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The Legalisation of Cannabis in South Africa: Proposing an Economic Value

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Chapter 6
The Legalisation of
Cannabis in South Africa:
Proposing an Economic Value
Chain Model for South Africa

Ranson Sifiso Gwala

https://orcid.org/0000-0002-1545-2259
University of KwaZulu-Natal, South Africa

ABSTRACT
The recent legalisation of cannabis in South Africa has created a sizable market for the importation of
cannabis products into the country. The cannabis-masterplan explains how the value creation features
must be reflected in legislation. Cannabis products may already be imported with approval. This causes
yet another delay and issue because it prevents the local market from being primary, secondary, and
tertiary producers. Small-scale cannabis producers are a secondary segment of the value chain that can
best solve this. Consequences can be anticipated from making cannabis farming the main source feed-
ing into the value chain. The chapter suggests a value conceptual framework that creates new players,
markets, and jobs for the local women and the youth, thus addressing one the sustainable developmental
goals of creating employment.

INTRODUCTION

The South African authorities have long regarded cannabis as an illegal substance. Marijuana use was
consequently made unlawful. Cannabis continued to be sold on the underground market despite being
deemed to be illegal to grow and use. Its illegality was closely tied to the apartheid-era ban on alcoholic
beverages for Africans in South Africa. Consumption acted as a form of liberation movement in addition
to being a cheap way to get alcohol and drugs. Cannabis was used by Rastafarians for religious purposes
even though it was illegal, which contributed to its rise in popularity. Cannabis is the most commonly
used illegal substance in western nations, with 32% of young adults in the European Union and over

DOI: 10.4018/978-1-6684-6346-8.ch006

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The Legalisation of Cannabis in South Africa

half of young adults in the USA and Canada reporting lifetime use (Skypala et al., 2022). Cannabis
use is strongly associated with young people (10–24 year-olds) who are more impulsive and have poor
response inhibition (Lawn et al., 2022).

BACKGROUND AND THE STUDY FOCUS (PROBLEM STATEMENT)

The history of cannabis is extensive and fascinating. Central Asia or western China were the earliest
places to use cannabis. When it was added to the pharmacopoeia in 2800 BC, the first mention of its use
was made. Writings by Indian Hindus, Assyrians, Greeks, and Romans claim that cannabis helps treat a
variety of illnesses, including asthma, amenorrhea, depression, inflammation, pain, and loss of appetite
(Ayenigbara, 2014, Acharya, 2005).The emergence of trade saw the spread of cannabis throughout the
world. In Africa, the indigenous use is cited as far back as in the fourteenth (14th) century in Ethiopia
(Samuel and Edward, 2015). It was exchanged as a kind of product. The Khoikhoi in South West Af-
rica, now known as Namibia, and the former Southern Rhodesia, now known as Zimbabwe, were early
populations that cultivated cannabis and traded it for a living. The use varied from the herb’s traditional
use among some of the sangomas (traditional healers) in the southern tip of Africa to its use as a combat
herb, medicine, insecticide, anaesthetic, and recreational activity (Almqvist, 2020).
As colonisation developed in Africa starting in the 1650s, colonisers began enacting laws as they
gained knowledge of local customs, laws that were designed to oppress and rule over Africans. Cannabis
was a legal drug prior to the 1890s, and its primary method of use went unnoticed. Cannabis was first
rightfully prohibited in numerous colonies by the Geneva Convention on Opium and Other Drugs, which
was passed in 1925 (Merleaux, 2020). Many governments have continued to ban cannabis outright ever
since without taking another look at other uses of cannabis that could benefit their economies. However,
the United Nation’s Single Convention on Narcotic Drugs of 1961 legislated cannabis use for medici-
nal and scientific use under Schedule1 and Schedule 4 (Collins, 2020). Regrettably individual nations
fear to tread where the United Nations or the United States of America and its partners have put their
regulations. African nations unfortunately continue to be conformists, and have adopted prohibitionists
approach on cannabis regulations.

