Ganja industry in the country
Labat Healthcare, probably the biggest player in the medicinal cannabis market in South Africa, believes it has a role in helping the illegal industry become part of the formal industry going forward.
Labat has licensed growing and extraction operations which serve the Australian and other foreign markets, selling both flowers — biomass is the industry term — distillate and extractions.
It supplies Australia’s importers with 20kg consignments of prepackaged Exodus Cheese — which it produces at a cost of R4 a gram — for R24 a gram. However, the real profit is made on the Australian side, where the same cannabis is sold at $20 (R245) a gram.
Labat operates Cannafrica, which runs a string of 58 wellness shops in high-end malls around the country, offering CBD products, which are legal under the current regime and are keen to enter the “adult-use” market, once it can lawfully do so.
Maasdorp said the lack of regulation and progress by parliament in passing enabling regulations had seen the situation arise in which the traditional industry has been “undermined” by the new entrants to the totally unregulated industry.
He added 35 to 40 of the country’s 100 licensed medical facilities, which had invested up to R20 million each, were dormant due to a lack of offset agreements and some were “offloading” their products on the local market. This was placing increasing pressure on the market and further compromised the existing growers by cutting into their market with cheaper, medical-quality products.
At a recent meeting held with growers in the Eastern Cape, convened by the presidency and the Eastern Cape Development Agency, growers said they had experienced a 70% drop in revenue in the past few years, Maasdorp said.
The problem was “very real” and required intervention to bring them into the formal cannabis economy.
Labat was working with Eastern Cape farmers to use their cannabis for extraction for the European wellness market due to its unique genetic makeup and its low THC content as a means of doing so, he said.
Regulation which identified the point of origin would help stop the dumping of export cannabis on the local market and would also help smaller growers access international markets in which this was an important issue among consumers.
This could also be used locally, Maasdorp said.
Myrtle Clarke, director of the NGO Fields of Green for All, was one of the applicants who won the landmark 2018 ruling and is a veteran of the battle for legalisation of cannabis in South Africa and in a number of multilateral international forums.
Clarke believes the cannabis trade — the country’s oldest and newest industry — has continued to develop despite the delays in the passing of legislation because of people “pushing the edge of the envelope”.
Doing so required money, she said, both in terms of access to premises and finances and to deal with the “brown envelope” side of the industry, as shops were “low hanging fruit” for “taxation” by the police.
Clarke also believes traditional cannabis growers and sellers have been put under extreme pressure by the current boom and are being “left behind.”
“This is a very real problem,” Clarke said. “There is no thought anywhere in all of this for the guys who have been selling — and getting arrested and sent to jail — in the townships. They are nowhere in any of this. They are completely out of the game.”
“There is thought given to traditional growers because they have a more romantic image but, to the kasi guys who have been in and out of jail for selling weed, there is none.”
Clarke believes the removal of cannabis from the Drugs and Drug Trafficking Act, which the new bill facilitates, is a “massive win” in terms of setting up a regulated, inclusive industry.
“There was a certain nativity around the process which we were all guilty of. One it is in the political arena — which it is — there is no such thing as one step forward, followed by another one. We have seen many steps to the side with this process.
“This is a unique industry in both its newness and its oldness. The biggest challenge we face is the huge gaps — the gaps in resources and access and the gap between the people on the ground who touch the plant and the people who make the laws and regulations,” she said.
‘I can’t get money to get into the industry because of my criminal records for being in the same game. What do you think of that?’