DRAFT NATIONAL CANNABIS MASTER PLAN FOR SOUTH AFRICA

CONFIDENTIAL

VERSION 5

CONTENTS

1. INTRODUCTION 3

2. PURPOSE AND OBJECTIVES 4

3. IMPORTANCE OF CANNABIS 5

4. STATUS OF GLOBAL CANNABIS INDUSTRY 9

5. CURRENT STATUS OF SOUTH AFRICAN CANNABIS INDUSTRY 14

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6. CHALLENGES FACING THE SOUTH AFRICAN CANNABIS INDUSTRY 17

7. STRATEGIC INTERVENTION MEASURES 21

8. IMPLEMENTATION PLAN 33

9. IMPLEMENTATION AND MONITORING STRUCTURES 38

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ACRONYMS

ARC Agricultural Research Council

CBD Cannabidiol
CSIR Centre for Scientific and Industrial Research
DALRRD Department of Agriculture, Land Reform and Rural Development
DEFF Department of Environment, Forestry and Fisheries
DJCS Department of Justice and Correctional Services
DHET Department of Higher Education and Training
DoH Department of Health
DTIC Department of Trade, Industry and Competition
DSI Department of Science and Innovation
GCIS Government Communication and Information System
IDC Industrial Development Cooperation
ITAC International Trade Administration Commission of South Africa
NAMC National Agricultural Marketing Council
SAPS South African Police Services
UN United Nations
UPOV International Union for the Protection of New Varieties of Plants
THC Tetra-Hydra Cannabinol

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1. INTRODUCTION

The legalisation and commercialisation of Cannabis Sativa (Cannabis) has been on the forefront of public
debate and on top of the agenda of policymakers globally. Cannabis refers to two closely related plant
varieties, namely hemp and dagga. These plant varieties belong to the genus known as cannabis. It is a
genus of flowering plants in the family Cannabaceae. Three well known species within the genus are
Cannabis sativa, Cannabis indica and Cannabis ruderalis. However, C. ruderalis may be included within C.
sativa or all three species may be treated as subspecies of a single species, C. sativa. The genus is widely
accepted as being indigenous to and originating from Central Asia, with some researchers also including
upper South Asia in its origin.
While the more than a century-long prohibition of cannabis has impacted the scientific community
comprehensively and exhaustively researching this plant, studies and control tests do provide strong
evidence that there are numerous medical benefits to using this plant. Studies also provide evidence that
Cannabis’s recreational use for adults is a better social policy apparatus as it allows for policymakers to
better regulate—ensuring an end to an illicit market and its negative side impacts on society; allows for
better oversight; and minimises adolescent access and protects adult consumers from harms of an illegal
and illicit market. Furthermore, cannabis, as a recreational-use product, has also been found to be less
harmful than alcohol, tobacco and opioids. For a nation-state, there are additional socio-economic benefits
of legalisation of cannabis, as there exist a net-positive economic growth opportunity of incorporating the
cannabis market into the formal economy. In many states globally, while the criminal penalties or
imprisonment for personal use and possession of cannabis was removed, they left the supply of cannabis
to the illicit market—fuelling a crime-prone underbelly and networks of individuals operating outside the
realm of ethical and moral behaviour.
With the growing public support and judiciaries overturning legislation that criminalises cannabis, a new
dawn is emerging that is showing the way for a cannabis global market coming to existence that will uphold
democratic principles such as human rights and better application of science and research into the sale
and use of cannabis––both medically and recreationally.

On 18 September 2018, the Constitutional Court of South Africa ruled that South Africans can now smoke
cannabis in the privacy of their own homes––this provides the impetus to recognise the commercialisation
of cannabis. Furthermore, with South Africa’s economy facing sluggish growth and society facing the
impacts of COVID-19, the commercialisation of cannabis has a net-positive impact on the country by
potentially creating new jobs.

The country’s economy has been in steady decline for a number of years according to various reports from
Stats SA. This state of affairs is attributed to various factors like unreliable energy supply, poor transport
systems, declining investments in infrastructure and many other related factors. The economic challenges

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resulted in increased liquidations and bankruptcies of many companies. The poor state of the economy has
also resulted in reduction in government revenues and subsequent increases in poverty and high
unemployment rates. Geopolitics are in a flux which further compounded economic problems for South
Africa. The emergence of a new bipolar world order, with USA and China as protagonists, has also slowed
down global economic growth. Both countries are major export destinations for South African products.
Consequently, South Africa was negatively affected by these tensions.

The cannabis plant contains at least 70 unique compounds, collectively known as phytocannabinoids, of
which two are tetrahydrocannabinol (THC) and cannabidiol (CBD). THC is a cannabinoid that produces a
psychoactive effect but also has medicinal properties. CBD is a cannabinoid with mostly medicinal
properties. The major difference between the hemp and dagga is the physical appearance and the amount
of THC they contain. Hemp plants are generally taller whereas dagga plants are shorter and bushy.
Industrial hemp and medicinal cannabis are currently broadly classified as hemp, although the cultivation
practices, morphology, growth pattern, cultivation requirements, etc. are quite different. Hemp for industrial
use is generally suitable for open field production while medicinal cannabis is grown under protection for
optimum results. Hemp plants contain lower levels of tetrahydrocannabinol (THC). Dagga, on the other
hand, contains high levels of THC. THC and CBD, as well as other cannabinoids and compounds, are
secreted by glandular trichomes on flower buds of female plants.

Cabinet took a decision in July 2019 that the country needs a national strategy to commercialise cannabis
in order to increase economic growth, create jobs and alleviate poverty. The development of this Cannabis
Masterplan is underpinned by the Re-imagined Industrial Strategy which is operationalised through the
application of a master-planning process that seeks to create a shared vision and secure reciprocal action-
oriented commitments between industry, government and labour for long-term sustainability and growth of
the national priority sectors. Therefore, the development of the master plan will follow an integrated
approach with various affected departments assigned different pillars to lead. The scope of the master plan
includes both hemp and dagga. The Department of Agriculture, Land Reform and Rural Department
(DALRRD) is the convener of this process in line with Cabinet’s decision.

2. PURPOSE AND OBJECTIVES

The purpose of the master plan is to provide a broad framework for the development and growth of the
South African cannabis industry in order to contribute to economic development, job creation, inclusive
participation, rural development and poverty alleviation.

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The purpose is anchored on the following key objectives:

a. Establish an inclusive, sustainable and globally competitive cannabis industry in South Africa
b. Increase the volumes and variety of cannabis products destined for both local and export markets
c. Establish and increase the capacity of South African farmers to produce dagga and hemp
d. Create opportunities for creation of small- and medium-sized enterprises across the cannabis
value chain

e. Increase investments in research and technology development to support increased production,

productivity and competitiveness of the cannabis industry

f. Establish and increase the manufacturing capacity of the South African cannabis industry
g. Designate cannabis and hemp products with the designated local content legislative framework

3. IMPORTANCE OF CANNABIS

Cannabis has long been a subject of intrigue and perceptions. Humans have used the plant for hundreds
of years for fibre, oils, medical treatment, food and recreational purposes. It is used for a variety of purposes
as discussed below:

3.1 MEDICINAL

The cannabis plant has a history of medicinal use dating back thousands of years in many cultures. Medical
cannabis refers to the type of cannabis and cannabinoids that are prescribed by physicians for their
patients. The use of cannabis as medicine has not been rigorously researched and tested owing to
production and governmental restrictions, resulting in limited clinical research to define the safety and
efficacy of using cannabis to treat diseases. Preliminary evidence suggests that Cannabis can
reduce nausea and vomiting during chemotherapy, improve appetite in people with HIV/AIDS,
reduce chronic pain and muscle spasms and treat severe forms of epilepsy. Medical cannabis is
administered through various methods, including capsules, lozenges, tinctures, dermal patches, oral or
dermal sprays, cannabis edibles and vaporising or smoking dried buds. Synthetic cannabinoids are
available for prescription use in some countries, such as dronabinol and nabilone.

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Cannabis is used to treat illnesses such as pain and inflammation, controlling epileptic seizures and
possibly even mental illness and addictions. In some countries it is also prescribed to help with a range
of medical conditions, including chronic pain, glaucoma, and poor appetite.
There is evidence that indicates that dagga (marijuana) or some of its components, such as CBD, is useful
for relieving severe pain, inflammation, nausea and chronic conditions. However, CBD is just one of at least
70 substances (cannabinoids) found in marijuana. People have many health concerns about the use of the
drug. Another primary component of dagga is delta-9-tetrahydrocannabinol (THC), which is the key mind-
altering (psychoactive) substance in dagga (marijuana).

CBD is produced mainly in the flower buds. The CBD oil is used in many forms, including CBD oil tinctures,
gummies, creams and many more. CBD oil contains cannabidiol and often other cannabinoid compounds
in an oil suspension (carrier oil) and is typically ingested orally. Topical CBD such as balms and creams
can be applied to the skin. The concentration of CBD varies from product to product and claims on potential
health benefits are numerous, although very few proven by clinical tests. The greatest amount of evidence
for the therapeutic effects of Cannabis relate to its ability to reduce chronic pain, nausea and vomiting due
to chemotherapy and spasticity. Furthermore, there are no approved quality standards currently available
in South Africa and similarly no quality control on products currently sold on the local market. In South
Africa, extraction of CBD or THC from the cannabis plant is considered to be ‘manufacturing’ in terms of
the Medicines and Related Substances Amendment Act, 2015 (Act No14 of 2015) and requires a licence
to manufacture issued in terms of Section 22C of the Act. Hemp seed oil (if within the thresholds mentioned
above) is excluded from the Medicines Act.