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The Legalisation of Cannabis in South Africa

Figure 1. A timeline illustrating highlights from the history of the medical use of cannabis with an em-
phasis on the treatment of seizures and epilepsy (Source:(Friedman and Sirven, 2017)

The pharmaceutical industry however has not given up in influencing changes in legislative framework
(Brooks, 2018). Figure 1 depicts the history of cannabis use from 12 000 BC to the present. In order to
develop a value chain that will benefit regional small cannabis growers, the study will look at literature
on legalisation and value chain creation in other regions of the world. Cannabis use for medical purposes
and for personal use is now legal in South Africa, however no laws governing the sale of cannabis in many
forms or its commercialization have yet been passed. This is because deregulation must go through a
laborious process. As a result of the South African Constitutional Court’s decision in Minister of Justice
v. Prince, the Constitutional Court decided in 2018 that the state should legalise cannabis.

DEFINITION OF CANNABIS

Cannabis comes in three mains strains, known as cannabis sativa, cannabis indica and cannabis ruderalis.
Cannabis sativa, popularly known as marijuana, hemp, marihuana, ganja or insangu is included in the
list of the five primary crop groupings, along with grains, cotton, vegetable oils, and cotton (Rupasinghe
et al., 2020, Nath et al., 2022). The application of cannabis sativa is widespread and includes industries
like textile technology, home furnishings, food processing, medicine, and health, among others (Crini et
al., 2020). Cannabis has a wide variety of complex compounds, including lipids, flavonoids, terpenes,
hydrocarbons, non-cyclic macrophenols, alkaloids, silver citrate, and cyclic cannabinol among others.
Cannabis strains produce more than 500 compounds, including phytocannabinoids, terpenes and flavo-
noids (Radwan et al., 2021). Cannabis indica psychotropic originating from the harsh environments of
Asia. Cannabis ruderalis, grows tall and is perfect for cultivating outside. These types only differ in the
concentration levels of tetrahydrocannabinol (THC), which is the main cannabinoid or drug element.

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The Legalisation of Cannabis in South Africa

Studies continue to reveal a lot that was not understood about cannabis. However, the uses of cannabis
have been extensively exhausted with the medical use of cannabis being the leading topic in cannabis
studies.

THE LITERATURE REVIEW

Cannabis or marijuana is a tropical plant known as ganja and sometimes hemp. It is a flowing plant that
belongs to the Cannabaceae family. Its origin is in Middle Asia and has scattered to various parts of the
world. Historically, cannabis has been known to be used for over four thousand years for various purposes
such as animal feeds, cooking, recreation, etc (Gerra et al., 2010, Katsidoni et al., 2013, Grotenhermen,
2003). The scientific name of the plant is Cannabis sativa L. subsp. indica. The plant has male and fe-
male genders (dioecious plant). Cannabis has over 400 chemicals known as cannabinoids. Among these,
tetrahydrocannabinol-THC is the most potent brain stimulant (Laohavanich, 2022). The following figure
shows the chemical formula of cannabis. The banning of cannabis by many countries including South
Africa was based on the stimulant effect of cannabis (Atakan, 2012). Cannabis is a complex plant with
over 400 chemical entities of which more than 60 of them are cannabinoid compounds, some of them
with opposing effects. Figure 2 shows the chemical formulae of significant cannabinoids found in can-
nabis with tetrahydrocanabiod (THC) being the main drug in cannabis.

Figure 2. The Chemical formula of cannabis product derivatives (Source: (Salami et al., 2020))

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The Legalisation of Cannabis in South Africa

Figure 3. Mapped: The Most Common Illicit Drugs in the World (Source: The Economist and World
Drug Report 2021 in (Wallach, 2017)

Cannabis is also the most widely used illicit drug in the world and its use has been associated with
various mental health problems, particularly in the young (Degenhardt et al., 2010). There are many
advantages of cannabis. Hemp has been identified as a potential alternative fibre source for the pulp
and paper industry due to its high potential yields, resistance to disease and pests, and industrial quality
(Francis, 1996). This is far better than using traditional wood which takes years to grow, it utilises vast
amounts of land and water and degrades the land. Using cannabis would add much value and ensure
that the environment is taken good care of. Cannabis takes one season, which is typically a few months
to grow and harvest. Hemp is further promoted as a crop that could fit into farmers’ rotations, improve
soil conditions, and decrease the need for chemical inputs, in addition to a source of non-wood fibre
(Robinson, 1996). The chapter aims to develop the proposed value chain and value add framework post
the legalisation of cannabis in South Africa to benefit the rural men and women who have cultivated
cannabis throughout decades if not centuries. Figure 3 shows the extent of drug use in countries in 2021.
The United Nations (UN) as well as the World Health Organisation (WHO), through the United Nation’s
Single Convention on Narcotic Drugs of 1961 and the Geneva Convention on Opium and other Drugs
of 1925, changed cannabis legislation towards stricter control or straight banning.
Figure 3 shows counties that have shown the growing use of cannabis in different countries. These
countries mainly use cannabis as an herb, resin or any other type. In many of these countries cannabis
is still illegal and its use is strictly forbidden although enforcement of illegality is hard to enforce.

