Global | Publication | February 2020
Following a Constitutional Court judgement1 in September 2018, South Africa became the first African country to legally permit the private recreational use of cannabis. This ground-breaking judgment was the culmination of a lengthy battle between citizens and the will of the government.
The South African judicial, legislative and executive systems have their foundations in the Constitution of the Republic of South Africa 108 of 1996 (the Constitution). The Constitution was a radical piece of legislation which placed an obligation on the legislature and judiciary to protect and promote basic human rights. Much of the legal reformation in South Africa has been based on the rights enshrined in the Constitution, and the evolution of cannabis legislation is a prime example of this. Although previous challenges were based on religious freedom, it is the right to privacy that led the way for reform in South Africa’s cannabis laws.
The Constitutional Court judgment gave the South African government two years to amend the existing cannabis laws and in the interim read provisions into the law that decriminalized private use and cultivation of cannabis. Whilst legislative amendments are anticipated and there is hope that the cannabis economy will assist South Africa out of its current dire economic situation, the current regulation results in a legal grey area when it comes to the acquisition, use, possession, cultivation, manufacture and sale of cannabis and cannabis products. There are many cannabis dispensaries, recreational coffee shops, franchises, and producers that have started operating in South Africa despite the fact that the majority of these activities remain illegal. There is sporadic and inconsistent enforcement of the existing cannabis laws. Generally there appears to be strong support for the medical use of cannabis however many remain skeptical of recreational use.
There are currently two acts that govern the use, cultivation, possession and dealing in cannabis (locally known as “dagga”) in South Africa.
The Drugs Act categorizes cannabis as an “undesirable dependence-producing substance.”
In terms of the Drugs Act, it is a criminal offence to use, possess, deal in and/or cultivate cannabis or any part of the cannabis plant, with a few specific exceptions provided for in the Medicines Act below. ‘Deal’ is defined very broadly in the Drugs Act.
The Medicines Act makes a distinction between THC, CBD, the cannabis plant in its entirety and the components thereof. The Medicines Act regulates cannabis and its components as follows:
The cannabis plant and THC
The cannabis plant, any portion thereof and THC are classified in Schedule 7 of the Medicines Act, with specific exceptions. Schedule 7 substances are those that are deemed to have no legitimate medical use2.
The cannabis plant, the whole plant, or any portion or product thereof falls into Schedule 7, except:
THC also falls into Schedule 7, except:
This means that processed hemp fiber products (e.g. textiles, bricks, ceiling boards) and processed cannabis seed products (e.g. hemp seed oil, cosmetics containing hemp seed oil) are specifically excluded.
In summary, Schedule 7 substances are regulated as follows:
| Acquisition, use, possession, manufacturing and supply | According to section 22A(9)(a), the Director-General of the National Department of Health (the “Director-General”) may authorize the acquisition, use, possession, manufacturing or supply of a Schedule 7 substance in order to provide such substance to a medical practitioner, analyst, researcher or veterinarian. Provided that the substance is used for the medical treatment or prevention of a medical condition of a specific patient, or for the purposes of education, analysis or research. |
| Import and export | According to section 22A(11)(a), only persons in possession of a permit issued by the Director-General may import or export a Schedule 7 substance. |
THC for therapeutic purposes
THC is classified as a Schedule 7 substance unless it is intended for therapeutic use. In these circumstances, THC falls under Schedule 6 and is regulated as follows:
| Persons who may sell for medicinal use |
According to section 22A(5), only pharmacists, medical practitioners and dentists with the requisite authority to prescribe and dispense such substances may sell. According to section 22A(6), the particulars of each sale must be recorded and kept in the prescribed manner. |
| Persons who may sell for other uses | According to section 22A(7)(a), only a pharmacist, pharmacist’s intern or person in possession of a permit issued by the Director-General may sell such substances for analytical purposes, manufacture of foods, cosmetics, educational or scientific purposes. |
| Manufacturing, import and export | Only persons in possession of a permit issued by the Director-General may manufacture, import or export such substances for medicinal or other uses. |
CBD for medicinal use
According to the South African Health Products Regulatory Authority (SAHPRA), products containing CBD (except for those products discussed under the next heading) fall into Schedule 4 of the Medicines Act. Schedule 4 substances are regulated much in the same way as Schedule 6 substances with the exception that a special permit from the Director-General is not necessary to import or export such substances.
Any person who imports or manufactures a CBD-containing medicine must be in possession of a license issued in terms of the Medicines Act, must comply with the Good Manufacturing Standards Practices standards and must have their products tested by an accredited laboratory indicating the concentrations of THC and CBD.