3.2 RECREATIONAL

Recreational use of cannabis refers to the variety of ways Cannabis is consumed. The common ways of
consumption include inhalation (smoking and vaporising) and ingestion. Each method leads to different
psychoactive effects because of the THC and other chemicals being activated and then consumed through
different administration routes. It is generally considered that smoking, which includes combustion toxins,
comes on quickly but lasts for a short period of time, while eating delays the onset of effect but the duration
of effect is typically longer. Research has revealed that vaporiser users experience the same biological
effect, but without the toxins associated with smoking.
Cannabis can be smoked with implements such as joints, blunts, bongs and pipes. Makeshift pipes or
commercial pipes may be used, or cigarette-like joint or cigar-like blunt may be smoked. Local methods
have differed by the preparation of the Cannabis plant before use, the parts of the cannabis plant that are
used, and the treatment of the smoke before inhalation. A vaporiser heats herbal cannabis which causes
the active ingredients to evaporate into a gas without burning any plant material. Vaporising releases a

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lower proportion of carbon monoxide and other toxic chemicals than smoking, although the proportion may
vary depending on the design of the vaporiser and the temperature at which it is set.

Cannabis flowers, when harvested and dried, give rise to one of the most common drugs in the world.
Cannabis is usually consumed for its relaxing and calming effects. It is smoked or made into a concentrate,
which involves refining it into a more potent product, infused products and edibles.

A key component of dagga is delta-9-tetrahydrocannabinol (THC), which is the key mind-altering

(psychoactive) substance in marijuana. It acts on specific brain receptors, causing possible mood
changes, depression, suicidal thoughts, memory issues and disruption to normal learning abilities. It may
also produce dependency. The compound is also known to stimulate appetite (informally known as "the
munchies") and induce a relaxed state, as well as other effects on sense of smell, hearing, and eyesight.
THC can also cause fatigue and in some people, it may reduce aggression.

Cannabis herb consists of dried and crumbled leaves and flower buds of the female cannabis plant, which
are generally smoked. By contrast, hashish (or hash) is comprised of extracted cannabis trichomes, which
contain the psychoactive compound, as well as other cannabinoids such as CBD, CBN and CBG. There
are many different ways to make hash, and some of these techniques have been developed over hundreds
of years by traditional cannabis-growing communities. Cannabis resin are made by sifting mature cannabis
flowers through a series of sieves until only a resinous powder remains. This powder is compressed and
heated to allow the resins to melt and stick together forming blocks.

3.3 INDUSTRIAL

Both dagga and hemp have a multitude of industrial and commercial uses. Hemp is one of the fastest
growing biomasses known and identified as one of the earliest domesticated plants. Hemp is used to make
a variety of commercial and industrial products, including rope, textiles, clothing, shoes, ceiling boards,
bricks, food, paper, biodegradable plastics, paint, insulation, and biofuels. The bast fibres can be used to
make textiles that are 100% hemp, but they are commonly blended with other fibres, such as flax, cotton
or silk and also virgin and recycled polyester to make woven fabrics for apparel and furnishings. The inner
two fibres of the plant are woodier and typically have industrial applications, such as mulch, animal bedding
and litter. When oxidised, hemp oil from the seeds becomes solid and can be used in the manufacturing of
oil-based paints, in creams as a moisturising agent, for cooking and in plastics. Dagga, on the other hand,
is used mostly for medicine, cosmetics, industrial and recreational purposes.

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3.4 FOOD AND BEVERAGES

Reports from several countries indicate that food products made from cannabis are the fastest-growing
part of the market. The cannabis food and beverage market size was valued at $427.0 million globally in
2018 and is estimated to reach $2,632.0 million by 2026. Cannabis edibles are food products that
contains cannabinoids, especially tetrahydrocannabinol (THC). They include mints, gummies, candy, ice-
cream and cookies. Infused products include alcohol, ointments, and vaporisers. Hemp seeds can be
eaten raw, ground into hemp meal, sprouted or made into dried sprout powder. Hemp seeds can also be
made into a liquid and used for baking or for beverages such as hemp milk and tisanes. Hemp oil is cold
pressed from the seed and is high in unsaturated fatty acids. The leaves of the hemp plant, while not as
nutritional as the seeds, are edible and can be consumed raw as leafy vegetables in salads and pressed
to make juice. Hemp seeds have been used in bird feed mix as well. Hemp seed is also used as food for
other animals.
Cannabis-infused drinks also form part of the edibles. Most edibles contain a significant amount of THC,
which can induce a wide range of effects, including relaxation, euphoria, increased appetite, fatigue
and anxiety. THC-dominant edibles are consumed for recreational purposes. Some edibles contain a
negligible amount of THC and are instead dominant in other cannabinoids, most
commonly cannabidiol (CBD). These edibles are primarily used for medical purposes only. Foods and
beverages made from non-psychoactive cannabis products are known as hemp foods.

Hemp seed oil is the oil obtained by cold pressing the seeds of the hemp plant. Hemp seed oil does not
contain cannabinoids, such as CBD and THC, apart from trace levels that may be present. As animal feed,
hemp can benefit health and increase performance. The seed is high in much-desired fatty acids, such as
Omega 3, Omega 6 and Omega 9, while it is also very high in proteins and high in fibre, aiding an animal’s
digestive system. It also is a good source of minerals, such as copper, iron, boron, manganese, nitrogen
and zinc.

The cannabis food and beverage market has been fragmented based on product differentiation, distribution
channels and region. The market is subdivided into bakery products, chocolate, cereal bars, candy,
beverages, ice cream and others. However, its distribution channel is categorised into mass merchandisers,
specialty stores, online stores and others. The regional markets for food and beverage are divided as
follows: North America, Europe, Asia-Pacific and Latin America, Middle East and Africa (LAMEA).
Cannabis beverages have been very popular in the mature and emerging markets. This could be attributed
to rise in number of people choosing cannabis-infused products. Furthermore, an increase in disposable
income has aided the cannabis food and beverage market growth. Moreover, introduction of additional
innovative beverages that are made by infusing cannabis are some other factors that further drive the

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 growth of the market. However, fluctuating prices of raw materials act as a restraint for this market. On the
contrary, growth in demand for cannabis food and beverages by high income groups and introduction of
new variety of cannabis flavoured water are anticipated to provide growth opportunities for the cannabis
food and beverage market.
When analysing the cannabis food and beverage market by product type, the bakery products segment
generated the highest revenue in 2018. This can be attributed to increasing demand for bakery food infused
by cannabis such as THC and CBD in countries such as the United States of America (USA) and Canada.
Moreover, rise in penetration of cannabis in beverages industry and spirits is expected to increase the
demand for cannabis in the countries such as Mexico and Brazil. However, the cereal bars segment is
expected to grow at the highest CAGR throughout the cannabis food and beverage market forecast period
owing to increase in demand by athletes who are preferring cannabis food products for relaxation after
workouts.
In terms of distributions channels, the specialty store segment was the leading supply chain p oint with
highest cannabis food and beverage market share in 2018. This can be attributed to increasing adoption
of cannabis products from specialty stores chains in both the mature and emerging markets. Moreover,
the one stop solution provided by hypermarkets and supermarkets where consumers can get all types
of cannabis food and beverage market makes it a very popular option for shopping for consumers.
However, the online sales segment is expected to witness the fastest growth through the forecast period
owing to rapid penetration of cannabis food items on the E-commerce platforms. Availability of cannabis
drinks on leading online platforms is also playing a crucial role in the cannabis food and beverage
market.