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The Legalisation of Cannabis in South Africa

The Road to Decriminalisation of Cannabis, the Worldwide View

Cannabis use and cultivation can be traced to 12000BC in Asia and later in China. Many countries were
using cannabis for years. The fact is that no death has been directly associated with cannabis oral use for
centuries (Zahra et al., 2020). The formal legalisation of cannabis started in earnest in the late 20th century
(Chouvy, 2019, Small, 2017). Netherlands took a lead in ensuring that it legalises recreational cannabis
opening a lot of the so called coffee shops (Hall and Weier, 2015, Bennett, 2018). Figure 4 shows the
countries which by March 2021, had legalised in some form the use of cannabis in their countries. The
darker shade shows countries where medical and recreational cannabis had been legalised for adult use.
Whilst a slightly darker shade shows the legalisation of treatment, the so called medical use. The less
darker shade shows countries where the planting and production of cannabis has been legalised, these
include countries like China which is producing tons of cannabis but its use for medical and recreational
purposes is illegal (Wen et al., 2022).

Figure 4. States or countries where cannabis is legal (Source: The Economist)

The Use of Cannabis, the Worldwide View

This section will deal with the uses of cannabis in the United States followed by China, Africa and then
South Africa. The aim is to establish the already established use irrespective of legalisation in part or
in full.

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The Use of Cannabis in the United States

The two most popular varieties of cannabis are those produced for drug production, also known as
“marijuana,” and those grown for fibre and other industrial uses, also known as “hemp.” (Johnson,
2014, West, 1998). Famously, hemp was the first cannabis variety grown in what would eventually
become the United States (Hudak, 2020). Hemp was widely grown throughout the American colonies
and the fledgling nation that resulted from them between the early seventeenth and the late nineteenth
century(Crosby, 1965). Kentucky was already the top hemp producer in the country when it became a
member of the union in 1792 (Johnson, 2019).

The Use of Cannabis in the China

China is the largest cannabis-growing region. The World Intellectual Property Organization reports that
306 of the 606 cannabis-related patents in existence worldwide are the work of Chinese businesses and
individuals. A sizeable hemp sector has only persisted in China, the former Soviet Union, and Eastern
Europe (Bhamra et al., 2021, Romero et al., 2020). In China, the average hemp cultivation area originally
totalled roughly 160,000 ha in the late 1970s and early 1980s (Griffith, 2010, Clawson and Lee, 2016).
The cultivated area then started to decline.

Table 1. Provincial Distribution of Hemp Production in China

Flowering Heads
Province Fiber (×104ha) Seed (×104ha) Total (×104ha)
(×104ha)
Shanxi 1.07 1.00 - 2.07
Heilongjiang 1.95 - - 1.95
Yunnan - - 1.33 1.33
Inner Mongolia - 0.67 - 0.67
Jilin 0.09 0.05 - 0.13
Other Regions 0.39 - - 0.39
Total 3.50 1.72 1.33 6.54
Source: China Agricultural Research for Bast and Leaf Fibre Crops, 2020

Ancient documents and archaeological discoveries indicate that China has been growing hemp for
fibre and seed for more than 6000 years (Small, 2015). Numerous hemp landraces have been established
as a result of the long history of agriculture and widespread distribution of this fibre crop over various
climatic regions. Figure 5 shows the sizeable number of hectares and tonnage of cannabis production
in China. The intelligent use of land in China goes a long way in balancing both food production and
agricultural use for other production purposes.

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The Legalisation of Cannabis in South Africa

The Use of Cannabis in the Africa

On the African continent, cannabis is produced at the highest levels in the world. According to estimates,
Africa produced 10,000 metric tons of cannabis herb in 2005, or nearly 25% of the world’s total produc-
tion. Of all seizures in Africa, 42% were made by South African law enforcement alone.

