Dagga the ‘greener’ future
SILVERLEAF: PROFESSIONALISING SECTOR
The legal cannabis market in South Africa is projected at R27 billion by 2023.
The global movement to legalise cannabis has seen South African investment fund, SilverLeaf Investments, set up a fund to drive the professionalisation of the emerging sector. The global legal cannabis market is currently estimated to be around $30 billion (about R452 billion) and anticipated to reach somewhere between $75 billion and $100 billion by 2030.
Locally, The Cannabis Development Council of South Africa projects a market worth R27 billion by 2023 under its Rapid Economic Recovery Plan.
The SilverLeaf fund allows investors to back a range of cannabis ventures like the setting up of greenhouses, retail stores and even clubs and smoke lounges.
In a sense, the move to bring the cannabis industry into the formal sector is an acknowledgment that the country is already a major player in the world.
“The illicit market is thriving, and SA has for many years supplied more than a third of the global market,” says CEO of SilverLeaf Investments, Pierre van der Hoven.
But there still exists a need for initial investment to foster growth in the local industry and this is where SilverLeaf aims to be of service. The fund believes it would be a pity to miss the opportunity to jump on the growing momentum.
In September 2018, the Constitutional Court decriminalised adult personal use, cultivation, and possession of medical cannabis under licence from the South African Health Products Regulatory Authority (Sahpra).
However, any form of trading of the plant remains prohibited. This is mainly what is restricting the growth of the industry, it seems.
“The proposed Cannabis Bill has been extensively rejected by many role players and stakeholders,” says Van der Hoven.
“Unfortunately arrests ‘for trading’ continue and it is hoped government moves forward positively and decisively to unlock this side of the industry. It will provide an ideal opportunity to involve small farmers and bring the illicit market into the legal side of the industry.”
SilverLeaf Investments is of the view that the cannabis industry is aligned with the SA government’s strategic development priorities, which includes growth within the agricultural and agri-processing sectors that can lead to foreign exchange earnings through export.
But with the cultivation of hemp placed on halt since 2020, the opportunity to form part of the much-needed fast-growing industry may be missed.
“This delay has serious implications if SA ‘misses the boat’ while other countries in Africa and globally move forward quickly to establish themselves in the market. Hemp should be deemed an Agri-crop and can create significant jobs as it has done in India for example when it was legalised there,” says Van der Hoven.
With medical cannabis, on the other hand, pharmaceutical companies are permitted to manufacture the product and must purchase from licensed cultivators. This is where SilverLeaf is considering contenders for investment in this sector.
The investment company believes that the medical sector will experience considerable growth in the next 12 months. “The hemp sector will also grow exponentially once the new regulatory regime is clearer and permits or licences are issued,” Van der Hoven says.
The illicit market is thriving