4. STATUS OF GLOBAL CANNABIS INDUSTRY

The global medical cannabis industry is estimated to generate U$82,9 billion by 2027. Amidst the
COVID-19 pandemic, a new report expects Canada’s recreational marijuana industry to double
revenues this year and grow more than 500% by 2025. Canada has also made recreational cannabis
legal.
Many analysts have predicted that the industry could increase to USD$272 billion by 2028. The
International Monetary Fund (IMF) indicated that cannabis is the 59th largest economy in the world. It is
clear that this industry has great potential to impact the global economy as well as various other related
industries. Cannabis is quickly becoming more broadly accepted around the globe, which is a trend that is
likely to continue in coming years.
The United Nations estimates that approximately 3,9% of the global adult population, or 190 million
people, are cannabis users compared to one billion smokers. The highest prevalence of cannabis users

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was found to be from Europe, followed by the US and the Oceania Region. Although small, the Oceania
Region is considered significant given its access to the Asia Pacific region.
Increased liberation and legalisation coupled with the increased use of dagga in medical as well as
recreational applications is expected to promote the growth and development of this industry. Growing
adoption of cannabis as a pharmaceutical product for treating severe medical conditions, such as
cancer, Parkinson’s disease, Alzheimer’s disease, arthritis and other neurological conditions is
anticipated to drive demand for medical marijuana in the forthcoming years. Increasing need for pain
management therapies and growing disease burden of chronic pain among elders is also expected to
boost demand.
Legalisation of medicinal marijuana and decriminalisation in some countries has led to a significant
decrease in the black market, as people are resorting to legally purchasing cannabis for medicinal as
well as recreational use. Moreover, government earnings through taxation are further viewed as
opportunities for countries to earn revenues. Presence of a large customer pool and legali sation of
medical marijuana in most countries is expected propel the product demand across the globe. However,
legalisation of medicinal cannabis in European countries, accompanied by stringent rules and
regulations regarding the product sale and cultivation, may limit the overall growth in Europe and in turn
for the global market.
Other promising markets for cannabis are Australia, Germany, Poland, Colombia, Uruguay and Israel.
Israel is currently at the forefront of providing technology and knowledge transfer to the other world
markets. As the newer markets such as the U.K. and Thailand create their legal structure for cannabis,
the revenue growth is expected to witness significant growth. Legalisation of medical marijuana in South
Korea and Thailand could signal the beginning of that trend in Asia. Countries that are proceeding towards
legalising recreational cannabis in the near future include Mexico, Luxembourg and New Zealand. It is
highly likely that there will be increased adoption of medical marijuana programmes in coming years, even
in countries that have been traditionally hesitant.
Many countries, which include Argentina, Australia, Canada, Chile, Colombia, Croatia, Cyprus, Finland,
Germany, Greece, Israel, Italy, Lithuania, Luxembourg, North Macedonia, Norway, the Netherlands, New
Zealand, Peru, Poland, Switzerland and various states in the United States, among others, have legalised
the medical use of cannabis. In some jurisdictions, decriminalisation manifests itself in a reduction of legal
penalties. This can be done either by changing them to civil penalties, such as fines, or by diverting drug
use offenders away from a criminal conviction and into education or treatment options. Various US States,
among others, Connecticut, Delaware, Illinois, Maryland, Mississippi, Nebraska and New Hampshire, have
decriminalised private possession or the use of small amounts of cannabis by adults. Other jurisdictions
that have decriminalised the adult use of limited amounts of cannabis include Belgium, Australia, Belize,
Bermuda, Bolivia, Columbia, Czech Republic, Estonia, Israel, Mexico and the Netherlands.

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Hemp was the first in terms of been legalised for use by most countries for the last 20 years. There are
close to 38 countries that are reported to be growing hemp on a commercial scale. Canada was the first
country to legalise the cultivation of hemp in 1998. Other countries followed in years later. The driving force
for these developments was that it is been used for industrial purposes.

4.1 MAJOR CANNABIS PRODUCING COUNTRIES

Countries that are at different stages and levels in terms of regulating Cannabis throughout the world is
described below:
a. Canada. Canada’s first-mover status has helped the country emerge as the global leader in cannabis.
Canada is the first country to legalise dagga for medical use. Canada had now gone further and became
the first-ever country to legalise dagga for recreational use. Canadian companies also gained some
success venturing south of the border into USA. The United States of America has generally been less
welcoming to Canadian cannabis companies. This included imposing a travel ban on Canadians who
are investing in the US cannabis market. This had forced some of these countries to look at the
European and other markets across the world.

b. Portugal. Cannabis laws in Portugal are regarded as amongst the most progressive in the world. In
2001, the government decriminalised personal cannabis use, focusing rather on treatment rather than
punishment. Treatment is provided free of charge and is accessible to all drug users. The overall
number of drug users in the country had declined. Portugal legalised medical cannabis in 2018. Drug
trafficking remains an offence in Portugal and trafficking in cannabis is punishable with a period of
imprisonment ranging from four to 12 years, unless users sell drugs to finance their own consumption,
in which case the maximum penalty is reduced to three years.

c. Uruguay. Uruguay fully legalised cannabis in 2013. Uruguay is one of the few countries in the world to
fully legalise the production, sale, and consumption of recreational marijuana. Interestingly, the
government is also actively involved in the regulation process. Adult resident users must register with
the authorities that monitor their purchases, which can be no more than 40 g per month. Residents can
also collaborate and grow their own through Uruguayan cannabis Clubs. These organisations, formed
by up to 45 adults and with a legal limit to grow up to 99 plants, appear to provide a safe method of
procuring cannabis. The country has about 85 cannabis clubs. Over 8 000 Uruguayans are registered
as home growers. This was followed by a sharp decline in crime rates and an increase in employment
opportunities. These are clear indications that a legal cannabis industry can contribute to economic
growth and job creation.

d. Spain. Although legislation does not criminalise the possession of cannabis, the dealing in cannabis is
criminalised. This has resulted in the formation of cannabis clubs, which are non-commercial entities

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 with the goal of providing their members with enough cannabis to meet their personal needs. The social
clubs were first established in 2002 and can provide cannabis to their members. Members are not
allowed to sell cannabis or distribute it to minors. In Spain, the possession of large quantities of
cannabis does not constitute an offence unless this is done for the purpose of trafficking. Consumption
of marijuana in public is not permitted.

e. United States of America. The federal law (the Controlled Substances Act of 1970), classify cannabis
as a Schedule I substance, determined to have a high potential for abuse and no accepted medical
use, thereby prohibiting the use, possession and even the medical use of cannabis. Colorado and
Washington approved recreational cannabis in 2012. Alaska, Oregon and the District of Columbia
followed suit in 2014. California, Maine, Massachusetts and Nevada approved adult-use recreational
cannabis in 2016 and Michigan in 2018. In 2018, Vermont became the first state to legalise marijuana
for adult use through the legislative process, rather than a ballot initiative. Although Maine approved
recreational use of cannabis in 2016, it was only legalised in 2018. In 2018, various other US States
(Connecticut, Delaware, Georgia, Hawaii, Kansas, Kentucky, Maryland, Minnesota, Mississippi,
Missouri, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, Rhode Island, South
Carolina, Wisconsin and West Virginia) considered bills that would legalise the recreational use of
cannabis. Draft legislative proposals were filed in Hawaii, Massachusetts, New Hampshire, New
Mexico, North Dakota and Rhode Island. The measures in New Hampshire and Rhode Island were
enacted and established commissions to study the legalisation, regulation and taxation of marijuana.

f. Luxembourg. Luxembourg has recently indicated that it also considering legislation to legalise the
recreational use of cannabis.

g. Amsterdam. Cannabis is not legal but can be consumed in “coffee shops.” Amsterdam is famous
worldwide not just for its unique art, architecture, and history, but also their “coffee shops” which have
made the nation a must-visit tourist destination. With almost 600 “coffee shops”, aka establishments
where locals and tourists can purchase and consume cannabis, recreational cannabis is still illegal—
but its usage and consumption are often tolerated by authorities. While cultivation is strictly illegal,
possession and sale of small quantities, up to 5 g, is not punishable under law. Foreigners, on the other
hand, are not allowed to purchase at all, but that does not seem to stop the tourists.

h. Italy: One of the top hemp producers in the early 20th century, cannabis forms an integral part of Italy’s
history and culture. Medical marijuana was legalised in 2007 and earlier this year political movements
have garnered momentum to legalise it recreationally.

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i. Germany: Home is to the largest medical marijuana market in Europe, as reported by Prohibition
Partners. Talks are in progress between the Green Party and the Free Democratic Party—part of
which includes complete legalisation and sale through pharmacies or licensed dispensaries.

j. Mexico: Open to change and hoping to follow Portugal’s example, the government is looking into
decriminalisation to put an end to drug cartels by allowing people to possess very small quantities of
marijuana.

k. Colombia: Another nation aiming to fight the illegal drug trade. After the decriminalisation of marijuana
possession, medical marijuana was legalised in 2016; next on the cards is probable legalisation for
recreational marijuana.

l. Jamaica: Marijuana was decriminalised in small quantities in 2015 and in 2016 marijuana was
legalised. Inspired by the booming prosperity of the industry in the US, there is a strong push to legalise
recreational marijuana in the country.

m. Czech Republic: By legalising medical marijuana and decriminalising recreational marijuana, Czech
Republic, has become one of the topmost tourist attractions when it comes to cannabis enthusiasts.

n. Paraguay: The second largest producer of cannabis on the black market (after Mexico). Paraguayans
are not allowed to cultivate for recreational purposes. Since the legalisation of medicinal
marijuana allowed importing and growing for medicinal use, activists have been fighting for the right to
grow their own plants.

4.2 AFRICAN COUNTRIES

The cannabis industry in most African countries is dominated mostly by recreational use than other uses
as described below:

a. Nigeria. This country is described as being home to the largest number of cannabis consumers on the
African continent by a huge margin of over 20 million users. Cannabis consumption for medical and
recreational purposes in Nigeria is illegal and carries the potential for serious penalties. Prohibition
does not seem to have had much of an effect on the level of consumption.