Figure 5. Breakdown of global cannabis herb production in 2005 (N= 42,000 metric tons) Sources
UNDOC; Government Reports.

South Africa, just like a number of African countries, have planted cannabis in their backyards for
years, some in forests for large scale sales. Much of African cannabis production is consumed on the
continent in its simplest form (Duvall, 2019a, Ellis, 2009). An estimated 38,200,000 African adults (or
7.7 per cent of the adult population) consume the drug each year – far higher than the 3.8 per cent of can-
nabis users among the world population aged 15 to 64 (Kayange, 2019). Cannabis resin is also produced
in large amounts on the African continent (Charitos et al., 2021). Over the period 1995 – 2005, a total
of 19 out of 53 African countries reported the cultivation of cannabis on their territory (Akyeampong,
2005). Africa alone accounted for 10,500 metric tons or 25 per cent of the total.

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The Legalisation of Cannabis in South Africa

Figure 6. The arrival of cannabis in Africa [LEFT] ; The criminalisation of cannabis in Africa [RIGHT]
Source: (Duvall, 2019b)

Figure 6 shows the arrival of cannabis in the 1400, and how it spread throughout Africa from the
Port of Cape of Good Hope, now known as Cape Town. As easily as cannabis had spread as soon as the
United Nations in 1925 passed stricter control of cannabis, the colonies soon imposed stricter controls
in their colonies (Chris, 2019).

The Developing South African Cannabis Industry

The current legal framework, which was developed in accordance with the South African Cannabis
Masterplan’s goals to establish a sustainable cannabis market, came next. The Medical, Dental, and
Pharmacy Act, which was passed in 1928, outlawed cannabis use completely in South Africa. Cannabis
is prohibited under the 1937 Weeds Act as well. The Drugs and Trafficking Act of 1992, the Pharmacy
Act of 1974, the Criminal Procedure Act of 1974 (which authorises searches and seizures), and the
Medicines and Related Substances Act of 1965 all closely followed. These laws prohibit the manufac-
turing, distribution, and use of cannabis. For the sake of upholding the Constitutional Court ruling, all
of these laws must be abolished.

The South African Draft Cannabis Master Plan

According to the South African Master Plan on cannabis drafted in 2021, there are nine points that
highlight what the government plans to do as they roll out and legitimise the cultivation, value adding,
sale of cannabis products as well as enter into the export market. However, it would seem that the gov-

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The Legalisation of Cannabis in South Africa

ernment is lagging far behind as many cannabis products are now readily available in South Africa with
fully fledged shops selling imported products.

Figure 7. The South African Cannabis Master Plan Framework (Source: DRDLR)

The South African government has 9 plans of relevance to this study are the following two:

i. Including indigenous dagga growers in the value chain

ii. Developing and supporting the growth and development of the manufacturing and product devel-
opment capacity of the South African cannabis sector.

The South African Cannabis Masterplan Framework looks good on paper (de Wee and Asmah-Andoh,
2022). It speaks to creating an effective regulatory framework which speak to the synergy between
legislations that will allow the masterplan to work. These laws must ensure that they regulate how play-
ers are going to play the game. The players, will also use the legislation weaknesses to their advantage
and challenge government in pursuit of profits. The research and development could only work if it is
controlled by the government entity like the CSIR working with universities in the identified province.
The plans must also be regulated in favour of the weaklings in the value chain. The questions that arise
as the Cannabis Masterplan Framework is still under conceptualisation are:

• Will such a policy ensure that the cannabis market favours South African development and value
chain creation that will develop local economic development in favour of rural and township
economy?

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The Legalisation of Cannabis in South Africa

• Has the lack of policy development prior to the clear Masterplan already opened economic flood-
gates in favour of western markets?

