The SA medicines' regulator has awarded its first batch of licences for cultivating cannabis for medical purposes to local companies, reports Business Day. This paves the way for them to gain a foothold in an international industry projected to be worth $50bn in the next decade.
Local players need to comply with stringent regulations put in place by the South African Health Products Regulatory Authority (SAHPRA) to capitalise on this rapidly growing market. These rules are intended to protect consumers and ensure that cannabis grown for medical purposes is not diverted to the black market.
But, the report says, the slow pace at which SAHPRA has processed cultivation licences has frustrated many players, and cost at least one local player a potential investment partner. In 2018, Canadian-based LGC Capital pulled out of its option to acquire a 30% equity stake in KwaZulu-Natal’s House of Hemp through its joint venture with AfriAg because House of Hemp did not have the requisite commercial licences.
The report says House of Hemp is now among the first recipients of SAHPRA’s cannabis cultivation licences and is set to begin talks with a range of potential investors, according to CEO Thandeka Kunene. House of Hemp has partnered with Cape-based agri-processing firm Afriplex to extract the products required by some of its potential customers. It also expects to supply customers with buds harvested from the crops it cultivates at its greenhouse in the Dube Trade Port’s Agrizone precinct.
"Our government, SAHPRA and the Department of Health have set up a new industry, because they have issued commercial licences. The onus is now on us in the private sector to get foreign direct investment," Kunene said. It had taken a year for SAHPRA to approve House of Hemp’s cannabis cultivation licence.
The licensing system for cultivating medical cannabis has been in place since November 2017, but the report says, SAHPRA has only recently begun awarding licences to applicants that meet the regulator’s requirements. SAHPRA’s head of law enforcement, Griffith Molewa, said several licences were awarded, but declined to provide further details, saying SAHPRA would issue a statement at a later stage.
House of Hemp’s cultivation licence is expected to stimulate the entire value chain, as potential customers for medical cannabis products need to know that the product can be traced from the farm to the pharmacy shelf, said Afriplex CEO Danie Nel. SAHPRA’s granting of the licence would set in motion a process that would lead to the standardisation and scientific formulation of cannabinoids for medical purposes, ensuring consumers had access to safe products that were of a consistent quality, he said.
The two key compounds of interest in cannabis are THC (delta-9-tetrahydrocannabinol) and cannabidiol.
Afriplex had analysed more than 120 products sold in South Africa in the past year and found the majority were illegal and of "horrific" quality, he said.
The report says SAHPRA warned consumers in February that it had not registered any medical products containing cannabis, and all those currently sold were illegal.
[link url="https://www.businesslive.co.za/bd/national/2019-04-02-regulator-awards-first-batch-of-medical-cannabis-cultivation-licences/"]Business Day report[/link]