This article is an excerpt from Sihobo’s piece in Agricultural Economics Today: What is going on with the Cannabis Market? Published on 10 January 2025.

For many in South Africa working on the Cannabis and Hemp Master Plans, global developments in the cannabis market are worth monitoring to learn from the legalization experience of these countries.

The goal is to enhance the South African regulatory path.

Yes, we have been slow in providing a new and clear regulatory path for this plant, and the licensing price has been somewhat prohibitive for some people.

What is often puzzling for me in South Africa is the proliferation of cannabis shops and various products that retailers place on shelves. Do people have clear regulations or licenses to put up all these stores?

(Hallo Ntate’Ramasodi, DG of the Department of Agriculture 😊. I think it’s time for us to look closely at these products in stores.)

To be clear, I am broadly supportive of the cannabis industry, but the regulations must be followed, mainly when people sell things all over shopping malls and fuel stations.

When we finally progress with regulations, I still believe that cannabis could be a catalyst for revitalizing rural communities that are economically marginalized and excluded from the agriculture value chains. It could also create opportunities for cannatourism, especially in rural Eastern Cape, KwaZulu-Natal, and Limpopo.

South Africa still can build a competitive edge in the cannabis industry even though countries such as Lesotho are the first movers. Lesotho is building its cannabis economy on the back of low-cost labour, water abundance, relatively affordable electricity and high altitude, which reduces costs associated with pest management, thereby positioning the country as a key supplier of an organic variety of cannabis.

South Africa’s competitive advantage could be built on the back of a transparent and predictable regulatory framework, an open investment regime, strong research and development support, knowledge networks that bring together university researchers, centres of excellence, and other industry players; product quality and standards authority; and low-cost licensing regime.

However, we need to consider practical ways to ensure that production and value chains don’t mainly develop in areas that have always been the leading agricultural zones and urban areas with better access to investment.

The communities of the Mpondoland region of the Eastern Cape have been growing this plant in the shadows of the law for many years and should benefit from its liberalization. But does the government have a clear plan for mobilizing investment and value chain development in these regions?

The Eastern Cape, KwaZulu-Natal, and Limpopo provincial agricultural departments should lead and lobby their national colleagues to refine and craft the regulation to encourage investment in these provinces.

Wandile Sihlobo is the Chief Economist of the Agricultural Business Chamber of South Africa (Agbiz) and a Senior Lecturer Extraordinary at the Department of Agricultural Economics at Stellenbosch University. He is also a Visiting Research Fellow at the Wits School of Governance, University of the Witwatersrand, and a Research Associate at the Institute of Social and Economic Research (ISER) at Rhodes University.  Sihlobo was appointed as a member of President Cyril Ramaphosa’s Presidential Economic Advisory Council in 2019 (and re-appointed in 2022), having served on the Presidential Expert Advisory Panel on Land Reform and Agriculture from 2018.  He is also a member of the Council of Statistics of South Africa (Stats SA) and a Commissioner at the International Trade Administration Commission of South Africa (ITAC).