South African Companies Prepare For New Cannabis Regulations, Experts Expect Lots Of Fundraising And Debt

As the cannabis law in South Africa further develops, there will be more opportunities for law firms to get involved, says Paul-Michael Keichel, a lawyer with South Africa's Cullinan & Associates.

Why? On May 28th. South African President Cyril Ramaphosa signed into law the Cannabis for Private Purposes Act (CfPPA), which regulates the cultivation, possession and consumption of marijuana by adults in private settings. The measure, however, does not allow for legal marijuana sales. Adults can cultivate their own plants and can only consume it in their private residences. Selling cannabis could lead to a penalty of up to 10 years in prison.

Plenty Of Fundraising And Debt

The government has yet to release detailed regulations on the quantity of cannabis that can be cultivated for personal use and the licensing process. Coming up with these rules presents a challenge for government and legal experts, writes Law.com.

Eric Berlin, who leads the cannabis team at Dentons, one of the biggest global law firms said South Africa's new law brings important commercial opportunities as the market matures. Berlin predicts growing demand for legal advice on intellectual property, patents and trademarks as well as regulatory details.

"There's going to be a lot of transactions, including fundraising and debt," he told the outlet.

Shaad Vayej, a South African lawyer and founder of industrial cannabis sourcing firm OpenFarms is suggesting looking at Germany. He pointed out how German law firms began advising people interested in the industry long it was legalized.

Read Also: Cannabis Is Helping Heroin Users Withdraw And Stay Clean In This South African Harm Reduction Center

Looking To Germany

On Feb. 23rd, Germany became the third country in the European Union to legalize adult-use cannabis after Malta and Luxembourg. Under this first pillar of cannabis legalization, adults over 18 can legally possess up to 25 grams of dried cannabis flower and cultivate up to three marijuana plants at home. The German government is working on the second pillar of its cannabis legalization law–setting up municipal five-year pilot programs for state-controlled marijuana to be sold in licensed shops.

German law firms such as Heuking, SKW Schwarz, Nimrod Rechtsanwälte and KFN+ were providing legal advice in cannabis even before the law took effect. For example, Heuking advise Berlin-based medical marijuana provider Cantourage Group on its listing on the Frankfurt Stock Exchange in 2022 and KFN+ represents the European Industrial Hemp Association (EIHA). Cantourage, a Berlin startup became the first medical cannabis company to list on the Frankfurt stock exchange. This happened more than one year before cannabis was legalized and medical marijuana use was simplified.

While awaiting new rules, some South African companies, like Webber Wentzel and Cliffe Dekker Hofmeyr (CDH) rely on experience from existing practices within the company.

"When looking at the various African countries where cannabis has been decriminalized, there is one major commonality, which is the acceptance of cultivation and use of cannabis in the medical and scientific sector," CDH said in a legal briefing. "It is clear that there is significant potential for cannabis cultivation in the commercial sector, promising substantial revenue for farmers."

According to, Belinda Scriba, a director at CDH  cannabis-special practices won't be necessary even if commercial cannabis growth for adult-use launches. "It is more likely that there will be advisors within wider sectors who have specialized cannabis knowledge," Scriba said.

Law Firms Also Interested In Medical Marijuana

Medical marijuana use is regulated under a different law – South Africa's Medicines and Related Substances Act, 1965. On June 25, Cilo Cybin Holdings Ltd became the first medical marijuana company to list on the Johannesburg Stock Exchange's (JSE) Alternative Exchange. The company was advised on its initial public offering (IPO) by 5, by South African law firm Werksmans Attorneys. Cilo Cybin's shares were oversubscribed after only a week of its IPO.

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Photo: Benzinga edit with image by kylefromthenorth on Unsplash and by OpenClipart-Vectorsfrom Pixabay