There have been some big movements in the South African cannabis industry recently and, considering our economy is in desperate need of a budding (pun absolutely intended) industry to create jobs and economic activity, perhaps this new market could be the extra impetus we need to recover from the economic devastation caused by the pandemic.
Business Insider reported on a story last week about major South African cannabis companies completing a merger that is worth R650 million. This follows a series of developments among both the government and private investors.
While the government has announced plans to implement a “master plan”, which would roll back regulations on the South African cannabis industry to promote exports and economic development.
Goodleaf, South Africa’s first legal, commercial CBD store, opened in the centre of Cape Town in May 2019 recently announced a merger with Highlands Investments in a deal worth approximately R650 million. Meanwhile, Leaf Botanicals, one of the few holders of a commercial growing licence from the South African Health Products Regulatory Authority (Sahpra), was recently offered R11.25 million for a 75% stake in their operation. The company that proposed the acquisition, Labat Africa, has also been teaming up with American company, Ace and Axle to produce and sell other CBD products.
There is tremendous room for growth in the industry, and it’s estimated that the South African cannabis industry (which is currently still largely underground) can be worth up to R27 billion by 2023 and would create and/or formalize as many as 900,000 small scale farming operations to support the industry, which are currently excluded from the formal economy.
Considering the dire need for just one economic win in South Africa, the cannabis industry is a ready-made solution. The industry and its infrastructure exists… all it takes is to fix regulations so that the black market can go above ground, make the industry safer, collect more tax and inspire an economic boom that will reverberate throughout the country.