Intention in Creating Value in the local South African Market

Cannabis legislation changes in the Global North have made it permissible for privately held businesses
and publicly listed enterprises to generate profit. Through the payment of licencing fees that are too
expensive for the majority of the inhabitants of the countries to afford, these firms have compensated
African governments for laws that let them to cultivate cannabis for export. This is opposed to the freedom
and empowerment of Africans. The western countries and Europe continue to export processed cannabis
goods from Africa that are priced 100 times higher than the raw cannabis that is shipped to Africa. If
citizens are to gain, this generational error cannot be permitted to continue. Multiple economic sectors
in African nations have been hampered by neo-colonialism in terms of wealth creation (Arowolo and
Lalude, 2022), and the recent phenomenon of land acquisition through long-term leases (i.e. land grab-
bing) is commonly interpreted as accumulation through dispossession, enabled through neo-colonial
power (Ethiopia, 2019, Andrews, 2018).
The GDP of South Africa peaked in 1964 at 7.94% and experienced its lowest decline in 2020 at
6.43%. The fact that there was negative growth in 1983, 1985, 1992, 2009, and most recently in 2022
is notable. Events that have resulted in negative GDP growth are simply explained by economists. The
global credit crunch caused the negative growth in 2009, whereas COVID-19, which is the worst de-
crease since 1961, caused the decline in 2020. For the legislators to make changes that have an impact,
data analysis is crucial. Instead of leaving everything in the hands and levers of the economy, this paper
makes the case for empowerment. The economy forgets the poor and the economically weak, the South
African government must not. The value creation must be direct and enforceable (John and Ross, 2021).
This should be in favour of old grannies, unemployed youth who currently have small yards of land and
need the government to release land for cultivation. These people should be organised into small primary
to secondary cooperatives which should form the core of the production of cannabis.

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The Legalisation of Cannabis in South Africa

Figure 8. South Africa GDP Growth Rate 1961-2022 (Source: StatsSA)

The next layer should capacitate the young in value adding and production. The formation of the state
owned enterprise will ensure that the targets of ownership and supply are adhered to.

Figure 9. The South African Cannabis Model that includes small growers in the value chain. (Source:
DRDLR)

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The Legalisation of Cannabis in South Africa

Figure 9 shows how the state plans to include small farmers in the supply chain of cannabis as the
primary product that will be used in the central processing facility. It is a good intent to create a central
facility, but it is problematic if farmers can just supply without authenticating the source of production
or supply. In order to empower South African women, youth, and those on the economic margins, this
must be done purposefully. The most economically marginalised members of society would not have
been empowered if the masterplan and, finally, the legislation, failed to address it.
The sale of cannabis-related goods is now legal in South Africa. Since this market is still developing,
local competitors are currently at a disadvantage. But because obtaining a licence is so expensive, global
corporations control the market. Many small-scale farmers all around the nation have been grumbling
that they receive no benefits from this sector. According to the Department of Agriculture Land Reform
and Rural Development (DALRRD), the South African cannabis business is expected to be worth R28
billion in 2021. (Daniel, 2021). But current legislation, despite the private use of cannabis being decrimi-
nalised by the Constitutional Court (CC) in 2018, is a major hurdle in realising the economic potential
of commercialisation (Dostal, 2021). There are no provisions for the commercialisation of cannabis in
the Cannabis for Private Purposes Bill (Adinoff and Reiman, 2019), which needs to be approved by
parliament (Aguilar et al., 2018). Industrialization is still not permitted, as noted by the Department of
Trade, Industry and Competition, until changes are made to the Drugs and Drug Trafficking Act to bet-
ter align it with the Medicines Act, which regulates the growth, manufacture, distribution, import, and
export of medicines containing THC (DTIC).

The Production Process: Laying the Background and Preparing the Seeds

South Africa started formally growing hemp in 1999. The National Hemp Pilot Initiative was a joint
effort between the Eastern Cape Provincial Department of Agriculture, the then-National Department of
Agriculture, and the Department of Trade and Industry to establish the hemp industry in South Africa.
According to preliminary studies by the CSIR and partners that formed the basis for this programme,
the Eastern Cape, Western Cape, and KwaZulu-Natal regions all offer favourable conditions for hemp
growing (Wynn, 1998).
The responsibility for breeding and agronomic research on hemp was delegated to the Agricultural
Research Council. These programs were carried out over the course of more than 20 years. Commercial
experiments were carried out with the help of the DAFF, ARC, and Eastern Cape Department of Agri-
culture. The experiments demonstrated that it is feasible to produce commercial hemp in South Africa
(Coogan, 2016).

The Research Methodology

Research methodology includes the steps used to define the design, choose methodologies and strate-
gies, process sampling, choose data gathering tools, and perform a systematic analysis of secondary data
on the cannabis study topic. The descriptive research approach employed in this chapter is qualitative.
The qualitative method is used in the systematic review to assess written and published records as well
as theme-based scholarly publications. The qualitative technique helps in comparing South Africa’s
legalisation and value creation to that of other nations. The main goal of this study’s use of past and
present data was to perform a literature review and analyse the secondary data that had been gathered.

