Where's the Market?

With over 130 cultivators licensed by the South African Health Products Regulatory Authority (SAHPRA) and approximately 1,100 hemp-permit holders, the sector has collectively invested over R2.6 billion in infrastructure. However, a critical question remains: where is the market for these products?

Shaad Vayej from OpenFarms succinctly noted, “Without offtake agreements, cannabis farmers are just growing grass.” This statement underscores a fundamental flaw in South Africa's emerging cannabis industry, which poses serious financial risks for licensed growers. The focus has primarily been on cultivation, with insufficient emphasis on developing marketing mechanisms for both medical and industrial cannabis.

Currently, fewer than 20 of the 130-plus SAHPRA license holders are actively exporting "bulk" cannabis. Consequently, a substantial amount of capital remains unproductive; investment data indicates that at least R2.6 billion has been spent on compliance and cultivation, with some players investing over R100 million in individual facilities.

Compounding these challenges is the fact that many commercial license holders did not establish compliant standards from the outset, forcing them to reinvest and redevelop their operations. Existing laws prevent growers from selling unsold stock in the local market, leading some to take the risk of illicitly offloading products for financial survival.

Nexus Established to Move SA Product Abroad

Nexus Pharma, founded by cannabis industry veteran Johann Slabber (pictured above), has now entered the picture. Slabber has positioned the new company as a specialized processing and marketing network aimed at revitalizing South Africa’s cannabis sector. With representation in the UK, Europe, and Australia, Nexus's primary focus is to facilitate the export of South African cannabis products.

In an exclusive interview with Cannabiz Africa, Slabber describes Nexus as an ‘agri-pharma’ company. He says  the firm will not become involved in cultivation but will concentrate on processing and trying to create a robust export market through best practices and agri-processing techniques.

Backed by a significant player in the German cannabis industry and with the backing of  local capital, Nexus has secured substantial investment to develop two processing facilities—one near Pretoria and another in Cape Town.

The Gauteng facility, described as "one of a kind," is slated to begin operations in 2025, with the Cape Town facility to follow. Both locations will serve as bio-hubs focused on agri-processing, catering not only to cannabis but also to other plant-based and scheduled pharmaceutical products. Slabber says the amount invested remains confidential at this stage.

Group Set to Export 10 Tons of Cannabis Next Year

“In setting up Nexus, we wanted to align with South Africa’s overarching cannabis strategy,” Slabber tells Cannabiz Africa. “Rather than focusing on cultivation like many others, we aim to advance the industry by adopting direct commercial strategies. With a demand for over 10 tons starting of cannabis per year, we are excited to start operations in 2025.”

The company plans to produce cannabis tinctures, topicals, extracts, and creams, with future phases focusing on pharmaceuticals. Slabber envisions significant opportunities in modified foods, medical foods, and specialized dietary supplements, extending beyond cannabis to include complementary health products and plant-based Schedule 0 items.

Absence of Standards and Norms is a Major Challenge

A major challenge facing the local industry is the absence of established standards and norms. “We hope to play a pivotal role in developing benchmarks that will enhance South Africa's competitiveness on the international stage,” Slabber remarks.

To facilitate this, he is exploring the establishment of a private sector body—designed to develop industry standards and advocate for regulatory improvements.

“We have approached various stakeholders in both the private and public sectors and will be announcing important developments in 2025,” he states.

“The private sector urgently needs a representative body to assist the government in enacting effective legislation that can unlock the domestic cannabis market.”

Slabber says that since cannabis was legalized seven years ago, South Africa has yet to establish itself as a player in the global industry.

“Given our favorable production costs and potential economic benefits, we should have been a key player already.  But fortunately, even though there have been missed opportunities, it is never too late” he says.

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