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b. Ethiopia. The country is the largest user of cannabis on the continent. There are about 7 million
consumers of the drug despite the fact that cannabis for medical and recreational use is illegal in all
forms.

c. Egypt. The country ranks third in the continent with 5.9 million cannabis users. Cannabis products are
illegal to possess and consume, even though the use of hashish has a long cultural and social history
in the country.

d. The Democratic Republic of the Congo is fourth on the list, with 5 million cannabis users.

e. Tanzania has the highest number of cannabis users in East Africa and is ranked fifth in the continent
with just over 3.5 million consumers.

f. Kenya comes in close behind at second most consumers in East Africa and sixth most overall.

g. Sudan is seventh with 2.7 million users, and Uganda comes in eighth with 2.6 million
users. Madagascar is ninth with 2.1 million users, with Ghana a close tenth with 2 million.

h. Lesotho. In 2017, Lesotho became the first country in Africa to allow cultivation of cannabis for
medicinal purposes. However, an exorbitantly expensive licensing process has ensured that the market
is dominated by foreign companies. Many local farmers in the country have been complaining that they
are not benefiting anything from this industry. Lesotho has issued over 100 licenses, but for any capital
that comes in, all the profits go out. Meanwhile, the rural farmers outside of licensed premises are still
being arrested and prosecuted.

i. The countries with the fewest cannabis users are Malawi, Niger, Zambia and Zimbabwe, all of whom
are home to less than 1.5 million cannabis users.

5. CURRENT STATUS OF CANNABIS INDUSTRY IN SOUTH AFRICA

The size of the cannabis industry in South Africa is estimated to be about R28 billion. The bulk of the sector
had largely operated underground and its products were traded on the black market. Cannabis in South
Africa is largely grown for recreational use. The number of dagga users in South Africa is estimated at 3.5

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million. Interpol rated South Africa as the fourth largest producer in the world. South Africa has good climate
for growing both hemp and dagga.

Cannabis is still largely regarded as an illegal drug in South Africa. There is a long list of regulatory
instruments used over the years to prohibit the cultivation, possession and use of cannabis in this country.
Cannabis was wholly criminalised in South Africa in 1928 under the Medical, Dental, and Pharmacy Act.
Cannabis is currently regulated under the Medicine and Related Substances Act as well as the Drugs and
Drugs Trafficking Act. It is largely regarded as an illegal substance according to these two pieces on
legislation. Therefore, cultivation, possession, trade and use of both dagga and hemp is prohibited.

The cannabis industry has been inhibited by regulatory restrictions for most of recent history, but the
legal market has emerged rapidly as more governments legalise medical and adult use. Driven by
efficacy, medicinal marijuana is gaining traction both within the med ical fraternity and with the general
population. The stigma is slowly being challenged and will eventually be removed. Medicinal acceptance
of the drug will lead to the eventual legalisation for recreational use.

The cannabis industry in South Africa entails the production and use of both hemp and dagga as illustrated
in the subsections below:

5.1 HEMP

Hemp cultivation in South Africa officially started in 1999. The Eastern Cape Provincial Department of
Agriculture in collaboration with the then National Department of Agriculture, as well as Department of Trade
and Industry embarked on a National Hemp Pilot Initiative aimed at establishing the hemp industry in South
Africa. This initiative was informed by preliminary studies done by the CSIR and partners, which indicated
favourable conditions for growing hemp within parts of Eastern Cape, Western Cape and KwaZulu-Natal.

The Agricultural Research Council was given the mandate to conduct breeding and agronomic research on
hemp. These programmes were conducted over a period spanning more than twenty years. The hemp
breeding programmes resulted in development of two cultivars, namely, SA Hemp 1 and SA Hemp 2. The
two cultivars are currently awaiting variety listing and registration for plant breeder’s rights, once all the
current legal restrictions had been removed. The agronomic research work resulted in documentation of
best practices in the form of production guidelines that are appropriate for South African conditions.

Commercial trials were conducted under the guidance of the ARC, DAFF and the Eastern Cape Department
of Agriculture. The trials proved that commercial hemp production in South Africa is possible and might be

15
feasible. They further proved that commercial production of hemp by smallholder farmers is possible, but
the production costs are too high. The security requirements regarding putting up a 2 m-high fence around
the field is unaffordable for most farmers. This may be a serious barrier for new entrants.

The National Agricultural Marketing Council (NAMC) was commissioned to carry out economic feasibility
studies to determine as to whether the hemp industry will be economically viable in South Africa. The NAMC
worked with organisations like the Industrial Development Corporation (IDC), private sector companies, the
Agricultural Research Council and many others.

These studies proved that the hemp industry in this country may be economically feasible and sustainable
if all the current legal restrictions can be addressed or removed altogether. The key recommendations from
these studies are:

a. South Africa imports hemp products from other countries which gives a clear indication that there is
demand for hemp products domestically. Consequently, local production has potential to replace these
imports at a lower cost.
b. Out of all the three main components of a hemp plant, the most profitable one is seed followed by
leaves. Fibre comes out last. This particular finding is also in line with global trends.
c. There is a need for the establishment of an industry association to coordinate matters relating to the
hemp industry which will serve as a representative body on behalf of all role players.
d. The legal status around hemp needs to be sorted out in order to unlock the economic potential of this
industry. There is a need for responsible government departments to consider effecting amendments
to existing legislation that prohibits production of hemp in South Africa.

Hemp grows well in Eastern Cape, KwaZulu-Natal and Western Cape. The development in terms of
technologies will make production in other parts of the country be feasible.

5.2 DAGGA

Dagga has a long history in South Africa. It had been cultivated by rural growers in parts of the Eastern
Cape, KwaZulu-Natal and other provinces for many years. Dagga was harvested and transported to most
parts of the country, especially to major towns and cities were it was sold for recreational use. There are
also reports that some of the dagga is being exported to other countries. All of this was done even though
it is illegal. The income derived from illicit dagga cultivation served as source of livelihoods to many
households in the poverty-stricken areas of South Africa. The growers managed to put food on the table
for their families and pay for their children’s education.

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Dagga grows well in almost all the nine provinces. The optimum growing conditions exist in what is known
as the dagga belt. This is an area that extends from Eastern Cape to KwaZulu-Natal. It is referred to as a
traditional crop in this area. It is estimated that more than 900 000 small-scale farmers are growing dagga.
The target market for majority of their harvest is Cape Town, Johannesburg, Durban and also other South
African towns and cities. Millions of people depend on income from dagga.
The landmark Constitutional Court judgement in September 2018 brought a new dimension to the cannabis
industry in South Africa. The court ruled that the use, possession and cultivation of cannabis in private
dwellings was not illegal and should be allowed. The Court gave Parliament 24 months from the date of the
judgment to bring the ruling in line with South African laws. Even though private use of cannabis has been
decriminalised, the buying and selling of cannabis, cannabis oil and cannabis seeds remains illegal. The
Cannabis for Private Purposes Bill was developed to address the concerns raised by the Constitutional
Court. The indigenous dagga growers and sellers are now worried that everyone will be able to plant their
own dagga in their own homes, therefore they will not be able to make money from selling what they are
growing in that area. The other problem is that as the number of buyers decreases, the surpluses will
increase and the prices will go down.
The Department of Health is currently piloting the use of cannabis for medicinal use. A number of licenses
had been issued in this regard. Companies issued with these licenses were required to obtain off-take
agreements on export markets because local trade is currently not allowed. These companies are also
expected to import seed from other countries and not source them from within the country because local
trade in cannabis seed is prohibited.

6. CHALLENGES FACING THE CANNABIS SECTOR IN SOUTH AFRICA

6.1 LEGAL CHALLENGES

The cannabis industry has been inhibited by regulatory restrictions for many years. Cannabis is
controlled under the Single Convention on Narcotic Drugs of 1961 as amended by the 1972 Protocol
(Schedules I and IV).

The biggest legal challenge is that there is no law in the RSA that allows for commercialisation of cannabis.
The Departments of Justice and Health can only remove impediments for commercialisation, but they
cannot be the drivers of commercialisation. There needs to be another department or departments that will
drive such legislation.

In South Africa, cannabis is regulated in terms of two pieces of legislation, namely:

17
a. Medicine and Related Substances Act, 1965 (Act No.101 of 1965), administered by the Department
of Health. The purpose of the Medicine and Related Substances Act, 1965 (Act No. 101 of 1965) is to
provide for the registration of medicines and related substances intended for human and for medical
devices.

The Department of Health had, during May 2020, changed the legal status of cannabis. Cannabis had
been removed from Schedule 7. THC is now listed as Schedule 6 which legalises it to be used for
medicinal purposes. CBD is listed as Schedule 4 if it is going to be used as complementary medicine.
It is listed under Schedule 0 if it is being used for food, cosmetics, beverages and other manufactured
products. Problems, however, remain with regard to regulation of cannabis seed. The listing of CBD in
both Schedule 0 and Schedule 4 is potential source of confusion in terms of implementation.

b. Drugs and Trafficking Act, 1992 (Act No. 140 of 1992), administered by the Department of Justice
and Correctional Services which is enforced by the South African Police Services. The purpose of the
Drugs and Drug Trafficking Act, 1992 (Act No. 140 of 1992) is to provide for the prohibition of the use
or possession of, or the dealing in, drugs and of certain acts relating to the manufacture or supply of
certain substances or the acquisition or conversion of the proceeds or certain crimes; for the obligation
to report certain information to the police; for the exercise of the powers of entry, search and seizure;
and for matters connected herewith.

c. International Law

South Africa is party to three international Treaties that impact the legal status of Commercialising
cannabis:

 The UN Single Convention on Narcotic Drugs, 1961 (as amended by the 1972 Protocol);
 The UN Convention on Psychotropic Substances, 1971;
 The UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988.

