πŸ”’ Cannabis: Break Pretoria’s bureaucracy and SA will lead world in booming sector

In a jovial manner Finance Minister Tito Mboweni tweeted over the weekend that ‘legalising this thing (cannabis) = more tax revenue. I need more tax (money) urgently!! Radical Economic Transformation!. On the serious front Mboweni has to deliver a budget plan at the end of the month and needs to fill what is expected to be a monthly R25bn tax hole. And when one deals with finances there are two options, cut spending or raise income. Pierre van der Hoven, familiar with the cannabis industry, supports the urgent call to legalise the industry, as South Africa loses out to less favourable locations such as Canada. It’s a discussion with Biznews editor-in-chief Alec Hogg that’ll hopefully get those involved off their butts. – Stuart Lowman

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Pierre van der Hoven, no relation to the van Hoven’s at Comair, which is a pity as we could have got some further insight into what is happening there. However we have a more interesting discussion on a fascinating situation here in South Africa where the minister of finance who has a farm in Magoebaskloof has got cannabis plants or dagga as its known in South Africa growing wild. He says on Twitter come and arrest me if you think this is illegal, however South Africa needs the tax money. It would make sense to legalise this industry as we could be one of the best in the world. So you’re in it now, how did you get into cannabis?
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I grew up in the Eastern Cape where people were farming it illegally and earning a small income, so I kept an eye on the international markets where it was legalised and last year it was fastest growing industry in the world. Two years prior to this I did a consulting job for the government about the economic opportunity and since then have been working to set up a cannabis company in South Africa as well as getting involved in some policy issues.

Why have the Canadians got the jump on us. There are billion dollar companies in this field based in Canada where cannabis is not wild or prolific like it is in South Africa.

The history goes back to when the United Nations sent out a single declaration and declared this plant illegal with no benefit to mankind and classified it in the same category as heroin. Many countries signed this declaration including South Africa. Canada later broke ranks, launched this massive billion dollar industry and they’re world leaders now. There are other countries with progressive drug policies like Portugal and Uruguay. South Africa decided to legalise medical marijuana a few years ago and there is a process now to issue licences. However the set up is still bizarre as you can’t ban a plant, for example if you bought a poppy seed, no one would be afraid you would start an opium farm.

So had South African authorities back then followed suite with Canada we might have had a multi-billion dollar industry?

Yes, probably stronger. We would be addressing unemployment issues and economic growth, particularly in rural areas. We would have generated probably over a million jobs by now. It is an absolute wasted opportunity and we couldn’t be better suited as a country anywhere else in the world. It grows wild here.

The past aside. Many countries, including many US states, have legalised marijuana.Why has the South African government not grasped the nettle given that even the finance minister says they should?

It’s a similar question as to why so many mistakes in the management of our country happen. There are probably elements of capacity and lack of knowledge. Also turf wars where each department wants to claim this as their area and the process itself getting bogged down in bureaucracy causing frustration, which we see with the Minister of Finance who wants to move with this. 18 months ago our Constitutional Court declared private use legal, which took us right to the two of the most liberal countries in terms of attitude towards consumption, however the guidelines have never been issued and it has become a debate about recreational use of cannabis. The debate should be about how can we launch a world standard competitive industry. We should be talking about job creation, the medical field and growing hemp on an industrial scale which can solve all kinds of environmental issues.

Lets hope someone listens to Tito and makes this thing happen as it sounds like it’s a huge industry that’s available. I read on Google this morning on Motley Fool where they’ve got three tips on the three best cannabis stocks. For instance one that that extract the THC and CBD, which is the hallucinatory part of it. Another that offers the lowest growing cost in the world, one can imagine what would happen if South Africa was there. And the other one is a company that distributes or actually acquires properties which they then lease to cannabis growing companies. I mean there’s extraordinary diversity already in an industry that it seems they are so far ahead of us. How does South Africa leapfrog this?

There are already some initiatives underway. One is to reclassify cannabis as a plant and ingredients from cannabis like THC or CBD. The Department of Agriculture will take over hemp and issue permits quickly, which will help the industry. On the investment side, the private sector is waiting Some of the big banks are very interested. There’s a conference coming up so I think we just need to unlock the issue with the permits and start issuing the licences because that’s where it all starts. If you if you want to take a chance the risk is you end up in jail. The Hawks have been raiding people who’ve applied for permits. The arrests are continuing so it’s just far too risky to do anything until you have some kind of legal endorsement from the government. So the key to everything is issue permits and issue licenses. SAPRO, along with the Department of Health are responsible for that but are also an institution which was huge capacity issues.

We know that there are many junior miners in South Africa that are listed on other stock markets: Toronto, Sydney, Perth etc that are exploiting South African reserves and then benefiting the shareholders in those countries. Are they any international players? I guess you could point to the Canadians who are doing the same in South Africa or in Southern Africa?

The Canadians are here in force. The world knows that when South Africa starts because of its infrastructure, financial systems and climate it’s going to be a massive force in the industry in fact it could dominate global production of cannabis. The Canadians have been here for years. They are hunting for the top strains, and probably the most valuable strain comes from South Africa and we are losing all IP around that. There was an announcement of a R2.5bn indoor facility in Cape Town. The international community wants to turn Africa into a raw material supplier based on low cost production and we cannot let that happen. We need to beneficiate their value in our country if we really want to benefit from this industry.

Unintended consequence if we are now allowed to smoke Mary Jane and get in the car and drive. Surely that’s a risk to an already high accident rate?

Well you know that the law already says you can smoke privately so we’ve already got that. We are already one of the biggest suppliers in the world and we have been for years so the production capacity is already here. So this huge area of diversion to me is a complete smokescreen. If you really want to buy cannabis you can buy it within 3kms of your house. What we need to do is include the illegal market. We’ve already got a legal market for personal consumption but even less strange is you can consume it, you can carry it but you can’t buy it. Well then where do you get it from? You have to grow it, but not everyone can grow their own cannabis. So even our laws are contradictory.

Lots to fix up on that side. Pierre van der Hoven giving us a fascinating insight into an industry where South Africa could be, should be the world leader. We just need to get off our butts and make it happen.