The health regulator has been slammed for hindering growth in the cannabis industry after it classified a cannabis oil compound as a prescription medicine, and some in the sector say slow regulatory reform is also holding back progress.
“We've moved backwards because now they are saying even the non-psychoactive cannabinoids are schedule 6, which makes zero sense and is outside what's happening globally,” said Gabriel Theron, CEO and founder of Cilo Cybin said.
The industry is estimated to be worth R28bn. To stimulate growth in the hemp market, the government is making legislative changes to facilitate its commercialisation. It is expected the sector could generate 130,000 jobs.
On Thursday night in his state of the nation address President Cyril Ramaphosa said the departments of agriculture, land reform and rural development and health will address existing conditions for the cultivation of hemp and cannabis to allow cultivation and harvesting from traditional farmers.
“This will unlock enormous economic energy in the rural areas of the country, especially in the Eastern Cape, KwaZulu-Natal and Mpumalanga,” he said.
He said urgent work was being finalised by government to create an enabling regulatory framework for complimentary medicines, food, cosmetics and industrial products, aligned to international conventions and best practices.
We've moved backwards because now they are saying even the non-psychoactive cannabinoids are schedule 6, which makes zero sense and is outside what's happening globally
— Gabriel Theron, CEO and founder of Cilo Cybin
This includes reprioritising departments' budgets to support traditional, black farmers, and align South African Police Services enforcement with regulatory reforms.
But the industry faces a new hurdle.
Last year the South African Health Products Regulatory Authority (SAHPRA) classified products that include cannabigerol (CBG), a cannabinoid, as a schedule 6 medication. All cannabinoids excluding CBD were now schedule 6.
CBG is one of many chemicals found in the cannabis plant, which contains at least 70 distinct compounds — the most popular being tetrahydrocannabinol (THC) and cannabidiol (CBD). THC is a cannabinoid that produces a psychoactive effect but also has medicinal advantages. CBD is a cannabinoid with mostly medicinal properties.
CBG's schedule 6 classification means consumers require a doctor's prescription to buy the medication.
SAHPRA has put limitations on the dosage of CBD products. Any product with less than 600mg per package and less than 20mg per dose is allowed without prescription, but above that a doctor's prescription is needed.
Warren Schewitz, CEO of Goodleaf Wellness, which recently listed some of its products on US e-commerce group Amazon, said the dosage limitations could also hamper local companies' ability to grow globally and deprives consumers of experiencing the calming effects of CBD. He said South Africa has the lowest recommended daily dosage of CBD while, for example, Australia is on 150mg and the UK on 60mg. “Its surprising that this has not been reviewed,” he said.
“There is a huge opportunity in the industry and it needs to be enabled by the government. But we recognise that it is a challenging process [as] there are multiple stakeholders involved and we hopeful that with co-ordination we will get there.”
Theron said hemp farmers started producing CBG because it was not regulated and is in high demand globally.
The number of jobs the cannabis industry could create.
— IN NUMBERS: 130,000
Cilo Cybin's cannabis oil products for sleep, pain and inflammation are sold on e-commerce sites such as Takealot and at some independent pharmacies.
SAHPRA spokesperson Yuven Gounden said all cannabinoids structurally related to THC fall under schedule 6. CBG “is a homologue” of THC, meaning it also produces a psychoactive effect.
Gounden said “the industry or any other person or association may make submission to SAHPRA to request review of the scheduling status of a substance, in line with existing published guidelines”.
Herschel Maasdorp, director for business development at Labat Healthcare, said while the company is aware that CBG (though it is also a compound of the hemp plant) falls into the medicinal category as a cannabinoid, the direct implication is that while hemp growers are permitted to grow hemp by the department of agriculture, land reform & rural development, the crop delivers a product (flower) or compound — CBG, a substance which is prevalent in the hemp plant — that falls inside the jurisdiction of SAHPRA.
“By strict definition, SAHPRA does not preside over hemp cultivation,” he said.
Labat Healthcare, which is a division of JSE- and Frankfurt-listed Labat Africa Group, covers the entire value chain of cannabis, from planting the seeds to retail.
The department, which has issued 371 hemp permits, published a draft cannabis master plan two years ago that aims to provide a framework for the development and growth of the sector.
Spokesperson Reggie Ngcobo said the master plan “has been extensively consulted and presented to several interdepartmental and inter-governmental structures. To better inform the interventions required in the CMP (cannabis master plan), targeted value chain research is being undertaken.”
The draft master plan aims to, among other things, improve the country’s seed production capacity, as well as the development of cannabis processing plants and storage facilities.
Maasdorp said the cannabis industry is a poised to boost economic growth. “While the legislative process has been put in motion, the country’s biggest challenge is translating projected growth figures into real-time economic activity where much progress has not been made. An enabling framework needs to be developed to activate all elements of the value chain, including growers, funders, and investors.”
He said South Africa has a good reputation internationally for quality of product and it is rated as number one in Africa for technical competence and cost of production.
The favourable climate, arable land and pre-existing experience in farming and hemp production “hold promise for the sector to thrive; however, various legal, political, economic, regulatory and social obstacles are standing in the way of the sector’s potential. This would also mean overcoming the negative stigma of cannabis as a narcotic tied to illicit trading,” Maasdorp said.
He said the sluggish regulatory process is due to cannabis’s stigma as a narcotic tied to illicit trading. Development banks and potential financiers are reluctant to invest in cannabis because of its legacy reputation, which is not yet dealt with as a new and emerging economic sector.
“They do not yet have a clear picture of what the commodity can bring to the economy.
“It is a double-edged sword where the government must ensure it creates an enabling environment and that the industry collaborates and brings the funders and financiers, still reluctant to invest due to its reputation, into the fold,” he said.
However, the absence of a “sophisticated policy framework is an absolute indictment on government and state agencies”, said Maasdorp.
Schewitz said while the government has put focus on the sector, “unfortunately, globally, things are moving quickly, and South Africa could lose out on investment opportunities because of a lack of a clear road map”.
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