6.2 HIGH BARRIERS FOR NEW ENTRANTS

Currently, the only route into the legal Cannabis trade in South Africa is by obtaining a South African
Products Regulatory Authority license for medical marijuana. Nevertheless, for rural farmers, there are
considerable barriers to entry, including an extensive list of quality control measures and infrastructure that
need to be implemented, accompanied by prohibitive costs. It is estimated that the costs for setting up a

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facility to the required licensing standards and prepare a license application would be as high as R6 million.
The application fee alone is approximately R24 000. The current regulations also forbid anyone with a
criminal record or any form of drug-related offence from applying for a license, which further restricts the
number of small-scale growers.

The current legislative framework allows permits to be issued only to those people or organisations who
intend on undertaking research projects. No commercial permits are allowed at the current moment.
Applicants are also required to pay application fees of about R900. They are also required to put up a 2 m
high fence around their lands and ensure that the gates are locked for 24 hours. These measures are seen
as creating high barriers to resource-poor farmers and companies that would like to enter and participate
in the hemp industry.

6.3 NEGATIVE PUBLIC PERSPECTIONS

Cannabis invokes mixed reactions from general public and other stakeholders. Most people feel that
government must put more restrictions on this industry to protect vulnerable members of the society against
drugs. The opposition to any legalisation of cannabis is associated with the beliefs that it will worsen the
public security conditions in the country. There are also strong perceptions that cannabis will serve as a
gateway to the use of harder and heavier drugs. The addictive nature of dagga raises many concerns. Use
of dagga by adolescents is associated with an increased risk of a range of negative health outcomes,
including future depression and anxiety disorders. There are many people who believe that any relaxation
of current restrictions will lead to a situation where government will be unable to curb increased illegal
trafficking.

6.4 SEED SUPPLY CHALLENGES

There is currently no formal seed supply system for cannabis due to the fact that it is treated as an illegal
commodity. Seed is currently obtained via informal markets and networks. This creates a regulatory
challenge in that it is virtually impossible for government to regulate and guarantee the quality of seed that
is traded. The farmers are therefore at risk of being sold poor quality seed with low germination percentages.
The availability of seed as and when needed is a serious challenge for producers. The other option is to
import seed from other countries, thereby incurring additional costs. This increases overall production costs
for farmers.

6.5 MANUFACTURING CHALLENGES

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The manufacturing of variety of products from cannabis is a huge challenge for South Africa. There is lack
of appropriate machinery and expertise to produce a variety of cannabis products. Manufacturing of a
variety of products from raw material is crucial for the sustainability of the cannabis industry. South Africa
might be forced to import machinery and the appropriate expertise from other countries. The long-term
solution will be to incentivise local production of the appropriate machinery for cannabis.

6.6 RESEARCH AND DEVELOPMENT CHALLENGES

Research, development and innovation (RDI) are essential for product development, manufacturing and
commercialisation of cannabis products. South Africa has both the innovation and technology capacity to
conduct world-class studies on cannabis. Some of the existing and emerging challenges that the cannabis
RDI sector will face is limited financial resources across the innovation value chain. While the sector is
developing rapidly, the so-called Historically Black Universities are still excluded in terms of appropriate
human capital and strategic infrastructure. These institutions are located in rural areas, where most of the
poor and marginalised cannabis growers are situated. The challenge will be leveraging resources to finance
basic and applied research, pre-clinical and clinical trials, product development, technology demonstration
and commercialisation studies. The focus will be on medical and medicinal cannabis, and to a lesser extent
hemp, as sufficient studies have been conducted in South Africa.

6.7 PROLIFERATION OF UNREGULATED CANNABIS PRODUCTS

South Africa is facing a huge deluge of cannabis products of all kinds. These products range from energy
drinks, chocolates, beers, health and beauty products and many others. These products are sold mostly
through street vendors, garage shops and smaller retail outlets. Unfortunately, these products had not gone
through any form of regulatory system to test for their safety and efficacies. This means that the general
public is consuming drinks and food that had not been approved by any government department or its
agencies. The same applies to health and beauty products along with a whole range of other products that
are being sold to the general public. The problem is that people are being ripped off in terms of their finances
and at the same time their health is also at risk.

6.8 FRAGMENTATION

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The cannabis industry is highly fragmented. The main reason for this is that it is still an illegal industry and
therefore role players had not come out openly. It is said that there are more than 900 000 smallholder
dagga farmers that are involved in primary production of the commodity. There are also an unknown
number of buyers, middlemen, and traders of the commodity. Because of all these factors, there is no single
industry body that represents the interests of the majority of these stakeholders.

6.9 MARKET CHALLENGES

The legalisation of cannabis will need local and export markets to absorb whatever products that will be
produced. Export markets are unpredictable due to shifting rules. As a result, the expectation is for local
market to take a bigger share of the produce in the initial stages. As more countries relax their restrictions
on cannabis, it is expected that more export opportunities will open. South Africa currently imports several
cannabis products that are sold on the local markets. The low-hanging fruit in terms of creating a local
market for the South African cannabis industry is to replace imported products with the locally produced
products.

6.10 MARKET CONCENTRATION

There is potential risk that big corporations with huge financial muscles are to dominate the new cannabis
industry in South Africa. This scenario will lead to a situation in which smaller enterprises might be squeezed
or even be taken out of the cannabis industry. The total dominance or takeover by big corporates remains
one of the serious challenges for the new cannabis industry in this country. It is inevitable that there will be
a few corporations which take over and take advantage of this industry. The global trend is that small-,
medium- and large-sized cannabis businesses will be acquired by bigger companies unless they develop
a dedicated target market. It will be important for government to use competition laws to deal with this
challenge to create an inclusive cannabis industry.

Legalising cannabis will open opportunities to all interested stakeholders, including big business. The
challenge for government will be how to avoid a situation where big corporations might try to dominate the
whole dagga and hemp value chains at the expense of rural communities that have been growing these
crops for hundreds of years. These communities have been suffering from arrests and imprisonment for
years.

7. STRATEGIC INTERVENTION MEASURES

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The growth and development of the cannabis industry in South Africa depend on a range of intervention
measures that are necessary to ensure a sustainable cannabis industry that will contribute to economic
development, poverty alleviation and job creation. These intervention measures are packaged into nine
pillars, as outlined below:

7.1 PILLAR 1: EFFECTIVE REGULATORY SYSTEMS

Government is expected to maintain a delicate balance between the need to protect the general public
against drugs as well as the need to promote legitimate economic activities that would be brought about by
commercialisation of dagga and hemp. The country is also expected to comply with international obligations
on drugs and related substances in terms of the UN Conventions that government had signed. It is also
important to ensure that commercialisation of cannabis does not lead to unintended negative consequences
for the country and its citizens.

The international legal and administrative framework for cannabis is provided under the Single Convention
on Narcotic Drugs of 1961 as amended by the 1972 Protocol. There is a general consensus that the current
legislation on cannabis, namely the Medicine and Medicine Substances Act of 1965, and the Drugs and
Drugs Trafficking Act of 1982 provide a solid foundation for providing a reliable regulatory framework for
the future. There is a need to address the remaining restrictions in each of the two pieces of legislation.
The proposed amendments would make it easy for South Africa to establish and grow a sustainable and
globally competitive cannabis industry.

The pillar focuses on developing a new regulatory framework for both hemp and marijuana. It is important
to establish a new legal regime that must be clear to the general public, industry stakeholders and law
enforcement agencies, with enforceable rules and corresponding penalties that are proportional to the
contraventions. This include amendment of existing legislation by removing existing constraints that are
hindering commercialisation. The Department of Health leads this pillar, supported by the Department of
Justice and Correctional Services; and Department of Small Business Development.

Key Activities:

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The key intervention measures regarding this pillar include the following:

a. Finalise the necessary changes to the Drugs and Drugs Trafficking Act to remove the current
restrictions that prohibits commercialisation of all aspects of the cannabis value chain.

b. Develop an appropriate policy framework and a new legislation to regulate the commercialisation and
industrialisation of cannabis in South Africa. The new policy and legislative framework should be able
to adapt to new developments regarding specific cannabis products.

c. Creation of enabling policy, legal, and regulatory environment for the inclusive economic participation
of the previously disadvantaged community enterprises.

Stakeholder Commitments:

The stakeholders commit to the following deliverables:

a. Business
 Compliance to legislation and regulatory framework, in terms of licence and permit conditions, as
well as other related matters.

b. Organised Labour
 Compliance to legislation and regulatory framework.

c. Communities
 Compliance to regulatory framework.

d. Government
 Provide a conducive environment for the development and growth of the cannabis industry.
 Issuance of the necessary permits and licenses to farmers, institutions and companies that want
to participate in the cannabis value chains in a fair and transparent manner, subject to the law.

7.2 PILLAR 2: SUSTAINABLE SEED SUPPLY SYSTEMS

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Seed is the key foundation of a sustainable cannabis industry. The key to regulated cannabis industry is
seed certification. In this way the burden for compliance will fall on the seed producers and breeders. The
Agricultural Research Council and other research organisations are expected to take responsibility of
initiating and implementing breeding programmes for new dagga and hemp cultivars. They will be
responsible for importing suitable cultivars from other countries and conduct adaptation trials before these
cultivars are released for use in South Africa. This will be done in such a way that there is no contravention
of international obligations like UPOV and country’s competition laws.

