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Regional cannabis industry to “re-build” from a lower revenue base



Across member states, cannabis industry earnings declined in 2020 due to restricted economic and trade activity.

Market revenues are estimated to have dropped by just over 50% between 2019 and 2020 because of the local and global populace prioritising other things including staying health and essential good purchases. Recreational cannabis which accounts for most of the sub-region’s cannabis sales declined by a CAGR of just over 15% in 2020 but it is the medicinal cannabis segment that recorded the largest demand dip (48% CAGR fall between 2016 and 2020) because of international trade disruptions brought on by the COVID-19 pandemic.
Most of the medicinal cannabis grown on the continent is grown for export and shutting of local, regional, and international borders limited what could be traded and thus, impacted revenues earned in 2020. Despite the fall in earnings in 2020, strong growth is still forecast for the sub-region’s industry going forward. Sizeable investments have already been channelled towards establishing and progressing the industry, particularly the medicinal cannabis sector. Recently, a Lesotho based industry participant obtained a good manufacturing practice (GMP) certification, empowering the entity to supply its products to lucrative EU markets.
More of the investors into the market are expected to follow suit and over the longer term see the sector growing its earnings at a CAGR of between 20 and 22% during the forecast. Modest growth is forecast for the recreational cannabis industry, but further commercialisation of the sector will depend on policy adjustments across member states with regards to legalising this segment of the market. Currently, only South Africa has legalised recreational cannabis albeit for private consumption. However, based on most of the region’s revenues being generated from recreational consumption, a rethink on how the segment can be legalised across member states to benefit farmers, consumers and the state should be prioritised. In conclusion, inclusivity and local market developments are key tenets to growing the regional cannabis industry sustainably over the longer-term. This can only be done through government support from a research, entry barrier removal and downstream opportunity facilitation standpoint.

Southern Africa’s Cannabis Industry Analysis (2021) report includes:

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