Cannabis Business is Booming

Cannabis Business in South Africa is becoming a big business now that the constitutional court has decriminalized private possession, use, and cultivation of cannabis. Trading in any part of the cannabis plant remains illegal but then why is this industry suddenly booming? Along with this change in the law. We have seen a major increase in cannabis-related products as well as the private cultivation of the plant. The industry now has the spotlight and is what people have been fighting for.

A First for SA

South Africa had the privilege of holding our first Cannabis Expo in Menlyn, Pretoria.  The event was three days of industry, health and agriculture exhibits. The organizers did implement a strict “no cannabis” policy but this did not seem to influence ticket sales as the expo was sold out. The early ticket sales were R150 each and an estimated 20,000 people were expected to attend. This was double what exhibitors were promised with many of the exhibitors’ spaces sold out with.

There were certainly many organizations at the expo looking for investment in new business ideas and potential markets once cannabis is fully legalized. Many such seedbanks were launching brands for the first time but are unable to sell their primary product just yet. South Africa’s first Cannabis expo was certainly a success. The exhibition in Cape Town in April is expected to be three times the size.

Cannabis BusinessBig Business, But be careful

Many industry players are preparing themselves for what is expected to be a flood of business when the full legalization of cannabis happens. For many entrepreneurs, a great deal of preparation is underway as this could be a golden opportunity. If this new industry interests you, beware, as launching a new business or cannabis product could be a nightmare.

The ruling by the constitutional court is definitely considered the first step towards commercializing cannabis in South Africa. Those looking to venture into the weed trade, especially the manufacturing of cannabis products, could run into unexpected trouble. SA’s trademark laws still prohibit the registration of names that are widely regarded as offensive or products with substances that cannot be traded – such as “Dagga”.

Many companies that have long been established are now suiting up for a whole new potential market. Specialist fertilizer companies and hydroponic firms that have been trading for many years are now seeing a rapid increase in sales. Even legal consultants and firms are offering themselves as experts and many packaging and design companies are preparing for this new business opportunity.

The court’s decision…

The court’s decision has the potential to boost agriculture and manufacturing. But any application to have “dagga” in a product name may be refused by the trademarks registrar. This is because even though private consumption and cultivation of cannabis are allowed. Its sale is not, nor is the trade in any product that contains it. The Trade Marks Act does not allow the registration of a mark that’s contrary to laws, or likely to offend any people. However, now the mark “dagga” may no longer be objectively offensive following the Concourt ruling.

The only other legal obstacle would be another section of the same law which prohibits the registration of a mark that describes the quality or characteristics of a product. Although this is a difficult route to follow, there are some very interesting brands that have hit the market. One such brand is SA’s first dagga beer that managed to jump this hurdle by not containing actual dagga. The beer contains hemp instead, which has little or no psychoactive effects. So this means that a “dagga” product that contains no actual “dagga” could slip this law. But trying this could also be considered deceptive. And I would be pretty upset to be misdirected by a product name that is intended to be a play on words.

Cannabis BusinessWhat we do know

  • It is still illegal to trade cannabis in South Africa. This, however, hasn’t stopped the cannabis business from booming. This has come after the private possession, cultivation, and use was decriminalized by the constitutional court.
  • The first ever Cannabis expo in Pretoria was sold out regardless of the strict “no Cannabis” policy.
  • The ruling is certainly a step towards commercializing cannabis in South Africa.
  • South Africa’s trademark laws prohibit the registration of names regarded as offensive.

South Africa is on the path to full cannabis legalization. So now one would imagine that the local cannabis industry would be as strictly regulated as say the tobacco industry in SA. This is not the case as of yet and there are also many other laws and regulations that would come into play on labeling, advertising, and even plant breeders rights. Many new business opportunities will become available in the Cannabis industry. But following regulations and laws will be the difference between new legal business and a black-market drug trader.

~ Written By MJ and 420 Store Team, January 2019cannabis Business

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