This pillar will focus on production, processing, packaging and trade of seed and related products. This will
also include supporting breeding programmes for cannabis. The Department of Agriculture, Land Reform
and Rural Development will lead this pillar, supported by the DSBD.

Key Activities:

The key intervention measures regarding this pillar include the following:

a. Compulsory registration
 All companies and organisations involved in breeding, multiplication and sale of cannabis seed
must be registered and have valid permits to conduct their activities. It will be compulsory for all
these companies to keep reliable and up-to-date records of the amount of seed produced and sold
as well as particulars of their clients.

b. Certification schemes
 All cannabis seed producers, packers and other role players will need to be included in a
compulsory certification scheme. The schemes will ensure that all members comply with
regulations regarding seed quality and all other related matters.

c. Import and export control systems

 There is a need for import and export control systems and protocols for cannabis seed to be
developed and implemented.

d. Variety control and listing

 All cultivars of dagga and hemp will undergo testing to ensure their distinctiveness, uniformity and
stability before they are released for sale on the South African market.

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e. Seed testing
 Seed that is destined for export market alongside that for local markets will be tested for quality
and viability. This is aimed at ensuring that only high-quality seed is used locally and exported to
other countries.

Stakeholder Commitments:

The stakeholders commit to the following deliverables:

a. Business
 Compliance to legislation and regulatory framework regarding to seed and related matters.
 Investment in local seed production, processing and trade.
 Provide opportunities to new seed growers and enterprises through contract growing and other
arrangements.

b. Organised Labour
 Compliance to labour laws.

c. Government
 Develop and implement a regulatory system for cannabis seed.
 Promote compliance to regulatory framework by farmers, seed companies, breeders and other
stakeholders.
 Support the development of new seed growers and enterprises.
 Facilitate training of new seed growers through the SETAs.
 Issuance of export and import permits for cannabis seed.

7.3 PILLAR 3: RESEARCH DEVELOPMENT AND INNOVATION

Poverty is a national emergency in South Africa, and cannabis research, development and innovation (RDI)
offer the country opportunities to create jobs, alleviate poverty and reverse inequality. The Department of
Science and Innovation (DSI) leads the RDI pillar of the masterplan and is in the process of facilitating
several flagship projects on Medical cannabis. The Medical Cannabis RDI initiatives are coordinated by the
African Medicines Platform of the Indigenous Knowledge-Based Bio-Innovation Programme. The DSI has
been funding medical cannabis studies since 2015 and its strategic imperatives together with its partners
are limited to facilitating research to ultimately support local industrialisation.

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In order to avoid re-inventing the wheel, a tried and tested value-chain model that supports ‘‘integrated
applied research and inclusive innovation’’ is herein proposed. This is currently implemented through a
forty-member Indigenous Knowledge-(IK) Based Bio-Innovation Programme, which is constituted by
signatories from science councils, universities, partner government departments, traditional health
practitioners (THPs) and rural and township small-medium enterprises (co-ops) owned by IK-Holders.
The pillar is focussed on supporting research and development programmes for the South African cannabis
industry. These include breeding programmes and development of new technologies needed across the
entire value chain. The Department of Science and Innovation will lead this pillar supported by the DSBD
and other relevant sector departments.

Key Activities

The DSI supports initiatives with national knowledge production, clinical research, product development,
SMME support and commercialisation. The scope and strategic imperatives of envisaged teams should be
systematic and geared towards:

a. Indigenous Knowledge Interface

 Pioneer the pro-poor and IK-based ideation or concept generation for interfacing of IK-based
technology and grassroots innovation within the national innovation system.

b. Integral (Applied) Research

 Support IK-based (applied) research and discovery initiatives for new knowledge production and
technology innovation in germplasm, agronomy, African Medicines, Cosmeceuticals,
Nutraceuticals, Health Infusions and Hemp Product like textile and building materials, etc.

c. Inclusive Innovation

 Implement inclusive innovation programmes, clinical research and product development

programmes for social and economic development.

d. Local Technology Transfer

 Enhance local technology transfer (incubation) and manufacturing processes for entrepreneurship
and secondary economies (small and medium enterprise support).

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e. Holistic Enterprise Development

 Facilitate holistic and evidence-based marketing (branding) and enterprise development models
for competitive industrialisation and commercialisation.

f. Conscious Commercialisation
 Promote sustainable and conscious commercialisation and beneficiation initiatives for the
emergence of new high-end industries, thriving societies and improved quality of life.

g. Germplasm collection and maintenance, breeding of new varieties, control of pests and diseases,
amongst others.

h. Development of test kits for the police. supports the development of mobile test kits that would be used
by police who would be manning roadblocks. These will be handheld testing kits that would rapidly
determine the percentage/amount of THC in hemp in order to distinguish it from dagga. The Department
of Science and Innovation as well as other standard setting organisations like SABS and NMISA (for
calibration and measurements) should be involved regarding this initiative.

Stakeholder Commitments:

The stakeholders commit to the following deliverables:

a. Academia (Universities and Science Councils)

 Conduct research, development and innovation initiatives on both medical cannabis and hemp.
 Facilitate human capital development in applied research, product development and
commercialisation.

b. Business
 Investment in research development and innovation programmes.
 Adoption and use of new technologies.
 Participate in the commercialisation of new technologies.

c. Organised Labour
 Facilitate training programmes for workers regarding the application of new technologies in their
daily operations.

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d. Communities
 Lobby for the development of safe and efficient technologies and products in line with the needs of
communities.
 Promote indigenous knowledge systems for inclusive development, benefit sharing and
socioeconomic development.

e. Government
 Invest in research and technology development programmes.

 Promote the adoption and use of new technologies by all stakeholders.

 Development and implementation of education and training programmes regarding research and
technology development.

7.4 PILLAR 4: PRODUCER SUPPORT SYSTEMS

Farmers are important in terms of ensuring that there is sustainable production of hemp and marijuana to
cater for the needs of both domestic and export markets. The pillar will focus on mobilisation and
supporting farmers to participate in the cannabis value chains. This also involve the inclusion of current
“illegal” dagga growers into the formal system. The pillar will further focus on the development of small
suppliers for the cannabis industry. The lead department will be Department of Agriculture, Land Reform
and Rural Development supported by the Department of Small Business Development.

Key Activities:

The key interventions in terms of this pillar are:

a. Technical support
 Cannabis has been a prohibited commodity for many years. Therefore, many farmers are not
familiar with many aspects of it. The farmers will need to be supported in terms of cultivar choices,
cultivation practices, pest and disease control, harvesting and post-harvest practices. This type of
support will be provided by agronomists in both government and private sector, dedicated extension
officers, non-governmental organisations, etc. The support will also be in the form of development
and distribution of production guidelines, posters, brochures and other information material.

b. Financial support

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  There is a need for dedicated funding for farmers participating in the cannabis industry. Financial
support may in forms of grant funding, loans, equity, blended funding, etc. Government, private
sector, donor organisations and state-owned entities need to hold hands in terms of providing this
type of support to farmers.

c. Zoning
 Areas where conditions are conducive for growing cannabis should be identified and zoned. These
areas should preferably be in those areas where poverty and unemployment are high. The zoning
will enable resource-poor growers to generate sufficient income and thereby becoming significant
players in the cannabis value chains.

Stakeholder Commitments:

The stakeholders commit to the following deliverables:

a. Business
 Provide support to farmers to participate in cannabis value chain.
 Provide out grower contracts to new and resource-poor farmers.

b. Organised Labour
 Facilitate training programmes for workers.

c. Government
Provide targeted incentives and government support for small-holder cannabis growers.
Develop training programmes for farmers to facilitate their participation in the cannabis value chain.

7.5 PILLAR 5: MARKET DEVELOPMENT

Market access is crucial for the development and growth of the cannabis sector. Improved market access
for all farmers and manufacturers will contribute positively to the development of this sector. The pillar will
also focus on developing new domestic and export markets for the South African cannabis industry. It is
led by the DTIC and supported by DSBD and other relevant sector departments.

Key Activities:

29
These crucial intervention measures in terms of this pillar include the following:

a. Facilitate and support the development of domestic market for cannabis products.

b. Facilitate and coordinate the opening of export markets for South African cannabis products.

c. Facilitate public sector and private procurement of cannabis products from resource-poor farmers and
manufacturers.

d. Facilitate the development of appropriate market support infrastructure like collection hubs,
processing plants and storage facilities.

e. Development and implementation of user-friendly market information systems for cannabis products.

f. Provision of market information to all farmers and manufacturers.

g. Development and implementation of incentive programmes to support the participation of resource-

poor suppliers in the local and export markets for cannabis products.

Stakeholder Commitments:

The stakeholders commit to the following deliverables:

a. Business
 Provide off-take agreements to new growers.
 Source products from local farmers and manufacturers for both local and export markets.

b. Organised Labour
 Facilitate the adoption of fair labour practices in retail and other related sectors of the value chain.

c. Communities
 Lobby for affordable and safe cannabis products in local markets.

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d. Government

 Create a conducive environment for the development of local markets for cannabis products.
 Facilitate the opening of new export markets for South African cannabis products.
 Provide grants and blended finance to facilitate the participation of new entrants in both local and
export markets.

