Regulatory clarity on recreational cannabis is critical for a commercial future

As South Africa positions itself for a transformative economic opportunity with cannabis, significant regulatory gaps in the recreational cannabis space need to be addressed. 

Although the 2018 constitutional court landmark ruling decriminalised private use and cultivation for that specific purpose, the absence of clear commercial guidelines — such as those dictating acceptable THC levels, product quality standards and safe consumption practices — poses problems on multiple fronts. 

Without these regulatory foundations and strategic insights, law makers risk leaving consumers unprotected and investors hesitant, stifling the industry’s growth potential and undermining efforts to create a booming, transparent and safe cannabis environment.

Legal landscape

The private use and cultivation of cannabis have enjoyed a degree of liberalisation since 2018. Yet this progress is limited to personal liberties, with no comprehensive framework governing commercial activities in the recreational cannabis space. 

There are no established guidelines for recreational cannabis that dictate crucial aspects such as THC quantities, quality benchmarks and standardised product labelling. In addition, the Cannabis for Private Purposes Act 7 of 2024, although instrumental in decriminalising private use, proves inadequate for regulating the broader recreational environment. 

This Act, designed predominantly to safeguard individual privacy, does not address the emerging commercial realities and safety risks of an expanding market. It falls short of balancing the right to privacy with the right to life by neglecting critical public health and safety concerns. To establish a robust framework that covers all facets of the industry, amending this Act is essential.

Health and safety

Without regulated standards, recreational cannabis products can vary in potency. Cannabis products with high levels of THC may expose consumers to an increased risk of adverse reactions from impaired cognitive function and heightened anxiety to serious health complications. 

Compounding these issues is the lack of structured public health and education initiatives and community education to inform users of these risks. 

Moreover, South Africa’s infrastructure for testing cannabis intoxication remains underdeveloped. There are no government facilities or reliable roadside testing methods to assess cannabis impairment at accident scenes. Law enforcement often defaults to attributing accidents solely to drunken driving without the necessary tools to detect cannabis intoxication.

Enforcement 

Another gap is the weak enforcement of laws designed to curb unauthorised drug sales and trafficking. The Drugs and Drug Trafficking Act provides a legal framework to disallow the unsanctioned sale and purchase of cannabis, yet enforcement in the recreational sector remains inconsistent, enabling the proliferation of unlicensed vendors. 

This lack of enforcement undermines legal compliance and perpetuates an environment where consumer safety is compromised. Strengthening these enforcement mechanisms is essential for accurately investigating accidents and upholding the integrity of the cannabis market.

Economic implications 

The economic potential of the cannabis industry is enormous. Estimates suggest that a well-regulated market can generate significant revenue and create thousands of jobs. But the regulatory void has a negative effect on the sector. 

The absence of clear and enforceable guidelines, including set limits on THC content, fuels the continuation of an informal market characterised by inconsistent product quality and potency. This situation not only deters legitimate investors and stifles innovation but also places companies that are serious about building a transparent and safe cannabis environment at a severe disadvantage.

Without strategic oversight and a comprehensive regulatory framework, the industry faces several detrimental consequences:

• Investor hesitancy: Ambiguity in regulations discourages capital investment, as investors are unwilling to commit to a market with unclear legal boundaries and potential compliance pitfalls.

• Erosion of consumer trust: The proliferation of unregulated products undermines consumer safety and erodes trust in the market. Without standardized guidelines, consumers struggle to differentiate between products that are safe and those that may pose serious health risks.

• Market fragmentation: In the absence of a unified regulatory framework, the industry risks segmenting into regulated and unregulated sectors. This fragmentation hampers the growth of the legal market and encourages the persistence of a lucrative underground market.

• Missed economic opportunities: The lack of regulatory clarity prevents the formalisation of the cannabis sector, limiting its capacity to contribute to national economic growth and job creation.

Need for a comprehensive approach

Before South Africa can contemplate true commercialisation of the cannabis industry, significant groundwork must be completed. The environment lacks the robust infrastructure, advanced testing capabilities and stringent enforcement mechanisms required to support a healthy, well-regulated market. 

The Cannabis and Hemp Masterplan, while a step in the right direction, offers an incomplete picture. It falls short in balancing the genuine benefits of cannabis with the inherent risks. The masterplan primarily highlights economic opportunities without adequately addressing public health concerns, potential social problems and the operational risks of an unregulated marketplace.

This incomplete approach underscores the need for a comprehensive integrated strategy that ensures all critical aspects of the industry are addressed in an auditable manner. 

Only by investing in such strategic oversight can South Africa build a regulatory foundation that ticks every box from quality control and consumer safety to robust enforcement and investor confidence.

By closing these regulatory gaps, investing in comprehensive testing and enforcement infrastructure and developing a fully integrated, auditable strategic framework, South Africa can build a cannabis industry that contributes to the economy but also safeguards public health and nurtures a secure, competitive market environment.

Advocate Simi Pillay-van Graan is the chief executive of Trikar Enterprise Solutions and a former chief executive of Business Against Crime South Africa and the Tobacco Institute of Southern Africa.