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PRISMA protocols were employed, which are a standard protocol and an evidence-based framework for
conducting comprehensive review researches.

Secondary Data

Data from several secondary sources were compiled through a desk review. Credible academic journals,
books, numerous articles, periodicals, conferences, magazines, newsletters, newspapers, websites, and
other sources were taken into account when examining the development of the cannabis sector. Data from
up-to-date working papers, manuals, protocols, reports, statistical information, rules, regulations, and
standards were also utilised in the review. Secondary data (scholarly publications) and data analysis are
categories assigned to the study design (thematic analysis). Data were analysed using discourse analysis.
Only 39 of the initial 161 peer-reviewed articles were kept and qualified by the exclusion criteria to
serve as the analysis’s starting point.

THE FINDINGS AND EMERGING THEMES AND TRENDS

Key indicators were identified under four broad themes and these are legislation framework; commer-
cialisation; farming or cultivation and safety. Many countries that have adopted legalisation of cannabis
struggle to come up with legislation that addresses some of their socio-economic challenges. (Potter et
al., 2013) identified cultivation and commercialisation as key issues in the cannabis legalisation. Safety
was identified as critical amongst cannabis users compared to other inhaler, medical, or recreation drugs
(Chang et al., 2019). Legalisation of cannabis has been widely identified as a key factor in the safety and
commercialisation of cannabis (Kepe, 2003, Manu et al., 2021, Stein, 2016, Mokwena, 2019).

Figure 10. Themes emerging from research

Preliminary trends from other legalised jurisdictions reveal little consensus regarding the effect of
cannabis legalisation on public health and safety harms and an emerging body of evidence to support
potential benefits (e.g. reductions in opioid use and overdose)

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The Legalisation of Cannabis in South Africa

The Reliance on Foreign Investments in Developing the Cannabis Industry

Key informants (KIs) from Jamaican government agencies and domestic cannabis business owners
believed that foreign investment was a crucial source of funding for legal cannabis enterprises’ start-up
costs (Steinberg, 2022). Local cannabis business owners gave priority to investors with the best finan-
cial standing, brand recognition, and export connections. They also took into account how closely an
investor shared their vision for the company (e.g., organic cultivation, medical vs. recreational). Transfer
of technological know-how and financial capital, which improved production, quality assurance, and
seed-to-sale tracking, were the main advantages of working with a foreign investor (Rychert et al., 2020,
Martinez et al., 2022). Some KIs raised concern regarding investors’ emphasis on boosting production
volume and efficiency at the expense of supporting R&D and clinical trials, investment in Jamaica’s
domestic cannabis industry’s diversification (Rychert et al., 2021). In the US, they also grapple with
national legislation as opposed to federal legislation (Chemerinsky et al., 2015). This leads to the cre-
ation of an industry within an industry. A focus on studying the effects of Western-driven policies, such
as the war on drugs, high value commodity chains, is some of the challenges in establishing the local
cannabis industry.

Towards a Well-Balanced Cannabis Legislation

When creating a policy, decision-makers must strike a balance between conflicting socially desirable
objectives, such as protecting children from the negative effects of cannabis use by limiting their access
and use, minimising the negative effects of cannabis use on adults’ public health and public order, allow-
ing adults to use cannabis for recreational purposes without state interference, and minimising the social
and economic costs of the policies intended to achieve these objectives (Hall, 2020). Reforms involving
“decriminalisation” have yielded conflicting outcomes (Melchior et al., 2019). Current cannabis legalisa-
tion frameworks differ greatly in their key elements. Legalisation has certain clear benefits, including as
regulated usage, products, and user education; however, results are dependent on key regulatory factors,
such as commercialization and policy ecologies (Budney and Borodovsky, 2017). Although significant
changes in consumption have not been noticed, legalisation experiences have so far had mixed social and
health effects, with some harms growing and persistent black markets. Uncertainty exists over whether
legalisation lessens youth social harms or cannabis exposure (Fischer et al., 2020).

