Is an inclusive dagga economy possible?

Urbanjodi
4 min readMar 8, 2019

Like many other nations, South Africa is slowly entering the world of legalized cannabis. Arguments for this include moral, legal and economic ones.

Amongst the economic arguments are fiscal ones (the opportunity to grow and tax an existing industry), economic growth ones (export markets are opening up along with each country legalizing medical and/or recreational cannabis products) and economic inclusion ones (most notably, a “save the Eastern Cape” mantra). The latter has a silver-bullet risk.

The assumption is that much of the production occurs in the Eastern Cape and that legislation automatically leads to direct inclusion of these farmers in formalized and legal supply chains.

There are, however, no built in guarantees that legalization will include those involved in the illicit dagga economy (whether farming or distributing). People currently involved in the sector may not be willing or able to comply with new requirements fast enough. And with advanced agricultural technologies, there are also no guarantees that sunny and green EC will have any competitive advantage over tunnel or industrial farms closer to urban manufacturing, trade and export centers.

In other words, there is no reason to assume that structural inequalities that exist throughout our society won’t immediately replicate themselves in the dagga economy.

When thinking of direct inclusion through ownership and jobs, legalising cannabis cannot be treated in the same way as innovation would. Cannabis already exists in the market. There are incumbent producers and distributors. The process of building an inclusive cannabis industry involves both development of new value chains as well as active de-criminalization of existing ones, with existing participants.

If not managed carefully, incumbent producers may stand to lose out from legalization. The Netflix documentary series Murder Mountain shows that de-criminalization is not just a matter of a change of legislation. Helping willing outlaws adjust and comply, while removing ties to deeply criminalized elements of the existing cannabis economy requires careful and patient action.

Unfortunately, South Africa’s economy is hardly a parecon. Will we be able to achieve a truly inclusive and participatory economy in a sector that by its very nature will require including outlaws in participatory planning processes, grant structures and technical assistance programmes?

Including existing producers

One way to protect existing producers from being replaced by capital intensive commercial entrants would be to involve them directly in the design of a phased legalization approach, offering financial, legal and technical support in the transitionary phases.

But will people who’ve spent years avoiding the state, willingly collaborate and trust such a process? What are the traditional or other structures that can safely be used to foster this compact?

Including new entrants

Inclusion of new entrants arguably doesn’t require significantly different approaches to any other inclusive policy or programme. South Africa’s mix (in policy if not always in action) typically involves sector training bodies, mentoring and apprenticeship programmes, land reform, grants, technical assistance and access to cooperative structures. These need to expand beyond subsistence and small-scale production only:

“ True transformation should encourage the integration of new entrants into the commercial sector, rather than perpetuate and entrench the duality that currently exists in South African agriculture.” — Wandile Sihlobo

Inclusion in adjacent opportunities

The cannabis industry is about more than just getting a plant to a market. Opportunities exist for edibles, medicines and cosmetic products. And that’s without including the manufacturing and construction capabilities within the broader hemp industry.

Equipment for growing, cleaning and processing will also be in demand, as will various crop protection products and services. “Grow kits” are already available at major garden chains and large companies supplying agricultural equipment and (fertilisers, pest control, irrigation etc) products will be geared to service the cannabis grower with their existing technical, marketing and distribution capabilities. Similarly, people who can understand the changes in law, changes in technology, and be geared to scale production will be in high demand.

These are all areas that offer substantial potential for expansion should the market become legitimate, and should South Africa become an exporter of cannabis products. These are also, however, all areas where know-how lives in existing, often untransformed, firms servicing the agri-sector.

Without structural incentives, we cannot assume that, beyond the redistribution benefits of tax, and low and medium skilled harvesting, cleaning, packaging and processing jobs, there will be any more direct ownership in the benefits of this growth.

What can we learn from elsewhere

As you can tell from posing more questions than answers above, I am not an expert in this field. We would be wise to learn from the transitions to a legalized industry that are taking place elsewhere, and how minorities and those negatively impacted by previous criminalization are or aren’t included in the benefits of legalization.

One quick google search returned the below initiative:

The (NuLeaf) grant program is meant to help promote equity in the cannabis industry by providing financial aid to companies owned by people who have been harmed by the hyper-criminalization of marijuana

“ We are unapologetically about the work of building intergenerational wealth for people of color
through the legal cannabis industry.” http://nuleafproject.org/

I hope the legislatures working on this change are working with the top agricultural economists, criminologists and participation facilitators.

Update: I enjoy this submission from PLAAS and SLF calling for a two-sector (recreational and medicinal) approach: http://bit.ly/32NLb8l?cc=41dd923d98de7fe210ee7ec7fd37a046

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Urbanjodi

Archive of thoughts. Imperfect, incomplete and not assumed to be my final position. My actions speak louder than my words. Learn more: https://jodi.city