Is Cannabis Still a Good Investment in the Long Term in South Africa?

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The Aquila Column

The cannabis industry in South Africa holds long-term promise, especially after recent regulatory shifts and market expansion efforts. In 2024, investment in cannabis is focused on medical production, with over 70 cultivation licenses granted to various players, both local and international. Most of the money is flowing into large-scale cultivation and export projects, given South Africa’s ideal climate for growing cannabis.

Current investments are primarily directed towards infrastructure development and meeting the strict regulatory standards set by authorities. While South Africa’s cannabis sector is seen as ripe for growth, high startup costs, legal hurdles, and the need for substantial infrastructure upgrades are some of the key challenges. Companies have to navigate an environment that demands significant upfront capital before turning a profit.

Despite these challenges, the potential rewards are huge. The country is positioned to take advantage of the booming global cannabis market, projected to hit $43 billion by 2024. With this momentum, long-term investors remain optimistic.

Looking ahead, investment is expected to shift toward not only medical but also recreational cannabis markets if further legalization efforts advance. Over the next five years, as regulations ease and infrastructure matures, more funding is likely to go into product development, processing facilities, and high-quality export channels to cater to international demand.

While cannabis investments in South Africa face short-term regulatory and cost barriers, the long-term outlook remains bullish, particularly in the export sector, where the potential for growth is immense.