Africa: Weed for Export - Raising African Economies High On Medical Marijuana

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28 October 2022
The Exchange Africa
By Giza Mdoe

Medical marijuana may very well be the agri-business that Africa needs to get its economies high in the global multi-billion agro-industry.

Already, Africa's marijuana production is on the rise.

According to the Oklahoma Medical Marijuana Authority (OMMA) medical marijuana dispensary sales totalled US$11.5 million in just under one month. Other than the sales, OMMA also says in that same time, between January and February of 2019, it also raised more than US$3 million in taxes alone.

The following month, approximately US$873,361 came from the 7% gross receipts tax and US$1.3 from the 4.5% state sales tax.

Since OMMA began accepting applications for medical marijuana licensing, the state says it has pocketed well over US$7.1 million inpatient license fees and more than US$11 million in revenue generated in commercial license fees.

That is just one state. Consider how much the entire US has made from medical marijuana as a country. Worldwide, as of 2021, the global medical marijuana market size is valued at USD 11.0 billion, a good enough financial reason to increase African marijuana production.

This very high figure is only expected to get higher at a compound annual growth rate of 21.06% all through 2030.

So what is the science behind this high economic value of medical marijuana? First is awareness. Experts say the industry is experiencing this high growth due to increased awareness of the various therapeutic applications of medical marijuana.

African marijuana production can help the continent address the various health remedies the plant has been found to help. Medical marijuana is used in pain management, appetite enhancement, and even reducing eye pressure. Generally speaking, medical marijuana is highly effective in the treatment of chronic diseases.

According to data from the WHO, the global chronic disease burden reached 57% as of the year 2020. In recognition of the rising prevalence of chronic diseases worldwide, the global demand for medical marijuana is only expected to get higher.

  • The global medical marijuana market is valued at USD 11.0 billion as of 2021
  • Demand for medical marijuana is growing at an annual growth rate of 21.06%
  • Africa marijuana production is on the rise; Rwanda, Uganda, and Malawi legalize growing weed for export

There are two main medical marijuana types, Cannabis Sativa and Cannabis Indica, both of which do well in tropical climates making land-rich Africa a perfect production location for organic medical marijuana.

Given the forecasted increase in annual demand for medical marijuana or weed as its street name commonly knows it, the East African Community (EAC), an area that is rich in undulating fertile lands, has the potential to become a major producer of weed for export to the fast-growing markets of the West.

While the EAC major economies like Kenya and Tanzania remain sceptical as to the high economic potential of producing weed for export, others like Rwanda and Uganda have embraced the production of weed for export.

Ironically, according to local media, the EAC's biggest economies, Tanzania and Kenya, which are reluctant to pass laws to allow the growing of weed for export, actually produce the largest amounts of weed which is then consumed and exported illegally.

Unlike the two economic powerhouses, fast-rising economies like Rwanda have legalized growing weed for export based on its high revenue potential.

According to Clare Akamanzi, CEO of the Rwanda Development Board, "Some of these therapeutic crops can fetch around US$10 million per hectare of production."

The CEO also pointed out that a single hectare of weed fetches the highs of US$300,000, a comparatively high figure in respect to traditional commercial crops.

"The country has developed and approved the bloc's first framework for cannabis export and is now reviewing bids from interested investors.

While Rwanda is trying out its luck on weed for export, Malawi has mastered the economics of weed for export, with almost ninety companies registered for the business.

Weed for export in Malawi is handled by the Cannabis Regulatory Authority (CRA). To date, the CRA has licensed 48 firms for medicinal marijuana and 35 other firms for industrial hemp production. Another six companies are licensed for research purposes to develop various varieties of weed for export.

"The licenses have a one-year lifespan subject to renewal, and we expect that within the period, the licensees will have produced the crop as planned... they will start exporting between January and February next year when the economy will start benefiting from the industry," CRA director general, Ketulo Salipira explained to media in the country.

Replace tobacco with medical marijuana production

Even though tobacco products have been proven to have fatal health consequences, most African countries rely on tobacco farming because it pays so well. Now that the financial value of medical marijuana has been tried and proven, African countries would do better off weaning off tobacco production and growing weed for export.

Medical marijuana is both healthy and potentially earns more than tobacco, as the Farmers Union of Malawi (FUM) has admitted.

The FUM Chief Executive Officer, Jacob Nyirongo, told reporters that medical marijuana is an alternative crop to tobacco. That being said, the CEO also advised the government to ensure '... there is need for government commitment to ensure that the value chain takes an inclusive process.'

According to the authority, license fees to cultivate and sell weed for export and the license to process medical marijuana is around US$10,000, while the license fee to grow and sell industrial hemp is around US$2,000.

Once one has the financial muscle, all the farmer has to do is present the CRA with a business plan and, in it, present identified markets for the product.

Other than weed for export, other financial and medical gains can be found all along the value chain from the production of marijuana. The Malawi African Organisation for Standardisation (ARSO) General Secretary, Dr Hermogene Nsengimana, has gone on record saying there is a need to invest in the manufacture of medicines from herbs and shrubs, including marijuana.

The expert pointed to the Covid-19 pandemic, which he said Africa should have been ready to manufacture both treatment and vaccine. While western pharmaceuticals may not want to hear it, the expert believes that traditional medicines can be processed using modern technology to create various medicines that can be used to treat everyday ailments.

"Covid-19 exposed our fragility. We need to take advantage of already existing traditional medicines to develop our pharmaceutical industry," Dr Nsengimana asserted.

Read the original article on The Exchange.

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