7.6 PILLAR 6: ENTERPRISE AND SUPPLIER DEVELOPMENT

Enterprise and supplier development are important in terms of ensuring sustainable growth and
development of the cannabis industry. The indigenous dagga growers and sellers should be included in the
cannabis value chain. The same also apply to new small-scale growers from other poverty-stricken areas
of the country. Such growers and sellers should be grouped into primary and secondary cooperatives.
These will enable small-scale growers and buyers to be able to sell locally grown cannabis legally to bigger
licensed operations where it could then be processed for medicinal purposes. They will be able to do this
freely without fear of arrest. The Department of Small Business Development will lead the pillar with support
from Department of Trade, Industry and Competition.

Key Activities:

Key intervention measures in terms of this pillar are as follow:

a. Development of special incubation programmes for new suppliers.

b. Incorporation of cannabis development into existing incubation programmes developed by various

government departments and state-owned entities.
c. Facilitating and supporting the development and signing of off-take agreements between growers of
cannabis and the manufacturers.

d. Facilitating and supporting the development and signing of off-take agreements between manufacturers
and retailers of cannabis products.

e. Providing advisory services to new and emerging suppliers in the cannabis industry.

f. Facilitating collaboration between relevant cannabis supplier development providers and emerging
small-scale growers (value-chain development).

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Stakeholder Commitments:

The stakeholders commit to the following deliverables:

a. Business
 Facilitate the procurement of products from resource-poor farmers and manufacturers.
 Provide technical and financial assistance to the development of new enterprises.

b. Labour
 Lobby for fair labour practises in cannabis-based enterprises.

c. Government
 Provide technical and financial support to the development of new enterprises.
 Facilitate the inclusion of cannabis products from new entrants in public procurement programmes.
 Facilitate the incorporation of cannabis in incubation programmes of SEDA.

7.7 PILLAR 7: MANUFACTURING AND PRODUCT DEVELOPMENT

The pillar will focus on development and supporting the growth and development of the manufacturing and
product development capacity of the South African cannabis sector. The country will be in a good position
to derive immensely in terms of job creation, economic development and poverty alleviation if the
manufacturing sector is well developed. This sector cannot develop to its full potential if it is only focused
to growing and selling the raw material to both the domestic and export market. This pillar will further focus
on the development of suppliers for the cannabis industry. The Department of Trade, Industry and
Competition will lead this pillar supported by DSI and DSBD.

Key Activities:
Key intervention measures in this regard are as follow:

a. Infrastructure development. There is a need for investments in establishment of manufacturing plants

that will be used for producing food, medicine, beverages and a whole of other value-added products
from raw material of both hemp and dagga. The investments will come from government, private sector,
donors and state-owned entities.

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b. Incentive programmes and other financial support from government departments, SOEs and financial
institutions. There is a need to channel incentive programmes, grants, soft loans and blended finance
to support growth and development of the cannabis industry in South Africa.

c. Coordinate existing product development facilities for agricultural produces for collaboration on
cannabis development

d. Development and implementation of research programmes to develop new products from hemp and
dagga.

Stakeholder Commitments:

The stakeholders commit to the following deliverables:

a. Business
 Investment in manufacturing and product development for cannabis.
 Inclusion of new entrants in the supply of raw material for manufacturers.
.
b. Organised Labour
 Lobby for use of fair labour practices in the manufacturing and product development sectors.

c. Government

 Provide incentives for manufacturing and product development.

 Provide technical and financial support to manufacturers.
 Create linkages between farmers and manufacturers.

7.8 PILLAR 8: EDUCATION AND TRAINING

The formal cannabis industry is relatively new in South Africa and consequently there is a lot of capacity
development that needs to be done to ensure its establishment, growth and sustainability. Education and
training are important in terms of supporting the development of the cannabis industry in South Africa. The
pillar is focused on providing a framework on education and training matters in support of the cannabis
industry. There is a need to provide both formal and informal training in terms of cannabis cultivation

33
practices, manufacturing, product development, marketing and other related skills. This pillar will be led by
the Department of Higher Education and Training with support of Department of Basic Education as well
as the Department of Labour and Employment. Some of the invention measures under this pillar include
the following:

a. Develop and implement formal and informal training programmes for farmers and Extension Officers
on cannabis related matters.

b. Training and capacity building for potential manufacturers. There is a need to identify potential
manufactures and place them under dedicated training programmes. This will be complemented by
mentorship programmes.

c. Integration of cannabis related matters into the curricula of schools, colleges and universities.

d. Support cannabis education and training programmes through the appropriate Sector Education and
Training Authorities (SETAs).

Stakeholder Commitments:

The stakeholders commit to the following deliverables:

a. Business
 Provide support to education and training programmes on cannabis.

b. Labour
 Provide support to training programmes on cannabis.
 Lobby for the inclusion of cannabis in training programmes of SETAs.

c. Government

 Development and implementation of education and training programmes on cannabis.

 Facilitate the inclusion of cannabis in curricula of schools, universities and other training institutions.

7.9 PILLAR 9: COMMUNICATION AND AWARENESS

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Cannabis had been shrouded in controversy for many years. This is further compounded by misinformation
and false news. There is a need for an effective mechanism of delivering the correct and justifiable message
to all stakeholders and the general public. The pillar is focused on communicating a clear and unambiguous
message about the cannabis industry and related matters to all stakeholders and the general public. The
core messages will be around demystifying some of the negative perceptions about hemp, dagga and their
products. These programmes, and messages, will be distributed through exhibitions, information days,
website, emails, radio and television. This pillar will be coordinated by the Government Communication and
Information System (GCIS) and led by respective lead departments for specific thematic areas.
Key Activities:

The pillar provides support to all other pillars. Some of the invention measures under this pillar include the
following:

a. Consumer education and awareness on different uses of hemp, dagga and related products. To be led
by Economic Cluster departments.

b. Educate small enterprises, farmers and communities about business opportunities in the cannabis
value-chain. To be led by Economic Cluster departments.

c. Inform farmers, manufacturers, retailers, consumers and the general public of the niche market
opportunities for cannabis. To be led by Economic Cluster departments.

d. Educate the public about the addictive nature of cannabis products and the negative health outcomes
and dependency associated with the misuse. To be led by the Department of Social Development.

e. Promote compliance to regulatory framework and root out wrongdoers, including offences, penalties
and regulations. To be led by law enforcement agencies.

f. Evidence
 Implement evidence-informed public education campaigns, targeted at the general population but
with an emphasis on youth, disabled and other vulnerable members of the society.

Stakeholder Commitments:

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The stakeholders commit to the following deliverables:

a. Business
 Provide technical and financial support to information and awareness programmes targeted at
consumers and the general public.

b. Labour
 Provide support to information and awareness programmes targeted at labour.

c. Communities
 Provide support to information and awareness programmes targeted at consumers and the
general public.
 Mobilise communities to support the development of a sustainable cannabis industry in South
Africa.

d. Government
 Development of information and awareness programmes on cannabis.

 Facilitate the dissemination of information and awareness programmes to majority of stakeholders,

consumers and the general public through various media and other channels of communication.

8 IMPLEMENTATION PLAN

The implementation of various aspects on the Cannabis Master Plan will be done as illustrated in the
table below:

36
PILLAR INTERVENTIONS OUTPUTS TIME FRAMES RESPONSIBLE
DEPARTMENT/
ORGANISATION

1. Effective Addressing the remaining Amended 2021/2022 Health

Regulatory restrictions on seed and other regulations
Systems related matters in terms of the
Medicines and Related
Substances Act

Amendment of schedules of the Amended 2021/2022 Justice and Correctional

Drugs and Drug Trafficking Act regulations Services
as well as Sections 4 and 5

Signing of the cannabis for Cannabis for 2022/2023 Justice and Correctional
Private Purposes Bill into law Private Services
Purposes Act

Development of a new policy Policy and 2021/ 2022 Trade, Industry and
and legislation for legislation on Competition
commercialisation of cannabis cannabis

Declaration of hemp as an A new 2020/ 2022 Agriculture, Land Reform

agricultural crop regulatory and Rural Development
system for hemp

Creation of enabling policy, Policy on 2021/ 2022 DSBD and DTIC

legal, and regulatory increasing
environment for the inclusive inclusivity and
economic participation of the broad
previously disadvantaged participation.
community enterprises

2. Sustainable Establishment and Consolidated 2021/22 Agriculture, Land Reform

Seed Systems implementation of registration and up-to-date and Rural Development–
system for all companies and database of all Supported by DSBD
organisations involved in registered
breeding, multiplication and companies
sale of cannabis seed participating in
the cannabis
value chain.

