Want to run a cannabis startup? Here’s what is legal [Q&A]

The cannabis industry has been dubbed “the new gold”. It holds all kinds of opportunities for SA entrepreneurs, including tech startups. But what is legal and what isn’t? And where does one get permits from?

There’s been a flurry of interest following last year’s Constitutional Court ruling which legalised the private growing and personal consumption of cannabis (dagga). The selling of dagga however remains illegal.

“The industry is in an interesting period — because if you have the resources and time to invest in prospective R&D, you stand to be an early entrant into a budding industry,” note Eitan Stern and Brett Pollack of Cape Town law firm Legalese.

The firm, which advises startups, creatives and entrepreneurs, has been inundated with queries from those wanting to take advantage of the cannabis economy.

Last year’s Constitutional Court ruling which legalised the private growing and personal consumption of cannabis

It’s not surprising. Earlier this week Africanna Innovation, which claims to be SA’s first cannabis incubator reported that it had to reschedule a Joburg workshop it was to present on opportunities for tech entrepreneurs and farmers in cannabis (dagga), after unforeseen public demand (see this story).

In the following responses to Ventureburn questions, Pollack and Stern detail what is legal and what isn’t and what permits one needs, should one want to take advantage of trading in or growing cannabis.

What’s legal and what’s not with cannabis (dagga)? 

Since the Constitutional Court’s decision last year September, it is no longer criminal to grow cannabis in private for purposes of private use, possession and personal consumption. But it’s important to know that it is currently still illegal to deal in cannabis other than as a medicinal product.

So in terms of a government notice issued by the Minister of Health earlier this year, cannabidiol (CBD) has been down-scheduled to a Schedule 4 drug, which means that one can access CBD with a prescription from a doctor.

Then in another government notice published on the same day, the Minister entirely de-scheduled certain cannabidiol (CBD) containing preparations for the period of a year (the exemption notice), implying that certain products (those satisfying the thresholds in that notice only) are exempted from all of the legal requirements applicable to Scheduled substances in general.

What kind of permits or licenses does one need in SA to grow or distribute cannabis?

The permits and licenses presently available are largely sourced in the Medicines and Related Substances Act 101 of 1965 (the Medicines Act).

Some of the notable ones include licenses from the SA Health Products Authority (SAHPRA) to cultivate cannabis, and to manufacture, import or export and variously distribute medicinal cannabis products.

In order to, for example, cultivate cannabis for research and development purposes, one can, and indeed must, apply to the Director-General: Health (the DG) for a specific permit to do so.

Is it illegal to get involved in the payments of cannabis still, in SA? 

The sale of cannabis (dagga) outside of the regimes contained in the Medicines Act and perhaps other legislation regarding traditional healers is still illegal.

So yes, depending on the specific facts, a startup that assists such illegal sales will generally be committing a crime and can be prosecuted.

If one wants to grow cannabis for research and development purposes, one should get a permit from the director general of health to do so.

Irrespective of one’s motives (cultural or otherwise), one may now grow (and use, possess and personally consume) cannabis in private.

Parliament is busy legislating on what concepts such as “private” mean and is presumably determining the quantities one may grow and possess in private. It has until September 2020, two years from the Constitutional Court’s judgement, to do so.

What about a platform that handles exporting dagga or selling it overseas, is that legal?

Dealing in dagga is illegal unless doing so conforms with the Medicines Act.

In terms of the Medicines Act, it is generally a crime to sell, including export, medicinal cannabis unless the site where it is manufactured has been licensed as such, and the exporter has a license to export the produce.

Read more: SA’s first cannabis incubator forced to reschedule workshop after demand hits a high

Featured image: gomopix via Pixabay