/ 19 April 2024

Grass ain’t greener for South Africa’s underground cannabis industry

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The South African Human Rights Commission’s discussions with the Rastafari and cannabis communities raised its concerns about stories of systematic and personal violations. Photo: Delwyn Verasamy

It’s nearly as easy to order some of the finest cannabis money can buy as it is to get a beer in Davenport Road these days, with six dispensaries of the holy herb operating in the restaurant zone that has become Durban’s Green Mile.

Easier, actually, if it’s 11am on a Tuesday — most of the restaurants are still preparing to open at lunchtime, but the cannabis shops are already trading.

Dirty Kush Breath; Strawberry Cough; Alien Cookies; indoor, outdoor and greenhouse; hash, dab and shatter — they’re all on offer, a range of cultivars, growth methods and extractions as diverse in price — and effect — as the whiskey collection at the more sophisticated of the bars in the party zone.

It’s all going rather smokingly along the Davenport ganja strip, where the shops range from a hole-in-the-wall operation with a small smoking deck in front to the more sophisticated premises offering infused meals, live entertainment and a more rarefied atmosphere in which to puff and pass. 

It is still illegal to sell — or buy — cannabis in Davenport Road and anywhere else in South Africa.

After the constitutional court ruling in 2018 overturning the 80-odd year prohibition of the plant, the state was given two years to change the law. They missed the deadline — badly — and enabling legislation will only be put in place after the Cannabis for Private Purposes bill is signed into law, most probably after the 29 May national and provincial election.

Only after that will the laws enabling a commercial cannabis industry — and a national cannabis master plan curated by the agriculture ministry — be put in place.

However, the government’s tardiness hasn’t stopped entrepreneurs operating in Davenport Road, or anywhere else in Durban and the rest of the country, from pushing ahead with the green economy President Cyril Ramaphosa has been talking up in his State of the Nation addresses every year since 2020.

The upsurge in dispensaries and new entrants — and money — into the industry hasn’t been good news for everybody.

Anwar (68) has been selling cannabis in Durban’s Warwick Triangle area for more than 50 years and is among those whose businesses have been swept away by the city’s post-prohibition green wave. 

The eldest of a family of 10, Anwar started selling cannabis in his teens after leaving school in what was then standard three.

“I started selling zol when I was 16 and I’m still selling zol now,” Anwar told the Mail & Guardian this week.

“The family was battling. There were 10 of us. I am the eldest brother. I had to leave school and go hustle and do something. 

“My father was a smoker and used to send me to go buy his zol, so I got into selling it myself.

“I got married, had a family with no job. My only income was puzzling and selling zol. I never had a job my whole life,” he said.

While money from cannabis put food on the table, paid the rent and put his four sons through school, it also brought trouble with the law and — in 1989 — a lengthy jail sentence for dealing in dagga.

“The first couple of times, I paid a fine and got suspended sentences. Then I pulled time in jail, because of having previous convictions for the same thing. 

“The magistrate told me the suspended sentences weren’t teaching me a lesson, so he gave me six and a half years in jail,” Anwar said. 

On release from prison, he reverted to the cannabis game.

“I came out of there, no job, so I went straight back into this thing, ducking and diving, paying fines when the law changed, paying the cops. Money in zol is small, so it was R100, R200, like that,” he said.

“I never made big money, because of paying lawyers and jail and paying tax to the cops, but my sons are all educated and we lived with the same zol money. I’m still selling it now, what else can I do?”

Anwar’s business survived throughout prohibition but the advent of walk-in dispensaries, shops and lounges has pretty much killed it off.

His profit has dropped from between R20 000 and R30 000 a month in 2019 to between R3 000 and R4 000 today as the above-ground dispensaries draw in both newcomers to the market and his old clientele

“With these new shops now, there is no show for us. I was selling a kilo a week. Now I’m lucky if I sell a litre (100g) every two weeks. It’s no more what it was.”

“We went to jail for this thing but there is no show for us now.”

Age — and a lack of access to finance due to his criminal records for selling cannabis — have prevented Anwar from opening a shop himself.

“I can’t get money to get into the industry because of my criminal records for being in the same game,” he said. “What do you think of that?

“This is a young man’s game now. You have all these laaitjies that know nothing about zol and who have money but what can you do?’ he said.

The effects are also being felt in the Eastern Cape among the growers who previously supplied the underground market in Durban, East London and Cape Town.

