30 September 2020

Cannabis for Private Purposes Clubs

It’s out.

It surely won’t be passed in its present form or by the 17 September 2020 deadline ordered in the 18 September 2018 Prince judgment in which the Concourt abolished the prohibitions against an adult personally cultivating and possessing cannabis in private in order to personally consume it in private. Indeed, it was only officially introduced in Parliament two weeks ago on 1 September.

It permits.

It prescribes the quantities and modalities in which an adult may: possess seeds and seedlings; cultivate plants in a private place; possess bud in a private place; privately possess (including transporting) bud or plants in a public place; consume in a private place; and without any compensation give seeds and seedlings, plants and bud to another adult. 

It’s far from perfect.

It permits and prohibits arguably arbitrary quantities and creates some curious offences with harsh sentences that would make it difficult for many to exercise their constitutional, privacy-based cannabis rights; perpetuating and, many argue, deepening socio-criminal stigmas against already marginalised, cannabis-using communities.

But possession for the purposes of sale is a form of dealing. Thus the Prince Concourt was somewhat dragooned into ruling that in the case of cannabis the right to privacy is a right to be left alone but that Parliament must delineate the quantities that may be possessed within this private realm. So it is difficult to imagine how any first draft of its kind was ever going to navigate this Scylla and Charybdis of an impasse. Its permissions and prohibitions are hopefully under a sharp knife of the parliamentary process.

It is, of course, the Cannabis for Private Purposes Bill 19 of 2020 (the Bill). 

And in the wake of the Prince judgment, cannabis clubs are proliferating; steadily weaving themselves into the edgy fabric of South African urban culture with a thus far judicially untested legitimacy. 

Given that the prohibition against so-called recreational dealing in cannabis is here to stay (at least for now), and that many cannabis users are not in a position to privately cultivate their own cannabis, the Bill (in whatever form in which it is enacted into law) must by-hook-or-by-crook be read to legitimise cannabis clubs across the vast rural-urban and high-low income divides in South Africa.

If we have the constitutionally entrenched human right to privately cultivate, possess and consume our own cannabis, then we surely may exercise the right to freely associate with others – an equally entrenched constitutional corollary – in doing so. 

But dealing in cannabis is simply illegal. And cannabis clubs must fiercely apply this logic to all levels of their corporate decision-making and operations and meticulously reflect it in the corresponding legal documents and accounting systems.

To these ends, critical questions need to be carefully addressed in deciding whether an intended cannabis club model is legally viable, including, to name some of the salient ones:

  • Through which corporate vehicles can one establish a legally and commercially viable and private cannabis club?
  • Is it okay to contract out the cultivation element to independent or satellite growers or must all of the cultivation take place under the club’s roof?
  • Do any quality control standards apply?
  • Must the members own their own crop and, if so, how should this vesting or transfer of ownership take place?
  • Is it legitimate for the club to take 100% of the responsibility for the cultivation, harvest, and processing of the cannabis and is delivery to members permitted? 
  • What modes, quantities and varieties of cultivating, possessing and consuming cannabis should the club endorse?
  • What suite of constitutional documents, contractual agreements and policies are required to legitimately and transparently reflect these choices through sound objectives, principles, corporate governance and accounting measures? And what declarations and warranties should the club and its members be making in these documents?

This list is not by any means exhaustive of all of the considerations that require rigorous legal analysis and modelling. And the flexibilities of Prince will come to an end once the Bill’s legislative process culminates with an Act of Parliament. 

So it would be prudent to judiciously and prospectively consider your intended cannabis club model and whether it holds the promise of a commercially viable cannabusiness prior to pouring blood, sweat, tears and millions into establishing it.

Brett Pollack – 21 September 2020

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