By: Zandile Majavu
Red tape, funding, and expensive equipment are just some of the hurdles SMMEs must deal with to get into the cannabis and hemp sectors. Since the decriminalisation of dagga in 2018, many small enterprises that attempt to set up their businesses and export globally have been hampered by a lack of funding and bureaucratic processes before they even get off the ground.
Last month, the National Council of Provinces passed the Cannabis Private Purposes Bill. It is set to introduce a new set of regulations to determine the legal usage, cultivation, and transportation of dagga. Speaking at a recent Parliamentary briefing focused on opportunities and perspectives, including the challenges facing small businesses in the cannabis and hemp industries, House of Hemp CEO Dr. Thandeka Kunene said the different value chains of cannabis included seeds for oil pressing, cannabis stalks for fibre extraction, and leaves for medicine extraction.
Last year, about 664 farmers in KwaZulu-Natal received permits to plant, store, and transport cannabis and hemp. Although a hemp permit is easy to get with an application fee of R600 and a turnaround time of six weeks, businesses can only use registered seeds that are imported, while there are local seeds that have low tetrahydrocannabinol (THC), which is a psychoactive component.
In addition, Kunene said the SA Health Products Regulations Authority (SAHPRA) has stringent requirements for commercial licenses, which include a secured site, site inspections and offtake agreements, personnel requirements, and an application fee of R21,800. “There are now 107 SAHPRA commercial licenses, out of this amount, only seven people are black, and the rest are white, which is a big problem,” Kunene said. “And they need a lot of documents. I had to hand in three files with references in the value chain. They come five times to inspect the site, and every time they come, you must pay R5800 or R3600.”
Meanwhile, Hemp 4 Life CEO Ben Sassmen said that even though the government spoke about commodifying hemp and cannabis, most of the license holders were currently not receiving state funding and also had difficulties with banks. “I started to look for funding two years ago. Commercial banks and Absa denied funding on the basis that it is a high-risk sector, however, commercial banks will fund you if you want to farm because that has a track record of 150 years, whereas cannabis and hemp are only five years old. While the Free State Development Cooperation told me that their budget was depleted,” he said.
IFP Parliament portfolio member on small business, Inkosi Bhekisizwe Nivard Luthuli, questioned the unnecessary red tape processes that made it difficult for aspiring cannabis small business owners to secure licenses and funding. Luthuli also said some of the requisites were impossible to satisfy for rural small businesses that did not have the means and expertise to acquire expensive cannabis machines before obtaining the licenses. “First, you must have a doctor; second, you should have a place to sell; even a letter from a person that will confirm that they will buy. Even the equipment is expensive because if you are going to have a tunnel for it to plant, you must have a computerised water plant, you spend a lot before you can enter the industry,” he said.