37
PILLAR INTERVENTIONS OUTPUTS TIME FRAMES RESPONSIBLE
DEPARTMENT/
ORGANISATION

Establishment of certification Dedicated 2022/23 Agriculture, Land Reform

schemes for cannabis certification and Rural Development
schemes on
cannabis

Development and Import and 2021/22 Agriculture, Land Reform

implementation of import and export protocols and Rural Development
export protocols for cannabis for cannabis
seed

Development and Seed 2021/22 Agriculture, Land Reform

implementation multiplication multiplication and Rural Development–
and retail protocols for cannabis and retail Supported by DSBD
seed protocols for
cannabis

3. Research, Pioneer the pro-poor and IK- Report on IK- 2021/22 Science and Innovation
Technology based ideation or concept Based Projects
and Product generation for interfacing of IK-
Development based technology and
grassroots innovation

Support IK-based (applied) Reports on 2021/22 Science and Innovation

research and discovery Medical
initiatives for new knowledge Cannabis and
production and technology Hemp research
innovation in germplasm,
agronomy, African Medicines,
Cosmeceuticals,
Nutraceuticals, Health Infusions
and Hemp Products

38
PILLAR INTERVENTIONS OUTPUTS TIME FRAMES RESPONSIBLE
DEPARTMENT/
ORGANISATION

Implement inclusive innovation Report 2021/22 Science and Innovation

programmes, clinical research prototypes and
and product development clinical studies
programmes for social and and agricultural
economic development trials

Enhance local technology Report on 2020/23 Science, Technology and

transfer (incubation) and technologies Innovation
manufacturing processes for transferred
entrepreneurship and
secondary economies (small
and medium enterprise support)

Holistic Enterprise Report on 2021/23 Science, Technology and

Development: Facilitate holistic number of pilot Innovation
and evidence-based marketing enterprises
(branding) and enterprise supported
development models for
competitive industrialisation and
commercialisation

Conscious commercialisation: Report on pilot 2021/24 Science, Technology and

Promote sustainable and products Innovation
conscious commercialisation commercialised
and beneficiation initiatives for
the emergence of new high-end
industries, thriving societies and
improved quality of life

4. Sustainable Establishment and Incubation 2022/23 Agriculture, Land Reform

Producer implementation of incubation programmes for and Rural Development
Support programmes for new producers new producers
Systems Establishment and Technical 2021/22 Agriculture, Land Reform
implementation of technical support and Rural Development

39
PILLAR INTERVENTIONS OUTPUTS TIME FRAMES RESPONSIBLE
DEPARTMENT/
ORGANISATION

support programmes for programmes for

producers Cannabis
producers

Establishment and Financial 2022/23 Agriculture, Land Reform

implementation of financial support and Rural Development
support programmes for programmes for
producers cannabis
producers

Zoning of areas for primary National maps 2021/22 Agriculture, Land Reform
production of dagga and hemp for areas where and Rural Development
cannabis is
produced

Small-Scale Agriculture Training Ongoing Department of Small

production and processing programmes Business Development
training (Through existing
platforms at Small Enterprise
Development Agency)

5. Market Facilitate the development of Report on 2021/22 Trade, Industry and

Development domestic market for cannabis available Competition
products domestic
markets

Facilitate and coordinate the Report on 2022/23 Trade, Industry and

opening of export markets for available export Competition
South African cannabis products markets

Facilitate public and private Procurement 2021/22 Trade, Industry and

sector procurement of cannabis programmes Competition
products from resource-poor
farmers and manufacturers

Facilitate the development of Reports on 2022/23 Trade, Industry and

appropriate market support available market Competition (DSBD to
infrastructure in support through SEDA)

40
PILLAR INTERVENTIONS OUTPUTS TIME FRAMES RESPONSIBLE
DEPARTMENT/
ORGANISATION

infrastructure like processing various

plants and storage facilities. provinces

Development and Operational 2022/23 Trade, Industry and

implementation of user-friendly market Competition
market information systems for information
cannabis products systems

Provision of market information Market 2022/23 Trade, Industry and

to all farmers and manufacturers information Competition

Development and Incentive 2022/23 Trade, Industry and

implementation of incentive programmes for Competition (DSBD to
programmes to support the cannabis support through Cannabis
participation of resource poor industry Support Plan)
suppliers in the local and export
markets for cannabis products
Reconfigure the dtic’s incentive
to speak to a broader policy of
legalisation and industrialisation
of cannabis

Facilitate the development of National 2022/23 DTIC/SABS/SANAS/

appropriate cannabis accreditation NRCS
accreditation system for
cannabis

Facilitation of market Report on 2021/22 Department of Small

opportunities through the small market Business Development
enterprise sector-wide market opportunities
access strategy/framework

6. Enterprise and Development of special Incubation 2022/23 DSBD, Trade, Industry

Supplier incubation programmes for new programmes for and Competition
Development suppliers new suppliers

41
PILLAR INTERVENTIONS OUTPUTS TIME FRAMES RESPONSIBLE
DEPARTMENT/
ORGANISATION

Facilitating and supporting Report on off- 2021/22 Trade, Industry and

signing of off-take agreements take agreements Competition
between growers of cannabis facilitated.
and the manufacturers.

Facilitating and supporting the Report on off- 2021/22 Trade, Industry and
development and signing of off- take agreements Competition
take agreements between facilitated.
manufacturers and retailers of
cannabis products.

Providing advisory services to Advisory 2021/22 Trade, Industry and

new and emerging suppliers in services Competition
the cannabis industry

Facilitate collaborations with Report on 2021/22 Department of Small

supplier diversity institutions for collaboration Business Development
the benefit of emerging
cannabis suppliers

Incorporation into the existing Report on 2021/22 Department of Small

Supplier Development incorporation of Business Development
platforms through existing new suppliers
SEDA incubations into existing
supplier
development
platforms

7. Manufacturing Facilitate and coordinate Report on 2022/23 Trade, industry and

and Product investments in establishment of investments Competition
Development manufacturing plants that will be done in
used for producing food, manufacturing
medicine, beverages and a facilities for
whole of other value-added cannabis
products from raw material of
both hemp and dagga.

42
PILLAR INTERVENTIONS OUTPUTS TIME FRAMES RESPONSIBLE
DEPARTMENT/
ORGANISATION

Development and Incentive 2022/23 Trade, industry and

implementation of incentive programmes Competition and
programmes for development of Department of Small
new products from dagga and Business Development
hemp.

Development and Training and 2021/22 Employment and Labour

implementation of training and mentorship (DSBD to complement
mentorship programmes for programmes the process through
potential and aspiring training programmes
manufacturers of new products offered by SEDA)
from hemp and dagga.

Development and Research 2022/23 Science, Technology and

implementation of research programmes on Innovation
programmes to develop new cannabis
products from hemp and dagga.

8. Education and Development and Education and 2021/22 Government

Training implementation of education capacity building Communication and
and capacity building programmes Information Systems
programmes for farmers,
manufacturers, retailers, and
other stakeholders in the
Cannabis value chain.

Development of appropriate New curricula 2022/23 Higher Education,

curricula for formal and informal for formal and Science and Technology
training programmes offered by informal training
training institutions. programmes

43
PILLAR INTERVENTIONS OUTPUTS TIME FRAMES RESPONSIBLE
DEPARTMENT/
ORGANISATION

9. Communicatio Development and Information and 2021/22 GCIS

n and implementation of information awareness
Awareness and awareness programmes on programmes
Cannabis related matters.

Opportunity awareness Opportunity 2021/22 DSBD (SEDA)

education on cannabis value- awareness
chains for small enterprises and programmes
communities.

9. IMPLEMENTATION AND MONITORING STRUCTURES

Government and its social partners need to reach an agreement with regard to establishing mechanisms
for joint governance, accountability and implementation and monitoring and evaluation of the Masterplan.
This involves Executive the Oversight Committee, Programme Management Office, Master Plan Task
Teams and the Provincial cannabis Committees as discussed below:

9.1 EXECUTIVE OVERSIGHT COMMITTEE

The objective is to provide high-level leadership and coordination of the Master Plan implementation and
ensure and promote shared ownership and accountability for outcomes and commitments amongst the
social partners.
The composition of the Executive Oversight Committee will be as follow:
a. Government: Ministers of DALRRD, DoH, DJCS, DTIC, DSI and DSBD.
b. Farmer associations
c. Manufacturers

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d. Retailers
The duties and responsibilities of the Executive Oversight Committee are as follow:
a. Champion the vision, mission and implementation of the Master Plan

b. Provide high-level leadership, guidance and coordination of implementation

c. Monitor and evaluate the Master Plan implementation

d. Agree on Master Plan baselines and targets as well as and a baseline monitoring and evaluation
framework.

e. Receive reports from and provide guidance to Task Teams

9.2 PROGRAMME MANAGEMENT OFFICE

The objective is to provide secretariat support to the Executive Oversight Committee and dedicated
programme management of Master Plan implementation.
The duties and responsibilities of the Programme Management Office are:

a. Provide secretarial services to the Executive Oversight Committee

b. Provide programme management and coordination of Master Plan implementation

c. Develop, manage and coordinate programme implementation plans

d. Coordinate and drive Master Plan Task Teams and Provincial cannabis Committees.

9.3 MASTER PLAN TASK TEAMS

The Master Plan Task Teams will be responsible for supporting the implementation of various pillars of the
Master Plan. They will be made up of representatives of sector departments, state owned entities, industry
and other social partners. The teams will report to the Executive Oversight Committee.

9.4 PROVINCIAL CANNABIS COMMITEES

45
The Provincial cannabis Committees will be established in each province where there is production and
manufacturing of this commodity. These structures will be composed of representatives of government and
social partners in those provinces. The committees will be responsible for providing support to the growth
and development of the cannabis sectors in those provinces.

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