Speaking during the 2025/6 Budget Vote in Parliament on 4 July 2025, Department of Trade and Industry (DTIC) Minister Parks Tau has finally put some government figures on the table as a metric for quantifying South Africa’s legal cannabis industry. Without providing details on how he arrived at the figure, the DTIC Minister said the country’s cannabis economy is valued at around R14 billion. He said the DTIC projected an annual 10% growth of the industry going forward.
The details are significant as the National Cannabis Master Plan (NCMP), which is led by the DTIC, has valued the South African cannabis industry at R28 billion. The fact that Tau has shaved off half the value of his own department’s estimates shows just how questionable any figures are for the sector. It may well be that both of these valuations are completely wrong and are underestimating the de facto value of the industry by billions and billions of rand.
So who is throwing around what figures?
A market projection from April 2024 determined that South Africa’s “formal cannabis industry has the potential to create up to 25,000 jobs and could be worth around R28 billion.”
A separate projection from Prohibition Partners in 2019 forecast the value of the South African medicinal cannabis market and the recreational cannabis market at R11 billion and R20 billion by 2023, respectively.
Statista lists the following information regarding South Africa’s emerging cannabis industry:
- South Africa is expected to see a revenue of US$308.20m in the cannabis market by 2024;
- The revenue is forecasted to display an annual growth rate (CAGR 2024-2029) of 1.19%, leading to a market volume of US$326.90m by 2029;
It’s clear that there is no unanimity in the figures, but Statista’s valuation does not appear grounded in reality either. It’s not clear what the base assumptions are by any of the parties above in arriving at values.
A major problem in making a realistic assessment of the value of the local cannabis industry is that the multi-billion rand retail ‘Grey Zone’ has not been factored into the equation. There could be up to 5 000 unregulated cannabis operations in the country, trading openly under a variety of guises, but mostly in brazen defiance of the law.
Conservatively, if the average monthly turnover per outlet is R50 000, this equates to a whopping R250 million a month being generated by the sector that’s exploded in the past three years.
In many ways the ‘Grey Zone’ is doing part of Government’s job in that it the visible face of cannabis reform. As unregulated as it may be, it’s created thousands of new businesses and possibly 20 000 jobs (assuming at least four people are employed by the 5 000 outlets)
However, the regulation of unlicernsed cannabis operations and the revenue that could accrue to Treasury, are not even mentioned in the DTIC’s main objectives in implementing the NCMP. According to Tau, the DTIC is to focus on developing:
- mega-aggregation schemes,
- dedicated hubs,
- and pioneering Cannabis Indigenous Knowledge Sandboxes;
He said this would create new opportunities in rural areas and bring in significant forex.
But, as one investor, who wanted to remain anonymous, yet has significant interests in the cannabis sector commented:
“The worrying thing about the DTIC is its grasp of reality. One would have thought that some form of intervention in the ‘Grey Zone’ would be a priority, given that it’s robbing money from the fiscus, has a direct impact on consumer safety and is playing into the hands of organized crime. Sure, I understand that legacy farmers have to be brought into the fold, but it feels like they’re avoiding providing clarity on critical issues such as interim regulations, standardization and recognition of private clubs.
“And underlying this all is a complete lack of urgency about cannabis reform. It pains me to think how much all these people are being paid to muddle around with master plans and committees and consultations while legitimate players in the industry are under constant penalization”.
In the meantime, the DTIC is yet to release its draft cannabis commercialization policy document for public input although it says it has consulted certain stakeholders. This has prompted calls for more transparency about the consultation process and questions as to why the document remains under wraps.
#
