South African companies brace for new marijuana laws, experts expect a slew of fundraising and debt

As South Africa’s marijuana laws evolve, there will be more and more opportunities for law firms to get involved, says Paul-Michael Keichel, lawyer at the South African firm Cullinan & Associates.

Why? May 28, President of South Africa Cyril Ramaphosa signed the bill Marijuana Act for Private Purposes (Consent to use the Internet)which regulates the cultivation, possession and consumption of marijuana by adults in private places. However, the measure does not allow the legal sale of marijuana. Adults can grow their own plants and can only consume them in their private homes. Selling cannabis can result in a prison sentence of up to 10 years.

Lots of fundraising and debt

The government has not yet published detailed regulations on the amount of cannabis that can be grown for personal use, nor the licensing process. Creating those regulations is a challenge for the government and legal experts, writes Law.com.

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

“There will be a lot of transactions, including fundraising and taking on debt,” he told the outlet.

Shaad VaejSouth African lawyer and founder of industrial marijuana company OpenFarms suggests looking to Germany. He pointed out how German law firms began advising people interested in the industry once it was legalized.

Read also: Marijuana helps heroin users get off the drug and stay clean at this South African harm reduction centre

Looking at Germany

On February 23, Germany became the third country in the European Union to legalize marijuana for adults, following Malta and Luxembourg. Under this first pillar of marijuana legalization, adults over the age of 18 can legally possess up to 25 grams of dried cannabis flowers and grow up to three marijuana plants at home. The German government is working on the second pillar of its marijuana legalization law–establishing five-year pilot programs for cities where state-controlled marijuana will be sold in licensed stores.

German law firms such as Heuking, SKW Schwarz, Nimrod Rechtsanwälte and KFN+ providing legal advice on marijuana even before the law comes into force. For example, Heuking advises a Berlin-based medical marijuana provider Cantourage Group on the Frankfurt Stock Exchange in 2022, and KFN+ represents the European Industrial Hemp Association (EIHA). Cantourage, Berlin-based startup becomes first medical marijuana company listed on Frankfurt Stock ExchangeThis happened more than a year before marijuana was legalized and its use for medical purposes was simplified.

In anticipation of the new regulations, some South African companies such as Webber Wentzel AND Cliffe Dekker Hofmeyr (CDH) build on experience from existing practices within the company.

“Looking at the various African countries where marijuana has been decriminalized, there is one major common feature, which is the acceptance of marijuana cultivation and use in the medical and scientific sectors,” CDH said in a legal briefing. “It is clear that there is significant potential for marijuana cultivation in the commercial sector, promising significant revenues for farmers.”

According to, Belinda Scriba, director of CDH cannabis-special practices won’t be needed even if commercial adult-use cannabis growth does take off. “It’s more likely that there will be advisors in broader sectors who will have specialized knowledge of cannabis,” Scriba said.

Law firms also interested in medical marijuana

Medical marijuana is regulated by a different law, the South African Medicines and Related Substances Act 1965. On June 25, Cilo Cybin Holdings Ltd became the first medical marijuana company to be listed on the Johannesburg Stock Exchange (JSE). The company was advised on its initial public offering (IPO) by Firm 5, a South African law firm Werksmans AttorneysCilo Cybin’s shares were oversubscribed just one week after its IPO.

Read more:

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