The great cannabis debate over master plan: Is South Africa being left behind as New York becomes the 16th state to legalise?

By Edward Tsumele

The recent first workshop to be held between government and role players, mainly entrepreneurs in the emerging multi-billion dollar industry still struggling with issues of regulatory frame work reform and formalization saw robust input by participants,

The Workshop organized by the Department of l Agriculture, Land Reform and Rural Development though generally hailed as a positive development in unlocking the potential of this new industry, it also revealed the gap that still exists between government thinking in its approach and industry expectations.

Held virtually on March 30, 2021, it became clear that the industry expects a radical approach to the promulgation of regulations governing this new industry, including  the controversial issue of legalizing  adult use and regulated trade in cannabis with high THC (the compound that causes one to be high when smoked) and therefore regulate this portion of the market, which currently is happening on the black market, and is estimated by government to be worth R28 billion in South Africa.

Another issue that also became a sticking point, with Tebogo Tlhopane, the Chairman of industry association  Cannabis Traders Association of Africa (CTAA), threatening court action to force the South African Health Products Regulatory Authority (SAHPRA) to increase the daily dosage of CBD products as he argued that the current limit was out of touch with patients’ needs, and therefore must be challenged.

This discussion was part of the consultation to be incorporated into the draft plan developed by the Department of Agriculture, Land Reform and Rural development, the government department delegated to  lead government efforts in unlocking the value chain of this  industry.

Other issues that came up are the continued “harassment’’ of  ‘dagga  dealers and users’ by police, and therefore  a popular call at the workshop was for government to stop all while discussions about legal clarity when it comes to the future of this plant are continuing.

The need to consult communities, who have a long association with the plant by planting it illegally and selling it on the black market , with an effort of including them in the future commercialization and value chain of the emerging industry.

Interestingly  while in South Africa, the country is still discussing its master Plan for this multi-billion dollar industry, in the US, things seem to be moving faster with 15 States so far cashing in on the new green gold industry, as all of them have legalised wholly or aspects of the cannabis, for example for recreational use, or medical cannabis, netting millions for the Sates in taxes. The latest state to legalise cannabis for adult use is New York last week, March 29, 2021.  With New York City, which is in New York state, being the world’s financial centre, this legalization of cannabis in New York state is expected by cannabis analysts to push the US at Federal level to at least decriminalise if not legalise cannabis completely and already the effect of this latest move by New York is having an effect on the cannabis stocks in the US as CNBC reported over the Easter Weekend. The  US however at federal level legalised hemp in 2018, triggering a flurry  by other countries to follow suit, including in Africa, as whatever happens in the US, is mostly likely to be replicated elsewhere, the US being  the leading global economy as well as a superpower.

In New Mexico, a  a cannabis bill has been approved by legislatures already and is on the governor’s desk for signing, with the State of Virginia being the next state to legalise cannabis, and If that happened it will bring the sates where cannabis is legalised in one form or another to 17 in the US.

It is however the reaction of the financial markets that is interesting to investors as a result of these developments.

“Though many U.S. cannabis companies posted strong fiscal fourth-quarter earnings, “the bar was set pretty high,” Tim Seymour, portfolio manager of the Amplify Seymour Cannabis ETF (CNBS), told CNBC’s  on Wednesday.

As such, those who compared results to the prior quarter were left disappointed. But year over year, these companies have made significant strides, Seymour said, noting that Green Thumb Industries doubled its 2019 volume in 2020.

This week threw a few more catalysts into the mix with New York greenlighting recreational use and Senate Majority Leader Chuck Schumer indicating he would soon propose a bill to end the federal prohibition.

Not only could New York grow to a $5.5 billion market “in the next couple years,” potentially the largest after California, but it could also accelerate legalization across the rest of the East Coast, said Seymour, also the founder and chief investment officer of Seymour Asset Management,” reported CNBC over the Easter weekend.

The local emerging cannabis entrepreneur must be noting the current developments with regards to cannabis in the US and wondering if our policy makers and government are too noting these developments, especially as they seem to be still stuck in creating a National Cannabis Master Plan while the horse is about to bolt and would be hard to catch up with once it leaves.