South African State of Gauteng to Build Country’s First Cannabis Hub

South Africa’s premier, David Makhura, has announced plans for a $3 billion hub in the Vaal River Area.

For all the delay and excuses to be heard on the cannabis reform front just about everywhere else right now, one region of the world has the issue on a fast track. South Africa’s president, Cyril Ramaphosa just declared in his recent state of the union address that the country was moving forward, finally, to regulate the industry, create jobs, and create much needed income for the country.

Now comes the news that this country is moving to create a multibillion dollar cannabis “hub” in Gauteng. David Makhura announced that the project, located at the Vaal River, would include a green hydrogen innovation centre, an aerotropolis, an aerodrome, and a steel manufacturing sector. The four municipalities in the district have collectively made land available to create a Special Economic Zone.

Even more intriguingly, there have been other hints that this area of the country, also known for its gold mines, has been looking to cannabis, including for environmental remediation.

It certainly does not sound like the powers that be are going to wait around much longer to get things going. It is clear that the South African government has identified cannabis as a key economic differentiator for the country in the coming years.

Moving The Pending Legislation Forward

The Cannabis For Private Purposes Bill is currently moving forward in Parliament, this time with a little more speed. It was introduced in September 2020 and has been delayed both by COVID and bickering about the particulars. However, in its present form, the draft bill says that an adult may possess cannabis for personal use. Such individuals may also possess a limited number of plants, cultivate those plants in a private place and if found in possession in a public place, not be charged if this amount is within the law.

While the bill has been criticized, including for putting more burden on the poor who do not have access to such privacy, it is likely to move forward, at this point, given the political heavy-hitters now coming to the plate to support it.

Where this leaves cannabis clubs is still another question. However, what the passage of the bill will mean is that South Africa appears to be on track to both pass legislation and have projects in the hopper as early as 2023.

Implications and Impact

The South African cannabis discussion is an interesting one for several reasons, if not continents.

The first reason is that this exported crop means money for a country and continent now looking to reinvent itself in the 21st century. 

Beyond this, geopolitically however, there is also this intriguing twist. Chinese investments, which are happening all over Africa, have focused so far on building roads and other infrastructure. Given the current climate in China proper on the cannabis conversation, this pretty much leaves such investment in Africa out (for now). That also means that by focusing on cannabis as an economic builder and infrastructure focus, Africa may well be the first place that Chinese, American, and Canadian money come together and build sustainable, if not green, infrastructure with a cannabis theme.

But the significance of all of this will be felt far down the line. The impact outside of Africa is also going to be significant, and indeed it already has. Israel, Germany, and Macedonia, for starters, are lining up to purchase African-grown, medically-certified weed, simply because it is cheaper than growing it domestically. To put all of this in perspective, one can find African cannabis producers who are willing to meet the price set by the German bid for cannabis cultivated in Germany. This means that German producers will not maintain a price advantage, and further, everyone else (including producers from Portugal, Greece, and Columbia) will have to lower prices to meet the challenge. It also means that for the first time, there will be price pressure on not only the German/Canadian companies who won the first German cultivation bid, but also Dutch Bedrocan, right across the border.

This is good for the medical reform question in Europe right now because it also creates impetus on the industry to lower prices, and thereby help insurers see the light when it comes to approvals. There is a fierce battle currently underway at the moment of insurers now fighting back, even when a doctor prescribes cannabis, simply because of the cost. What it means for the recreational discussion is also an intriguing twist that will no doubt play out in the next several years, particularly in Europe.

African cannabis is certainly a game-changer for all of that — in addition to the significant impact it will also have locally.

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