‘SA well-positioned to become leader in cannabis production’

South Africa has the potential to position itself as a global player on the global cannabis market. This was according to Stephen Murphy, CEO of Prohibition Partners, speaking during an online media briefing hosted by the European Delegation to South Africa.

‘SA well-positioned to become leader in cannabis production’
Focussing on the quality and consistency of products will distinguish South African cannabis producers from their counterparts elsewhere in the world, says Stephen Murphy, CEO of Prohibition Partners.
Photo: FW Archive
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Murphy said regulatory progress made in the past five years had allowed South Africa to catch up with other countries that had legalised cannabis production earlier. To date, the South African Health Product Authority had issued 55 cannabis cultivation permits.

Limited access to the legal medical market for patients, equity concerns with regard to traditional farms, and the scope of hemp licenses were nevertheless holding the industry back, he said.

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Despite this, South Africa had several advantages that could help turn it into a global cannabis leader, he said.

Murphy pointed out that most cultivation projects had so far focussed on the production of flowers and extracts, primarily for sale as bulk, active pharmaceutical ingredients, to countries such as Israel, Germany, Australia and the UK.

While the market was still new, exporters had nevertheless already distinguished themselves from “cheap suppliers” of raw material, such as those in Colombia, Uruguay and Jamaica, according to Murphy.

This had been accomplished by focussing on the quality and consistency of products, and complying with the European Medicines Agency’s Guideline on Good Agricultural and Collection Practice, which is seen as the highest international production standard.

“In this market, it is not about being the largest or cheapest producers, but about delivering the required product at the right price, with off-takers in Europe, Israel and Australia primarily on the lookout for new offerings in terms of quality and consistency of supply,” he said.

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South African producers were also fostering strong partnerships with licensed manufacturers and co-packers in import countries to help them navigate and overcome stringent export requirements.

“The market has become increasingly competitive, with margins coming under increased pressure. Partnerships will become a key ingredient to market success in the future,” Murphy said.

In addition, Murphy said he also believed that the “grown in South Africa” selling point and the South African terroir would be turned into value-added factors as the regulatory environment became clearer.

This would allow South African expertise and product development capabilities to become a selling point on the European market.

He said he also expected South Africa to become a hub for breeding of cannabis start-up materials on the African continent, both for hemp and medicinal crops.