With the majority of the shops working with their own growers — or buying backdoor product from medical growers with export licences — they have no need to do business with long-standing growers from the  Eastern Cape and elsewhere.

Bantubonke Mfanekiso, a fourth-generation cannabis grower from the Lusikisiki area, is also feeling the pinch.

His family and others in the area have historically grown the local pondo cannabis, which has gone out of fashion in favour of higher tetrahydrocannabinol (THC) strains and have also transitioned to growing the more potent cultivars.

However, the lack of demand from the sellers he has supplied over the years — they, like Anwar, are battling to retain a slice of the market — means prices have dropped, along with the volume the retailers they work with are moving.

“Things are very bad. It’s worse if you are still growing pondo,” he said this week. 

“There is no market in local and it’s only the people that are growing ‘cheese’ that are surviving.”

“Those that are able to open shops are better off. They are buying a gram for R15 and are selling for R40. It is only them who are making money,” Mfanekiso said.

Herschel Maasdorp, director of business development at JSE-listed Labat Healthcare, probably the biggest player in the medicinal cannabis market in South Africa, believes it has a role in helping the illegal industry become part of the formal industry going forward.

Labat has licensed growing and extraction operations which serve the Australian and other foreign markets, selling both flowers — biomass is the industry term — distillate and extractions.

It supplies Australia’s importers with 20kg consignments of pre-packaged Exodus Cheese — which it produces at a cost of R4 a gram — for R24 a gram. However, the real profit is made on the Australian side, where the same cannabis is sold at $20 (R245) a gram.

Labat operates Cannafrica, which runs a string of 58 wellness shops in high-end malls around the country, offering CBD products, which are legal under the current regime and are keen to enter the “adult-use” market, once it can lawfully do so.

Maasdorp said the lack of regulation and progress by parliament in passing enabling regulations had seen the situation arise in which the traditional industry has been “undermined” by the new entrants to the totally unregulated industry.

He added 35 to 40 of the country’s 100 licensed medical facilities, which had invested up to R20 million each, were dormant due to a lack of offset agreements and some were “offloading” their products on the local market. This was placing increasing pressure on the market and further compromised the existing growers by cutting into their market with cheaper, medical-quality products.

At a recent meeting held with growers in the Eastern Cape, convened by the presidency and the Eastern Cape Development Agency, growers said they had experienced a 70% drop in revenue in the past few years, Maasdorp said.

The problem was “very real” and required intervention to bring them into the formal cannabis economy.

Labat was working with Eastern Cape farmers to use their cannabis for extraction for the European wellness market due to its unique genetic makeup and its low THC content as a means of doing so, he said.

Regulation which identified the point of origin would help stop the dumping of export cannabis on the local market and would also help smaller growers access international markets in which this was an important issue among consumers. 

This could also be used locally, Maasdorp said.

Myrtle Clarke, director of the NGO Fields of Green for All, was one of the applicants who won the landmark 2018 ruling and is a veteran of the battle for legalisation of cannabis in South Africa and in a number of multilateral international forums.

Clarke believes the cannabis trade — the country’s oldest and newest industry — has continued to develop despite the delays in the passing of legislation because of people “pushing the edge of the envelope”.

Doing so required money, she said, both in terms of access to premises and finances and to deal with the “brown envelope” side of the industry,  as shops were “low hanging fruit” for “taxation” by the police.

Clarke also believes traditional cannabis growers and sellers have been put under extreme pressure by the current boom and are being “left behind.”

“This is a very real problem,” Clarke said. “There is no thought anywhere in all of this for the guys who have been selling — and getting arrested and sent to jail — in the townships. They are nowhere in any of this. They are completely out of the game.”

“There is thought given to traditional growers because they have a more romantic image but, to the kasi guys who have been in and out of jail for selling weed, there is none.”

Clarke believes the removal of cannabis from the Drugs and Drug Trafficking Act, which the new bill facilitates, is a “massive win” in terms of setting up a regulated, inclusive industry.

“There was a certain nativity around the process which we were all guilty of. One it is in the political arena — which it is — there is no such thing as one step forward, followed by another one. We have seen many steps to the side with this process.

“This is a unique industry in both its newness and its oldness. The biggest challenge we face is the huge gaps — the gaps in resources and access and the gap between the people on the ground who touch the plant and the people who make the laws and regulations,” she said.