How to be a Dagga Farmer
It seems like everyone wants a share of the cannabis pie, but what’s the best way to do it?
In September 2018, the Constitutional Court of South Africa legalised the growing of cannabis for private purposes and the use of cannabis for adults in private places. The details of this ruling were vague: The Constitutional Court failed to define the meaning of “private places” and the South African Parliament has yet to formally change the law regarding the use and cultivation of cannabis. However, despite these grey areas, many South Africans are now seeking ways to legally profit from cannabis cultivation.
Globally, cannabis is an emerging industry, but one that’s starting to boom. In the USA, the legal marijuana industry was valued at $10.4 billion in 2018 and it is also estimated as the country’s fastest-growing job market. In 2018, Canada became the first country to legalise cannabis for recreational and medicinal use. Canada’s legal cannabis market is projected to reach $5.2 billion by 2024.
Following the same trend, a report by Prohibition Partners, an independent consultancy for analytics and business intelligence on the international cannabis industry, estimates that the South African domestic market for marijuana and associated products could be worth R27 billion per year by 2023. The same report also notes that South Africa is “ideal for large-scale cannabis cultivation.” Historically, cannabis was cultivated by the indigenous peoples of South Africa, with the first written record of the plant made by Jan van Riebeeck. The UN estimates that South Africa currently produces 2,500 tonnes of cannabis a year, illegally, some of which is exported, also illegally.
Agricultural economist Wandile Sihlobo has said that South Africa’s “dagga-belt,” the former Transkei area of the Eastern Cape has “the right terrain and climate for cannabis production.” His sentiments were echoed by Eastern Cape premier Oscar Mabuyane who wants to formalise the current illegal industry in the province and develop commercial marijuana production for export markets. In May, the City of Cape Town freed vacant land in the Atlantis Special Economic Zone for the production of medical cannabis and the construction of a billion-Rand growing facility. Marijuana producers growing for medical, research and export purposes have been granted licenses in the Northern Cape, Kwazulu-Natal and the Western Cape. Further legalisation of cannabis could have positive implications for South Africa’s agricultural exports and create jobs in areas of high unemployment.
So how do I become a cannabis farmer?
Until South African laws are changed, cannabis remains an illegal substance in South Africa. As such, cannabis production is a closely regulated process.
Licenses are issued by the South African Health Products Regulatory Authority (SAHPRA) for the:
- Cultivation and production of cannabis and cannabis resin
- Extraction and testing of cannabis resin and cannabinoids
- Manufacture of cannabis-containing or cannabinoid-containing medicine
- Import of cannabis-containing medicine
- Export a cannabis-containing medicine
- Distribution of a cannabis-containing medicine
It’s estimated that setting up an entry-level dagga farm and obtaining a license from SAPHRA can set you back between R3 million and R5 million. As potential cannabis farmers will be handling an active pharmaceutical ingredient, they must comply to strict guidelines regarding their personnel, security, buildings, infrastructure and more before a license can be issued. Once a license is obtained, farmers are expected to comply with a number of Good Manufacturing Practices. SAPHRA also works in conjunction with the Department of Health, the Department of Agriculture, Forestry and Fisheries (DAFF) and the SAPS to monitor the entire supply chain of cannabis production to ensure quality and security.
Farmers wanting to sell their product for export face an additional number of challenges. They must secure a buyer overseas before their license can be issued. Additionally, export to some countries also requires a Control Union Medical Cannabis Standard for Good Agriculture Practice (CUMCS – G.A.P.) certification which confirms the standard of the growing facility and product. Prohibition Partner’s report also raises concerns over the capability of African farmers to raise export quality crops due to a lack of irrigation infrastructure and innovation. The report says, “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.”
Armand Redelinghuys of CanbiGold has spoken of the difficulties in obtaining a license in Lesotho, saying, “we struggled to get certification for the setup we had…If you can’t get the certification you have to break it down and do it all over again. The guidelines are very strict.” CanbiGold’s solution was to create modular grow rooms from repurposed shipping containers. Known as “Fortresses” these small grow rooms adhere to all guidelines and allow for more control over the quality of the cannabis grown. CanbiGold’s containers sell for R6 million and produce 25 kilograms of medical grade marijuana a month, meaning that you could net a return of R5.4 million a year in export contracts, that is if you can obtain an export contract, a license and the necessary certification.
What about hemp?
Unlike the strains of marijuana grown for medicinal or recreational purposes, industrial hemp is high in fibre and contains very low levels of active tetrahydrocannabinol (THC), the compound in marijuana which gives that cloud nine feeling. However, because marijuana and industrial hemp are visually very similar, industrial hemp needs to be strictly controlled to prevent the unregulated production of marijuana. Industrial hemp is an increasingly attractive crop for farmers because it has a wide range of uses, from textiles, paper and animal feed to body care products, food and biofuel.
In South Africa, the DAFF has recognised hemp as an agricultural crop, but legally there is no distinction between industrial hemp and marijuana. Hemp is therefore regarded as an illegal product and may only be cultivated for research purposes, under special conditions granted by the director-general of the national department of health. In April the DAFF said they were still considering 36 applications for commercial hemp cultivation and that they were working with other state entities to develop a regulatory framework for hemp in order to establish a hemp industry.
A handful of farmers have been awarded permits to cultivate industrial hemp, and the world’s largest licensed commercial cannabis farm can be found over 5,000ha just outside Newcastle, Kwazulu-Natal.
South Africa seems to be on the precipice of a green revolution, similar to those currently underway in the USA and Canada. Those along the cannabis chain, from cultivators to end-product producers all have their eyes on massive financial gains. However, the success of these enterprises rests in the hands of legislators who have yet to present parliament with debatable legislation regarding cannabis laws in South Africa. Their deadline is September 2020. SAHPRA, meanwhile, is the gatekeeper of South Africa’s cannabis industry and holds the difficult job of balancing license applications with important regulations. The answer to gaining from the cannabis boom may lie in creating opportunities further along the production line, in support of cultivators or serving adventurous consumers interested in cannabis-related products.
Here a few cannabis products on the South African market. Some are made with hemp and others contain cannabidiol (CBD), another active compound found in cannabis, but without psychoactive properties.