The Local Cultivation of Cannabis

The availability of “coffee shops,” where cannabis has been sold to the public for personal consumption
by municipal authorities under the Netherlands’ drug policy since 1976, helped to encourage domestic
growing. The stronger regulation of cannabis cultivation in the Netherlands appears to have had an
impact on Belgium’s decision to expand its cannabis industry (Decorte, 2019). In Spain, localisation
is undoubtedly the model, just like in Netherlands. The availability of “coffee shops,” where cannabis
has been sold to the public for personal consumption by municipal authorities under the Netherlands’
drug policy since 1976, helped to encourage domestic growing. The stronger regulation of cannabis
cultivation in the Netherlands appears to have had an impact on Belgium’s decision to expand its can-
nabis industry (Decorte, 2015, Belackova et al., 2015). Studies on domestic cannabis cultivation have
shown repeatedly that even in an illegal context, users and growers can be part of informal networks or

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co-operatives of cannabis producers. South Africa can learn a lot from this model (Decorte & Pardal,
2017). When it comes to determining cannabis legislation, in the United States, the states are in charge,
and they’ve largely chosen to permit private businesses to be in charge of the means of production and
sale, albeit with various types and levels of state regulation (Larkin Jr, 2021; Gloyer, 2018). This is also
a trend that is observed in South Africa and Lesotho.

The Safe Use of Cannabis Products

Marijuana usage during pregnancy may have negative effects on the foetus, including foetal growth re-
striction and long-term neurological repercussions (Obstetricians and Gynecologists, 2017). In several
high-income nations, the legalisation of non-medical cannabis usage may increase the prevalence of can-
nabis use disorder (CUD) (Connor et al., 2021). Edibles were criticised for their inconsistent distribution
of marijuana in the product, delayed effects, surprise highs, and unpredictable highs. No one in either
region expressed concern about the negative health impacts of eating edibles (Giombi et al., 2018). The
safety of marijuana products is of very high standards and it is being continuously improved. Countries
and states may think about working with medical specialists to create a more appropriate standardised
legal framework for safe medicinal cannabis use worldwide (Cash et al., 2020). More US ‘legal’ states
than ‘illegal’ states as well as Canada reported using cannabis concentrates, vaped oils, edibles, and
drinks. In both legal and illicit US countries, dried herb vaping was more prevalent than in Canada, where
Canadians were more inclined to smoke dried herb with tobacco (Goodman et al., 2020).

THE PROPOSED CONCEPTUAL VALUE CHAIN

A variety of elements need to be taken into account in order to develop a well-balanced strategy for
both recreational and medicinal usage. Figure 11 shows that the policy must carefully take the supply
and demand of cannabis into account. It must also control cannabis abuse. For the industry to operate
within the confines of the law, all of these products must be licenced and subject to strict regulation.
These rules must provide for proper governmental regulation that enables both domestic and foreign
players to contribute to the development of the regional economy. To expand the local market and attract
local companies, the government has a vital role to play. More than a few hundreds of stores opened
at the start of 2022. A quick Google search turned up around 60 stores in Durban alone, as well as 15
stores in Umhlanga, 60 outlets in Pinetown, and 12 stores in Ballito. These are businesses that deal in
finished goods with added value. Over 140 stores were found within a radius of less than 100 miles.
This demonstrates how cannabis sales are growing. How will local players develop to a point where
they can compete with products and players from other countries? This is taking place without a clear
policy being formulated and discussed with the populace. The legislation needs to acknowledge that
rural people have been growing marijuana for decades. By the time a policy or legislation is in opera-
tion those who are well educated and connected would already taken advantage of the loopholes in the
policy. They would have formed part of the value chain by either organising the would be recipients
and lined them up as fronts for their benefit. This was seen in the implementation of Black Economic
Empowerment Act (BEE) and Broad Based Black Economic Empowerment Act BBBEE in South Africa
(Van de Rheede, 2020). It is also expected that this upcoming Cannabis Legislation will not escape such
scrutiny and self-enrichment from estalished business. Any policy must evolve to respond to conditions

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on the ground. It must also pass the constitutional master and avoid the challenges as those suffered by
the original BEE policy. It must however create new sustainable businesses and attrack new entrants to
the domestic market thereby addressing some socio-economic challenges of the country.

