South Africa’s unregulated cannabis ‘Grey Zone’ growth has probably been the fastest growing consumer retail segment the country has experienced this century.
Yet, because it has been mostly illegal, it has flown completely under the official radar and has not been measured or monitored in terms of performance.
Under the leadership of the Department of Trade, Industry and Competition (DTIC), the Cannabis Master Plan is beginning to take shape and with urgent interim measures being developed to regulate the runaway ‘Grey Zone and an overall plan to have a legal, regulated adult-use market by mid-2027.
April Deadline for Cabinet to Consider Cannabis Commercialization has Been Missed
However, the April deadline set out last year for the draft commercialization policy to be put to Cabinet and thereafter for public comment looks like it will be missed. That, along with the delays in finalizing the regulations for the Cannabis Act which as of last week is under legal challenge, has dented the proposed time-line for legislative action and the anticipated new over-arching cannabis law is not likely to be ready for another two years.
While government bureaucrats are still debating the proposed rules for cannabis commercialization, the market has already spoken. Loudly.
In the absence of new regulations and the inability/unwillingness of SAPS to enforce the existing law, cannabis retail has exploded. Driven by unleashed consumer demand, an entire supply chain has developed to support the 8000 or so illegal outlets and 2 000 or so private clubs that have surfaced around the country.
From figures bandied about during the DTIC’s first parliamentary meeting on cannabis commercialization, held virtually on 6 March 2026, it was estimated that over 500 tons of cannabis flower is moving through the Grey Zone as well as an unknown number of edibles and other cannabis products.
Regulatory Uncertainty Likely to Prevail Another 2 Years
Although the DTIC is looking at an interim licensing system for cannabis retailers before an overarching ‘omnibus act’ is drawn up, this is proving to be complicated. Cannabiz Africa understands that the Small Business Development Department, which is drafting new regulations for a new Small Business Act, has expressed concern that it does not have the skills or capacity to deal with cannabis licensing.
It is beginning to look unlikely that Parliament will finalize the new omnibus bill by its mid-year deadline as the draft policy still has to be considered by Cabinet and put out for public comment before being submitted to the legislative process.
The DTIC is also in favour of bringing private cannabis clubs into new regulations, but this has been met with resistance by the Justice Department. Spokesperson Makubela Mokulubete told MP’s that the Department did not favour the recognition of not-for-profit cannabs clubs in terms of the Cannabis Act regulations, even though it has not yet completed its review of the public submissions received.
And Then There’s Prince….
A further complication has been the legal challenge launched by Cannabis Development Council of SA chair Gareth Prince in the Western Cape High Court on 14 April 2026. The urgent application, which will be heard again on 8 May 2026, maintains that the Act is unconstitutional and should be set aside. It also calls for an immediate halt to cannabis arrests.
Even if Prince’s application is not successful it could be subject to court process for months to come, which means that the Cannabis Act is unlikely to pass into law this year. That in turn means that cannabis will remain classified as a narcotic under the Drugs and Drug Trafficking Act, which in turn prevents the plant from being officially becoming an agricultural crop in terms of the Plant Improvement Act.
Charl Botha, H3’s legal strategist, who presented to Parliament on 6 March 2026, believes the issues run much deeper than a lack of legal clarity.
No Clear Path for Bringing Cannabis Into the Tax Net
“When the numbers keep shifting depending on who is speaking, Parliament loses a shared point of reference,” Botha said. “The scale of the opportunity, the urgency of reform, and the level of intervention required all become blurred.”
“The question is how to bring an existing multi-billion rand market into the formal, taxable, and regulated economy,” says Botha.
He says that after eight years of unregulated growth, an established retail network is embedded across South Africa’s cities, towns and rural supply chains, with a wide array of businesses turning over anywhere from R100,000 a month to R100,000 a day. With uncertainty still prevailing on which specific mechanisms will be used to regulate the ‘Grey Zone’, the cannabis economy is likely to remain semi-underground for the foreseeable future.
The long and the short of it is that the lack of clear regulations governing the domestic cannabis market is likely to persist beyond the end of the year. The renewed momentum of cannabis reform may well stall, leading to the ongoing criminalization of cannabis stakeholders and their understandable frustration. It also means that meaningful investment in the sector is not likely to occur in the next 12 months.
Unless, the DTIC can find renewed energy, it’s unlikely that there will be any law governing the commercial trade in cannabis before mid 2028.
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