Image courtesy Unsplash.
Many governments are hoping to benefit from the rapidly expanding medical cannabis market but the reality is that there are high barriers to entry and the current export-only model will not lead to inclusive economic growth. That’s according to research published in September 2026 in the International Journal of Drug Policy
Government’s stated objective is for South Africa to be a leading producer of medical and industrial cannabis. However, a study published this month into the global cannabis value chain, cautions government from expecting that South African medical cannabis exports will provide any of the outcomes it seeks in the National Cannabis Master Plan.
The paper, Value capture in the emerging medical cannabis global value chain: insights from South Africa by Andrew Bowman, kicks flat the notion that medical cannabis exports will create jobs or reduce poverty.
He says South Africa, like many emerging cannabis economies, has high hopes that it can participate meaningfully in supplying the global value chain (GVC) and that this will lead to economic development back home, but that the evidence demonstrates the opposite.
Bowman writes that the GVC, an international network linking producers and consumers through multiple intermediaries, has rapidly emerged in recent years to connect geographically dispersed cultivators and consumers of legal medical cannabis.
The Commoditization Trap
“This is commonly presented as an important new economic development opportunity for low- and middle-income countries with favourable agro-ecological conditions” he writes, but concludes, that this is a “commoditization trap”
Bowman’s research drew on 34 semi-structured interviews conducted between 2021 and 2024 with a range of stakeholders in the medical cannabis GVC, including cultivators, brokers, consultants, and civil society. His paper analyses the growth of the legal medical cannabis GVC in South Africa, a major emerging supplier, focusing on how chain governance and power relations shape processes of inclusion, exclusion, and value capture.
“Interviews reveal that cultivators face intersecting challenges: regulatory complexity, increasingly intense competition, bargaining power imbalances, and a demanding series of quality conventions in which the sensory and aesthetic qualities of an artisanal product must be combined with pharmaceutical rigour” he writes.
“Barriers to entry are high, and costly upgrading processes are necessary to avoid falling into a commoditisation trap as easily-replaceable suppliers of a generic good, subject to ‘race to the bottom’ competition and price volatility.”
Medical Cannabis Exports Won’t Grow the Economy
Bowman concludes that his findings “undermine aspirations for medical cannabis exports to serve as an inclusive economic development opportunity for small-scale cultivators in the Global South”.
He says government would have to invest heavily in the sector and create appropriate policies if it was to be serious about participating in the global medical cannabis market.
“GVC participation requires major capital expenditures and advanced capabilities. Overcoming these challenges would require significant policy support.”
This is an excerpt from Bowman’s paper Value capture in the emerging medical cannabis global value chain: insights from South Africa, International Journal of Drug Policy, September 2026.
“Despite a wave of investment in over one hundred licenced facilities, few have been able to establish themselves as exporters. Meanwhile, legal ambiguities arising from the reform process, mean this particular permutation of the growth of the legal cannabis industry has reshaped the nature of South Africa’s illicit cannabis markets in a manner which potentially harms marginalised traditional growers.
The complexities of securing equitable pathways to cannabis legalisation, and at a broader conceptual level, GVC formation can produce new forms of inequality and exclusion.
The case casts doubt on the widespread assumption that the medical cannabis GVC provides significant inclusive development opportunities for small business and as a means to formalise illicit cultivators – though it may of course nonetheless provide a useful new source of high-value exports and skilled agro-industrial employment.
Rather than a qualitatively new kind of opportunity, medical cannabis exhibits barriers to participation common to other agri-food GVCs but in a more extreme form given the higher quality and regulatory standards associated with medical products, and the operational and regulatory ambiguities relating to the early stage of the industry.
Overcoming these barriers, and avoiding what appears to be a growing risk of a commoditisation trap, will require concerted support from state and industry bodies for competitiveness, innovation, and market access.”
#