Figure 11. Factors to be considered in developing a viable people driven (economic empowering) can-
nabis policy

The proposed conceptual value chain is mainly targeted at regressive tendencies of underhanded
corporations to either buy government favours, dictate to governments or use the legislations and
courts to bulldoze and undermine the local suppliers who are small and underdeveloped. Thus creating
a continuous monopoly that destroys any plans to create new and emerging farmers. This plan must
be deliberate, it must be legislated and it must be government led and government supported for some
time before it is allowed to be run by the dictates of the markets. The proposed conceptual value chain
proposes the targeted local economic empowerment for rural communities, especially the youth and
women. The women have planted cannabis for years during times of illegality. They have known the
conditions under which the cannabis can be planted and produce a good yield. The formation of a primary
producer cooperative which collects and sells the cannabis to all secondary producers will create value
for primary producers. The secondary producer licence should also be sufficient enough to create value
for the local market and export market. South Africa identifies four main production areas for cannabis
development, and these are:

• Medicinal use
• Foods
• Industrial use
• Recreational use

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The identified areas are well and good but the failure to acknowledge the development of products in
other parts of the world and how these will impact the infant South African cannabis industry is rather
short-sighted. It assumes that other players will wait for the South African legislators, let alone the
South African cannabis industry development to reach its peak. This assumption is partly the basis of
legislators’ myopia. The South African cannabis industry will pay a huge price and country to country
relations will also suffer a great knock if these relations are not well managed at the onset.

Figure 12. Proposed Conceptual Value Chain for Cannabis Production in South Africa

Similarly, goodwill and money thrown to people may undermine the very process, as people opted
for money instead of land. Where land was returned to the people it either pay dormant or again leased
back to white farmers who know how to till and farm the land. Without proper support and government
backing many of these laws seemingly do not make any difference at all. The link between higher insti-
tutions of learning specifically researching the safety of products as well as the South African Bureau
of Standards (SABS) should create value and make the sustainability and skilling for producers. To
change the economic relations in favour of the poor, the state must be willing to legislate and empower
those communities. Cannabis unlike commercial agriculture does not need a lot of care and irrigation.
It needs minimal care and therefore can be planted by rural communities with minimal investment but
give meaningful income thereafter.

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IMPLICATIONS OF THE STUDY

Future studies must examine how much established businesses, most of which are multinationals, are
benefited by the global legalisation of cannabis. Future research may compare the ways in which the
government has been successful in creating new markets by utilising the blue ocean and red ocean prin-
ciples. The creation of small to medium-sized businesses is essential for generating employment and
finding a solution to the unemployment problem. The results of this study should contribute to a better
knowledge of the regional cannabis market and how new markets may be targeted to help local busi-
nesses who are just entering the market. Legalisation should be seen as a reset button that creates new
opportunities and, at the very least, increases the power of local economic actors. It also builds new value
chains and gradually opens the door to international competition, enabling local markets to expand and
compete with those of other countries. This is possible through legislation that is centred on the needs
of the people and forbids the cannibalization or complete eradication of local markets.

CONCLUSION AND RECOMMENDATIONS

The empowerment of rural communities is very critical in ensuring that the movement of people from
rural areas to urban areas is not forced. The people from rural areas and townships have been cultivat-
ing cannabis for decades under illegality. They have also been buying and selling cannabis in its rawest
form coming from rural areas and neighbouring countries. Many people have been arrested as a result. It
would be a great gesture for the state to release all those convicted of selling small amounts of cannabis
for sustenance. As this would release a lot of space in South African jails, it would further start a process
of changing legislation on cannabis illegality. However, it is critical to ensure that legislation is passed
as a matter of urgency, ensuring that it does not have dire consequences on the envisaged cannabis value
chain. It will undermine the very efforts of legalising cannabis. The importance of cannabis value chain
creation should be to change the lives of the rural and township unemployed people. These people’s lives
could be changed drastically by ensuring empowering legislation. Local and provincial governments have
failed because what they say has always had an element of sustaining the current economic beneficiaries
and not creating another layer of beneficiaries. If the economy is to grow, it must create new markets
and new role players. There can be no change, no new markets of value of governments if we still look
at the current governments markets, we must create markets that create value (Kim and Mauborgne,
2015). The rural communities must continue to stay and improve their lives. The new industries must
be geared at making a difference rather than enriching the already rich. The transformation mandate
that is enshrined in the Constitution must become a reality (The South African government, 1996). We
can only change the past through real economic transformation, and that is the only way we can make
the constitution a living document.

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