The South African dagga industry could be worth R27 billion within four years – but export-quality cannabis may be a problem

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  • The South African market for marijuana and associated products could be worth R27 billion per year by 2023, according to a new report by Prohibition Partners.
  • Africa overall has the cheap land and labour to attract investment in cannabis, the consultancy says – but export markets looking for quality may require irrigation infrastructure not common on the continent.
  • But wrapping dagga in banana leaves and burying it may be just the edge African producers need to command high premiums for their weed.

By 2023, just four years from now, the South African domestic market for cannabis and related products – excluding consumer CBD products, will be worth around R27 billion, says pro-marijuana consultancy Prohibition Partners in a new report.

But how much of the export market SA, and the continent as a whole, manages to secure may depend on water and irrigation infrastructure, the pro-cannabis consultancy says in its African Cannabis Report.

By United Nations estimates the African continent as a whole already produces some 38,000 tonnes of cannabis per year despite it being illegal to grow and possess just about everywhere. Farmers in various regions, including South Africa, have the knowledge and skill to grow cannabis successfully, Prohibition Partners says. And as demand for tobacco declines, politicians will feel pressure to legalise growing while farmers will likely be attracted by a hardy crop with better cash yields than most others.

“With affordable land, low-cost labour and an experienced agricultural workforce, Africa offers enormous opportunity to local start-ups and foreign companies looking to expand,” the consultancy says.

South Africa's first cannabis industry exhibition attracts scores of entrepreneurs and consumers, since the constitutional court ruled that private, personal cannabis use was legal.
 

South Africa's first cannabis industry exhibition attracts scores of entrepreneurs and consumers, since the constitutional court ruled that private, personal cannabis use was legal.

Much of the current crop is already grown for export, albeit illegally. Yet the likes of South Africa could struggle in a new, formal and legalised export market, Prohibition Partners warns.

Without irrigation infrastructure and innovation, the consultancy says, "there is likely to be insufficient water to support mass scale operations in the region, particularly in newer cultivation methods such as hydroponics. As a result, Africa might be able to help supply demand, but is unlikely to be able to produce the quality cannabis that the maturing market will inevitably call for”.

However, some countries such as neighbouring eSwatini, has an existing advantage when it comes to artisanal production with a story attached to it, much the same way well-aged whiskey or brandy have market segments all to themselves.

“Similarly to the way in which alcohol is aged, the post-harvest processing of cannabis could tell a compelling story to the consumer that helps establish brand identity and command a price premium. In this way, Africa could play a key role in boosting the cost per gram of cannabis in the recreational market amongst cannabis connoisseurs," says Prohibition Partners.

That is in reference to the way the popular Malawi Gold and Swazi Gold cannabis is wrapped in banana leaves and buried to cure, adding a unique colour and flavour.

The R27 billion calculation for the South African cannabis market is based on growth in markets that have legalised marijuana for both medicinal and recreational use, such as Uruguay and Canada, and some American states. It excludes cannabinol (CBD) because there is not yet enough data on sales to predict the size of the CBD market, Prohibition Partners says.

CBD is a non-psychoactive compound extracted from marijuana, and products from beer to doggy treats containing it are already widely available in SA, suggesting it could add significantly to the total cannabis industry.

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