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New rules planned for medical cannabis in South Africa

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Although there has been much media coverage of the legal commercialization of cannabis for recreational purposes, South Africa’s role as a global player in the medicinal cannabis market should not be underestimated, the firm says. lawyers Cliffe Dekker Hofmeyr.

Apart from having a comparatively lower cost of agricultural production due to advantageous environmental conditions and labor cost, South Africa has experience in agricultural process innovation, medical innovation and stringent quality control requirements for licensing medical cannabis, making it an ideal destination to supply the global medical cannabis market, the company said.

“Local production has been primarily oriented towards raw cannabis flower and extracts for export to overseas markets as bulk active pharmaceutical ingredients. Demand is expected to grow as pharmaceutical product development pipelines are approaching global commercialization.


Latest development

In the latest version for public consultation of the Country Investment Strategy (CIS), published by the Presidency on May 27, 2022, cannabis is recognized as a legally and globally traded agricultural product.

However, CIS indicates that the state still views the commercial cultivation of cannabis for recreational purposes as a highly uncertain value proposition, both locally and internationally, requiring extensive legal and institutional evolution.

“Given the agricultural competitiveness profile of South Africa, the IEC concludes that cannabis grown and processed for medical purposes is the most viable competitive sales channel to pursue on an industrial scale and that the capacities developed for medicinal production can be rapidly deployed to meet the recreational demand of local or international markets.

In view of the above, the IEC proposes that the State allow the finalization of a common cannabis regulatory framework focused on industrialization for export, with a focus on the medical value chain, said Cliffe Dekker Hofmeyr.

“Consequently, the priority is development of a favorable legal framework that both streamlines production at export scale and opens up domestic market access through clear and sensible regulation of medical cannabis coupled with investment mobilization and enabling state activity.


Current regulations

Regardless of these latest developments, commercial medical cannabis is already legally possible under the current regulatory framework, said Cliffe Dekker Hofmeyr.

However, it is not without pitfalls, costs and loopholes – hence the need for a more supportive and streamlined legal framework.

“The South African Health Products Regulatory Authority (SAHPRA) is the state body that regulates the medical cannabis market. SAHPRA issues licenses under Section 22C(1)(b) of the Medicines and Related Substances Act 101 of 1965 (Medicines Act) which authorizes the cultivation, manufacture, extraction, testing, import, export and distribution of medical cannabis and ensures the necessary oversight of SAHPRA in regulating these activities.

“However, licenses for these activities are only issued after applicants have constructed fully compliant cultivation, processing, extraction or testing facilities and are audited by SAHPRA in accordance with quality control protocols and The above and other compliance criteria (such as pre-negotiated off-take agreements or letters of intent) provided by SAHPRA necessarily involve significant capital outlays, which are unfortunately necessary before a Section 22C license may be granted.

When it comes to the quality control aspect of medical cannabis manufacturing, South Africa is a member of the internationally renowned Cooperative Pharmaceutical Inspection Scheme (PIC/S), which ensures that products are systematically produced and controlled according to the quality standards appropriate to their use. intended use and as required by international marketing authorizations or product specifications.

SAHPRA audits are conducted in accordance with the requirements of the South African Guide to Good Manufacturing Practices (GMP), which refers to:

  • PIC/S GMP Guidance for Medicines – Part I for Pharmaceuticals
  • PIC/S Guide to GMP Medicinal Products – Part II for the Manufacture of Active Pharmaceutical Ingredients

“Notably, a Section 22C license does not automatically entitle the holder to global GMP status and a further application, which can be made through SAHPRA, is required,” said Cliffe Dekker Hofmeyr.

“Thanks to this high level of quality control, the medical cannabis produced in South Africa under license conditions is among the highest in the world, creating a compelling value proposition in international markets.”


Production cost

However, when it comes to production costs, strict adherence to GMP standards at the cultivation stage leads to increased costs, the company said.

“Internationally, there is evidence that cannabis is grown in accordance with Good Agricultural Practices and/or Good Agricultural Collection Practices standards, then processed in GMP facilities for sale as a GMP certified product on medicinal markets.

“By treating the cultivation stage as an agricultural activity according to agricultural standards and the post-harvest processing stage as manufacturing according to medical standards, significant savings can be made, which translates into a more competitive price on the world market.”

There is also a case to be made that in order to include rural small-, medium- and large-scale field growers in the cultivation side of the medical cannabis value chain, more needs to be done to ensure strict compliance with standards such as GMP does not continue to be a barrier to entry, the company said.

“This is particularly evident in single-molecule extract production lines that do not require cannabis to be grown only in controlled environments, indoors or in greenhouses.”


Market access

At the national level, the Medicines Act allows patients to access unregistered medical cannabis products for therapeutic purposes through the provisions of Section 21 of the Medicines Act.

In order for patients to have access to these unregistered medicines, a registered physician or licensed prescriber must apply to SAHPRA on behalf of the patient, to allow the purchase and use of unregistered medicines as a treatment regimen. .

This process has been greatly simplified and can be completed with online submissions by the licensed physician, Cliffe Dekker Hofmeyr said.

“Once the Section 21 application is complete, patients can access medical cannabis products through various online and, more recently, physical pharmacies licensed to acquire and distribute medical cannabis products. of medical cannabis.

“However, the Article 21 procedure outlined above can be seen as an interim measure until registered cannabis medicines become more widespread locally and are available for prescription at pharmacies across the country. “

Therefore, more work is needed to establish and strengthen domestic demand and consumption for medical cannabis, which generates domestic revenue, large-scale operations, and necessary hedging against demand shocks experienced by local cannabis businesses. export-oriented medical.

This would include finalizing and nationally registering medical cannabis products, the company said.

  • Commentary by Shaad Vayej (partner) and Susan Meyer (director) at Cliffe Dekker Hofmeyr.

Read: Updated cannabis laws planned for South Africa