action against the law-breakers has effectively given the charlatans free rein.

"Sahpra is not taking action against anyone," says consumer activist Harris Steinman. "The market is ripe for exploitation.
It is the perfect place for scamsters to make money."

Local consumers can readily buy products supposedly containing cannabis derivatives, such as CBD oil, online. But there are absolutely no safeguards in place to ensure that what is in the bottle matches the claim on
the label.

The FM’s entirely unscientific poll of random strangers at a Cape Town nursery reveals consumers are buying CBD oil on the street, and from friends, pharmacists, and colleagues. Everyone seems to know someone who can source it or is making it themselves.

"I know a doctor in the northern suburbs who makes CBD oil himself," says a woman at the nursery. "It really is good stuff. It is R2,000 a bottle."

At best, consumers are indeed buying CBD oil and taking it under medical supervision for a condition for which there is evidence of efficacy, such as pain or nausea. At worst, they are purchasing a fake that contains no CBD oil and is laced with harmful ingredients.

What it means:

Snake-oil salesmen and science-backed businesses alike are trying to make a buck from the cannabis boom

Afriplex CEO Danie Nel has previously told FM sister publication Business Day that his company tested more than 120 products, sold in SA, that claimed marijuana-derived medicinal properties, and found that most were of "horrific" quality.

Sahpra did not respond to the FM’s request for comment.

At the other end of the spectrum are the hi-tech agricultural and big pharmaceutical businesses, which are slowly taking advantage of SA’s recent moves to create a regulatory framework for the cultivation of medical cannabis.

Sahpra is tight-lipped about the first recipients, but industry sources say at
least three licences have been awarded to date.

The FM has knowledge of two recipients: House of Hemp, which has a hi-tech greenhouse in the Dube trade port near
Durban; and Elpasso farms in Gauteng, which has allocated 100ha to medical cannabis cultivation.

Elpasso Farms CEO Brylyne Chitsunge says her site was subjected to two audits by Sahpra, and she was impressed by the inspectors’ attention to detail.

"I had 27 deficiencies on my first audit in August. I give them credit for being thorough," she says.

Caption
Caption

A scientist by training, she is sceptical of the myriad cannabis products on
the local market that claim therapeutic effects.

"I’m not going to touch any of it until there is empirical evidence," she says.

The prospect of a legal medical cannabis industry in SA is driving innovation along the value chain.

There are consultancies offering to assist prospective growers obtain cultivation licences; firms selling hi-tech equipment for growing and harvesting the crop on an industrial scale; and still others geared towards extracting the various constituents of cannabis to sell on to pharmaceutical companies. Big business is making no secret of its plans to cash in, but it has been frustrated by the slow pace of regulatory change in SA.

Somerset West-based Canbigold is a privately held company that has patented a modular cannabis-cultivation kit in 12m-long shipping containers.

Each fire-proof metal box is kitted out with a hydroponic system with controllable temperature, humidity, light, nutrients and carbon dioxide flow.

Canbigold has ambitions to list on SA’s 4AX exchange later this year, and
ultimately on the Canadian Securities Exchange. It is asking investors to commission multiple containers, which it dubs "fortresses", that will be managed by Canbigold in countries where it has obtained cultivation licences.

It has secured licences in Lesotho and Uruguay, but has yet to do so here.

Health-care company Go Life, which has its primary listing on the Stock Exchange of Mauritius and a secondary listing on SA’s AltX, has similarly turned to countries that have moved faster than SA, in this case Lesotho and Zimbabwe.

"SA is still a no-no," says Go Life CEO Gerhard Naudè. His company has yet to
get a response to its application to cultivate medical cannabis in the Western Cape,but plans to make another application in a joint venture with the Ingonyama Trust in KwaZulu-Natal.

Many observers fear small players will in time be squeezed out by big businesses, which have the capital to invest in the large-scale facilities that are needed to produce the volumes of cannabis and its extracts required by the pharmaceutical industry.

These anxieties are well-founded, says Naudè. "Cannabis is the flavour of the day. But ultimately the bigger companies will coalesce."