Value capture in the emerging medical cannabis global value chain: insights from South Africa

A global value chain (GVC)-an international network linking producers and consumers through multiple intermediaries-has rapidly emerged in recent years to connect geographically dispersed cultivators and consumers of legal medical cannabis. This is commonly presented as an important new economic development opportunity for low- and middle-income countries with favourable agro-ecological conditions. This paper analyses the growth of the legal medical cannabis GVC in South Africa, a major emerging supplier, focusing on how chain governance and power relations shape processes of inclusion, exclusion, and value capture.

The paper draws on 34 semi-structured interviews conducted between 2021 and 2024 with a range of stakeholders in the medical cannabis GVC, including cultivators, brokers, consultants, and civil society. Interviews were analysed using Nvivo with a hybrid coding strategy.

Interviews reveal that cultivators face intersecting challenges: regulatory complexity, increasingly intense competition, bargaining power imbalances, and a demanding series of quality conventions in which the sensory and aesthetic qualities of an artisanal product must be combined with pharmaceutical rigour. Barriers to entry are high, and costly upgrading processes are necessary to avoid falling into a commoditisation trap as easily-replaceable suppliers of a generic good, subject to 'race to the bottom' competition and price volatility.

These challenges undermine aspirations for medical cannabis exports to serve as an inclusive economic development opportunity for small-scale cultivators in the Global South. GVC participation requires major capital expenditures and advanced capabilities. Overcoming these challenges would require significant policy support.