Tax and other huge spin-offs for SA can be had from hemp

Allowing dagga users to smoke a joint legally can yield more tax revenue than just medical use and hemp production, some cannabis users say.

President Cyril Ramaphosa announced last week at his State of the Nation address that government would be opening up and regulating the commercial use of hemp products, as well as cannabis, for medicinal use.

“This year we will open up and regulate the commercial use of hemp products, providing opportunities for small-scale farmers; and formulate policy on the use of cannabis products for medicinal purposes to build this industry in line with global trends,” Ramaphosa said.

Hemp products can be used in almost everything.

Hemp is a strain of the cannabis sativa plant and is one of the most ancient and versatile industrial crops that has been cultivated worldwide, including in countries such as Canada, China, Russia, the US and Europe.

Unlike other cannabis plants, industrial hemp is high in fibre and low in tetrahydrocannabinol (THC), the psychoactive ingredient in cannabis.

According to the Agricultural Research Council, which has been researching the cultivation of hemp in South Africa, the plant is used to make over 25,000 consumer products, such as clothing, household accessories, hemp seed oil, rope, paints, fuels, paper, cement blocks and soap.

In four to five months, the plant can be harvested to produce a number of useful products, the founding partner of Hemporium, Tony Budden, told The Citizen.

“From one crop, you can get fibre, which can go into the textile industry as a natural, biodegradable, eco-friendly textile that is stronger than cotton and uses way less agrochemicals,” Budden said.

According to Budden, hemp could also be used for:

• Speciality papers, like cigarette papers, currency and non-woven materials such as mattresses.
• The stalk can be used for hempcrete – a mixture of hemp and lime which makes a concrete-like substance used for building.
• The stalk can also be used to make chip board, as well as animal bedding due to its absorbency.
• Hemp seeds contain 25% digestible protein as well as Omega 3, 6 and 9 and essential fatty acids to boost the immune system.
• Hemp seed oil can be used in soaps and cosmetics.
• Biodiesel for fuel and bioethanol.
• Hemp plastic, which is used in some German cars in door panels and dashboards.
• Cannabidiol, which is a non-psychoactive compound found in the flower, aids sleeping disorders, anxiety, gives pain relief and is currently the fastest-growing hemp product on the market.

The many uses of hemp. Graphic – Costa Mokola

The value of hemp products (food, body products, clothing, building materials and car parts) in the US amounted to $820 million (R12.3 billion) in 2017, but SA doesn’t yet have a market.

Only five people have been granted permission to cultivate hemp for medicinal purposes by the South African Health Products Regulatory Authority, formerly known as the Medicines Control Board, spokesperson Yuven Gounden said.

“These are not licences particularly, but are letters of recommendation that have been granted which allow them to harvest medical cannabis.

“We have received approximately 140 applications but only five were granted.

“It all depends on how ready [farmers] are because there are stringent conditions attached to it.

“This is medicinal so it has to be strictly controlled as people’s lives are at risk.”

South Africa first needs to learn from mistakes of other countries and be realistic about market demands, Budden said.

“The first year of Canada’s cultivation, they grew over 20,000 hectares and the second year it was 3,000ha because farmers had a lot left over as they didn’t have processing in place and hadn’t developed a market.”

Should a market and proper planning put in place, the industry could create many job opportunities, particularly through processing the plant into many other products, Budden explained.

But the country’s fiscus should not expect to see any benefit of taxing hemp production just yet as it was a new industry, head of tax policy at PricewaterhouseCoopers Kyle Mandy said.

While any forms of additional revenue stream should be welcomed, hemp production could take some time.

He said: “There probably won’t be significant revenue and it would probably take a fair period before it really does manifest into additional tax revenues…”

– rorisangk@citizen.co.za

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