SAHPRA is responsible for the registration and regulation of cannabis-containing medicines in South Africa. According to SAHPRA it is currently considering the entries for cannabis and related substances in the Schedules.
Exempted CBD containing products
On May 23, 2019, the Minister of Health published a notice in the government gazette which effectively excluded the operation of the Medicines Act in as far as it related to certain CBD products for medical use for a period of 12 months. The exemption applied to those products which:
The effect of the Notice is that the above CBD products may be sold, exported and/or imported without a license or permit from the Director-General and may be purchased at any retailer without a prescription. The sellers of such products may not make any medicinal claims about the product unless these products fall within the definition of health supplements in terms of the Medicines Act. Hemp foodstuffs containing the exempted levels of CBD also have to comply with the requirements of the Foodstuffs, Cosmetics and Disinfectants Act, 1972. This regulates labeling, claims, advertising and content of foodstuffs. According to SAHPRA, CBD should not be included as an additive in foodstuffs; however, this is an untested interpretation.
The exemption is in place until May 23, 2020 unless extended.
Licenses
In terms of sections 21 and 22A(9)(a)(i) of the Medicines Act, medical practitioners may apply to SAHPRA for permission to access and prescribe unregistered medicines, including medicines containing cannabis, to treat patients in exceptional circumstances.
Section 22C(1) provides that the Director-General may issue licenses to registered medical practitioners, dentists, veterinarians and other practitioners registered under the Health Professions Act 56 of 1974 to compound and dispense medicines.
Licenses to cultivate cannabis for industrial purposes may be undertaken by persons who hold a permit issued by the Director-General in terms of section 22A(9)(a). To date, only a handful of permits have been issued by SAHPRA. The cultivation of cannabis for medicinal purposes on a commercial basis requires a license issued in terms of section 22C(1)(b) from SAHPRA and a permit in terms of section 22A(9)(a)(i) from the Director-General.
A license can be issued for any or all of the following activities, including to:
SAHPRA has, in January 2020, approved cannabis related clinical trials to be run by a consortium of parties, including government entities and a university.
To date, there are no registered cannabis-containing medicines in South Africa and any access to these medicines must be done in terms of the special circumstances exemption contained in section 22 of the Medicines Act.
According to the landmark judgment handed down in September 2018 by the Constitutional Court, South Africans are now permitted to use, possess and cultivate cannabis for personal consumption in private.
The basis of the court’s decision was that the prohibition on the use of cannabis by an individual in private, and the cultivation of cannabis in private and for private use, was inconsistent with the Constitutional right to privacy. The court also considered that there was no evidence to suggest that cannabis could be any more harmful than alcohol.
The South African legislature was given 24 months to amend the Drugs Act and the Medicines Act to allow for the possession and cultivation of cannabis for personal use. Until such time that the legislation is amended, South Africans will not know the exact allowable quantity or composition of cannabis or cannabis products.
The legislature has until September 2020 to amend current legislation to allow for the recreational use of cannabis. A spokesperson for the Department of Health has stated that the legislature is studying the recreational policies of the US and Uruguay with a view to update South African legislation.
In its current form, the South African cannabis legislative framework is a complex matrix of provisions that regulates cannabis according to the various compositions and uses thereof. SAHPRA has been issuing licenses to cultivate cannabis for commercial purposes since 2018. The licensing procedure is an onerous and expensive one, which makes the cannabis industry inaccessible to the average South African farmer.
The Prohibition Partners have estimated that the South African cannabis industry will be worth ZAR27 billion annually by 2023. Newly reformed markets like Canada and the US have an immense appetite for investment in Africa, but investors and locals alike have become disillusioned by the legal uncertainty and complex bureaucratic framework of the cannabis sector. South Africa’s neighbor Lesotho, however, has very successfully attracted foreign investment into extensive growing operations for export primarily to Canada. The South African Minister of Trade and Industry has, however, publically identified cannabis farming as a possible remedy to assist the ailing sugar industry. In January 2020 the Minister of Finance tweeted his support for liberalization of cannabis laws in South Africa.
The South African legislature will have to drastically liberalize and simplify cannabis legislation in order to facilitate growth in the sector, and to ensure that the industry is accessible to both foreign and local investors.
Publication
Miranda Cole, Julien Haverals and Emma Clarke of our Brussels/ London offices are the authors of a chapter on procedural issues in merger control that has been published in the third edition of the Global Competition Review’s The Guide to Life Sciences. This covers a number of significant procedural developments that have affected merger review of life sciences transactions.
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