Business Is Starting To Trump Morality In Africa’s Cannabis Industry

Developments in Western markets, where legalization is spreading rapidly, and the prospect of cashing in on the fast growing multi-billion dollar sector, are contributing to the sweeping reforms on the continent. At least 10 countries in Africa are enacting some form of legal framework for the product, while many others are pondering a move in a similar direction.

"Legislators and preachers think licensing cannabis growing will make young people resort to marijuana consumption, but no one wants to invest millions of dollars to sell leaves to broke youth in the slum."

Africa’s legal marijuana industry could be worth as much as $7.1 billion by 2023 according to Prohibition Partners, a research and consulting firm specializing in the legal cannabis industry. This projection focused on the legal and regulated cannabis markets in South Africa, Zimbabwe, Lesotho, Nigeria, Morocco, Malawi, Ghana, eSwatini, and Zambia.

Opening Up Africa’s Cannabis Markets

In 2017, Lesotho became the first nation to legalize cannabis on the continent, followed last month by Morocco.

Before the May decision by Moroccan lawmakers to authorize the “medical, cosmetic, and industrial” use of cannabis, as well as providing a regulatory framework, the country was already the world’s top exporter. Its thriving illegal industry sent an estimated $13 billion worth of pot to Europe annually, and employed close to 1 million people. Morocco is likely to wake up other sleeping African giants such as Ethiopia, the Democratic Republic of the Congo (DRC), and Nigeria, and also drive up Africa’s legal cannabis market projections as more transactions are mainstreamed.

By improving regulation and legal environments, African countries are counting on investment and technology to put their arable lands and relatively cheap labor to work. Along with establishing industries to process and export cannabis products or exporting raw products, the states stand to earn revenue from granting local licenses, and taxing the sector.

The African continent, especially the countries that lie along the equator, have a very big opportunity to contribute to cannabis innovations, not only in medicine, but through other sectors such as paper production, eco bricks, and plastics, says Isaac Imaka, a director at Seven Blades, one of the companies to apply for a cannabis license in Uganda.

“It is appalling that as usual…countries are choosing to lag and decide to be slow in issuing regulations to guide the issuance of licensing, he says. “The lack of knowledge among those that are supposed to make the decision has affected the speed with which countries like Uganda and Kenya should have taken up the opportunity.”

Moral Arguments Against Cannabis Use

The Covid-19 pandemic is, surprisingly, lifting a lid on the moral arguments against cannabis. Uganda’s first lady, Janet Museveni, and a section of former and current cabinet ministers, for example, have opposed attempts at legalizing the product, calling it “satanic” and ruinous to the “future of our children” A report indicates that the country has more than 2.6 million users.

In Kenya, major efforts to push for some form of legalization have been met with resistance centered on religion, negative public perception.

Imaka says that African countries should put a premium on licensing operators, in order to weed out speculators and license hoarders. They could also ensure that licensees are producing value-added cannabis products for export and controlled use within the country. By doing this, he argues, countries will be able to raise much-needed revenue and also create jobs.

“Legislators and preachers of morality think licensing cannabis growing will make students and young people resort to marijuana consumption, but no one wants to invest millions of dollars to sell leaves to broke youth in the slum,” Imaka says.

While it is not backed by any science, discussions about cannabis as a Covid-19 treatment have gone mainstream, with some promoting the product as a way to relieve some of the effects of the virus. In Uganda the health ministry was compelled to issue a public statement warning the public against using the plant to medicate the effects of the virus. In June 2020, South Africa commenced a trial of marijuana as part of the six herbs that could be effective in fighting against Covid-19.

Foreign Investment Means Growing Cannabis Businesses

Criticized for being slow by enthusiasts and players like CBD wellness brand Goodleaf, South Africa—the continent’s most-industrialized economy—is setting itself to take the lion share of the African legal cannabis market with varying estimates putting the country’s domestic market for cannabis and related products – excluding consumer cannabinol (CBD) products at about $2 billion.

The country has drafted a master plan for the industrialization and commercialization of cannabis, which has been touted as an instrument to support economic growth, create jobs, and even tackle poverty. The plan focuses on both hemp and cannabis (commonly called dagga in southern Africa) with plans to make the country competitive in the sector.

Outside South Africa, African countries exploring legal cannabis are not looking at developing local industries or tapping into and formalizing local markets on the continent. Instead they are looking to serve the hungry markets opening up, mostly, in the West.

As governments change their approach to cannabis on the continent, multi-million dollar deals are being made. On June 3, Goodleaf, which has become one of South Africa’s pioneer commercial cannabis brands, merged with Highlands Investments from neighboring Lesotho, in a deal valued at about $45.2 million.

Two months earlier, Lesotho-based MG Health, a licensed cultivator and manufacturer of pharmaceutical-grade cannabis extracts and products, made history by becoming the first Africa-based cannabis firm to earn coveted EU Good Manufacturing Practices (GMP) certification. This means the company can make deals in the EU market.

Growing Interest In Cannabis Licenses

In Uganda, more than 90 companies, both local and foreign, have applied to the government for licenses to allow them to grow marijuana on a commercial scale. Navigating the political and moral landscape is key as enthusiasts and entrepreneurs make a business case for the product.

For example, Sudhir Ruparelia, Uganda’s richest businessman, last year wrote to president Yoweri Museveni making the case for the product and drawing the line to appease any concerns about domestic consumption.

“We are ready and willing to leverage our expertise in commercial agriculture to grow this golden crop on a large and for-export-only scale,” he wrote.

Others aren’t waiting. Leveraging tech, people in African countries where cannabis is illegal are also coming out of the underground and launching illegal startups under the radar of the authorities. One such entity is TashaCookies& Stash which uses Twitter and Instagram to market its edibles and pills, and Whatsapp to connect with buyers for deliveries. Ubuy Uganda, an e-commerce store, also imports cannabis cosmetic products from the US and other markets for its customers in the country.

Countries like Kenya and Tanzania, which have massive underground operations, have been cautious to open up despite grassroots movements pushing for the same. While prospects for legalizing local trade and consumption are unlikely in much of Africa, the trends point to more of the continent opening up for business in the sector—at least with the rest of the world.