Developing an industrial cannabis economy is the National Cannabis Master Plan’s main priority, but significant challenges face the 2 000 or so hemp permit holders who are expected to be the foundation of the new sector.
For the sector to fulfil its potential, key fundamentals need to be addressed, according to Zegeta Consulting’s paper Commercialisation Pathways for the Industrial Hemp Sector in South Africa, a succinct overview of the local hemp industry prepared for the Local Industrialization Support programme and presented to Government on 26 May 2026.
Zegeta ‘conservatively estimates’ the local industrial cannabis value chain to be worth around R7.3 billion today and projected to reach over R40 billion over the next 15 years. But to get there primary constraints have to be overcome, says the including “costly, often unreliable, and long supply chains of imported hemp products” and the capacity to convert farm produce into hemp products for end users.
Those are sector issues that have to be addressed, but right now prospective hemp farmers are facing more immediate challenges: as planting season approaches there is the shortage of appropriate seeds, and the ongoing legal ambiguity around regulations, and the prospect of a massive dump of US hemp seeds before November 2026.
Definition of cannabis as an agricultural crop is still pending
Although the publication of new regulations governing the Plant Improvement Act in December 2025 provided a framework for hemp cultivation, the redefinition of cannabis as an agricultural crop is still pending.
Cannabis remains defined as a narcotic in terms the Drugs and Drug Trafficking Act, and although its removal may be imminent, other legislative alignment is required. For instance, it is unclear whether hemp grown for CBD flower is regulated by the PIA or the Medicines Act as both have different rules about cannabinoids.
From a practical point of view, the more pressing challenges hemp farmers face is the shortage of seed.
Access to seed is an issue
South African Cannabis and Hemp Development Association (SACHIDA) deputy chair, Cian McClelland tells Cannabiz Africa that finding the right seed for right purpose is an issue.
“One of the biggest constraints facing South African hemp farmers today is seed access. The ARC varieties currently available were developed for fibre production, so growers looking to enter the cannabinoid or nutritional supplement markets have very few locally bred grain options to work with.”
McClelland says the seed shortage highlights a deeper issue around importing genetics. “Even where a suitable variety exists, volumes are the problem — there isn’t enough certified seed in the country to supply the industry at scale. That gap is driving farmers towards imported seed, which may solve a short-term supply problem but comes at a real cost.”
Hemp varietals registered in South Africa
According to Zegeta, five known cultivars have been submitted for varietal listing under the Plant Breeders Rights and Plant Improvement Acts:
- ARCAN 001 (local),
- ARCAN 003 (local),
- NWG 2730 (North American),
- SAPA (East Asian),
- SABL8 (East Asian).
The danger of imported genetics
This real cost, says McClelland, is the danger imported genetics pose to local landraces: “Imported genetics are cross-contaminating our indigenous landrace cannabis populations, eroding genetic material that has adapted to South African conditions over generations and that we may not be able to recover once it’s gone”.
He says that without sustained investment in local breeding, South Africa runs the risk of losing its landrace heritage entirely and becoming permanently dependent on imports.
Beware possible massive US hemp seed dump before November
This speaks to a separate, but related issue. The changes in cannabis scheduling in the United States could have an unintended consequence in South Africa – the risk of a massive hemp seed dump by US farmers in the next few months.
“That is a real risk” says McClelland. “New federal legislation signed in November 2025 is due to take effect in November 2026, and it significantly restricts hemp grown for cannabinoid production. There are active efforts underway in Congress to delay or overturn the law before it takes hold, but as things stand, many American farmers are choosing not to plant this season rather than risk falling foul of the new rules. That’s likely to leave the US sitting on a substantial oversupply of seed with nowhere domestic to go — and South Africa, without safeguards in place, is an obvious dumping ground.”
Apart from the problems of what is going into the ground. There’s also the issue of what comes out of the ground at the end of the hemp harvest.
Offtakes: US out of the question, Europe more promising
“Offtake is another major challenge our farmers face” says McClelland. “With the changes to US legislation, large-scale offtake agreements for hemp flower into the United States are no longer viable, and South Africa has effectively lost that market for now — a significant blow to the industry.
“That said, we’re making strong inroads into Europe, and we’ve secured new offtake agreements there. They’re smaller markets for now, but the global hemp market is expanding rapidly, and we expect to grow alongside them as that demand builds.”
International developments are beyond the control of the local hemp industry and the best way to hedge against risks in the global market is to create local markets for hemp products.
International uncertainty reinforces need to build a local hemp market
McClelland says falling cannabis prices globally reinforce the need to build a local market.
“In some ways, this is forcing us to do what we should have been doing all along: developing our own value chain. Exporting raw flower has been a useful stepping stone into export markets, but it means we’re exporting the raw material and letting other countries capture the value of processing it.
We need to move towards processing hemp locally and manufacturing value-added products here, rather than simply shipping out raw material. It’s a difficult transition, but it’s also an opportunity — one that pushes us to build a proper local industry around value-added hemp products, instead of remaining a raw material exporter.”
According to Zegeta Consulting’s analysis of the hemp industry from May 2026, there were just short of 29 000 ha under hemp cultivation in 2025, with just over 50% of the permit holders being concentrated in three provinces: Gauteng, Eastern Cape and KwaZulu Natal.
Zegeta has identified the largest opportunities cluster for processed hemp products lie in food and beverages, retail pharmaceuticals, and textiles; with additional growth potential in chemical products.
It says there is “demonstrated demand from variety of downstream industries, in particular clothing, textiles, personal care, and foods and beverages, with examples of products already locally marketed by top retailers.
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