Germany is the Eldorado for South Africa’s medical cannabis exporters.

July 18, 2023 80

It’s billed as the ‘promised land. For South Africa’s cannabis producers, Germany is the ultimate export prize, but first, regressive policies at home in South Africa itself hinder accessing Germany’s fertile cannabis market.

“Germany is where the money is if we put our act together first,” industry player Dikeledi Matla, chairperson of the Soweto Cannabis Alliance Forum in Johannesburg, South Africa, says.

Germany’s appeal

The Prohibition Partners European Cannabis Report 7th Edition, says Germany’s medical cannabis patient demographic has soared dramatically since 2017. Early start medical cannabis companies in Germany are scooping the money e.g. the Frankfurt-based Cansativa Group has just obtained $15 million in investor funds, and Sanity Group, a Berlin start, has been handed nearly $76mn so far. In 2022, $0.4bn in sales of medical cannabis in Germany are expected, with $0.6bn hoped for through 2026.

The Soweto Cannabis Alliance Forum, whose goal is to prepare Black cannabis exporters in South Africa to lay a stake in the country’s expected tear for the German market, is worried that domestic cannabis obstacles in South Africa may block would-be exporters from taking advantage of Germany, Europe’s fastest growing medical cannabis market.

“It’s everything, unclear cannabis rules, and the big problem, it takes nearly a year for one in South Africa to obtain or get denied a grower’s permit,” says Matla.

Even though it is one of Africa’s most significant cannabis growers, the market for medical cannabis in South Africa is relatively tiny compared to Germany. “There’s no prize for guessing where the big cash for medical cannabis exporters in South Africa is: Germany,” Matla says.

Licenses roadblock

The biggest stumbling for aspiring medical cannabis exporters from South Africa is the South Africa Health Products Regulatory Authority (SAHPRA), a state body regulating animal and plant products. Cliffe Dekker Hofmeyr, the leading law firm in South Africa say, SAHPRA cannabis license fee costs ZAR 902 ($59) per hemp application, ZAR 23 980 ($1410) per medicinal application, an inspection fee of ZAR 714 ($42) per hour, and a fee of ZAR 3180 ($186) on picking up the hard copy license.

“We hear from those hoping to plant foot in the export side of things that it’s expensive and frustrating even to get a decision on the license,” says business leader Dennis Juru, president of The South Africa International Cross-border Traders Association.

For industry players hoping for a slice of the German export market, just applying for an exporters license from the SAHPRA gives a headache. “20 pages; that’s how big the medical cannabis application form is in South Africa,” says Matla.

SAHPRA is unapologetic and calls the process for obtaining medical cannabis export or growing clearance a ‘rigorous one. The agency says that South Africa is a signatory to the International Narcotics Control Board, so things can’t be rushed.

“Growing and loading medical cannabis onto a ship abroad to Germany might have potential significant margins of losses if, along the process, SAHPRA suspends your license during inspection of cannabis greenhouses,” says Matla.

‘By the time one wants to ship the product abroad, a significant loss would have been registered,’ Matla says.

Time waits for no one

If South Africa doesn’t expedite the internal hurdles facing her domestic medical cannabis exporters, nearby rivals like Lesotho and Zimbabwe will outpace her to grab a spot in the lucrative EU market.

“Lesotho is fast-forwarded. Their growth of contract cultivation models is outpacing South Africa’s,” says Carter Mavhiza, an independent public accountant. Lesotho obtained the sought-after EU GMP Approval in 2021, exploiting the know-how of its Germany-based partners.

Another potential rival for South Africa is nearby Zimbabwe. Zimbabwe doesn’t waste time, because the army and government are also players in the medical cannabis for export business. In September, an impressive 57 medical cannabis players were licensed, while the first batch of 30 tons of hemp to Switzerland in 2021.

“Their speed, ease-of-rule, focus, clarity on the EU export market – is absent here in South Africa,” says Matla.

Sources:

Written and Published by Ray Mwareya in Weed World Magazine issue 161

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