…as a litre of CBD oil sells for up to M250 000
MASERU – The Lesotho hemp and cannabis production has emerged as a model sector during South Africa president Cyril Ramaphosa’s State of the Nation address held in Cape Town last week. With the potential to create more than 130 000 new jobs for the big neighbour, Ramaphosa said South Africa was streamlining the regulatory processes so that the hemp and cannabis sector could thrive like it was in Lesotho.
“Our people in the Eastern Cape, KwaZulu-Natal and elsewhere are ready to farm with this age-old commodity and bring it to market in new and innovative forms”, he said. Ramaphosa said while South Africa helped existing industries to grow, they were also nurturing new opportunities for growth and jobs. As in Lesotho, Canadian groups are in the starting blocks. Spectrum Therapeutics, a subsidiary of Canopy Growth, signed an agreement in June last with the city of Cape Town to establish a 12-hectare facility in the Atlantis economic zone.
The company plans to invest €38.5 million (M500.5 million) to grow and process cannabis. The Johannesburg Stock Exchange could also not be spared the Lesotho cannabis gravy train as the listed Labat Group announced in September the acquisition of Knuckle Genetic, which produces cannabis oil and flowers in Lesotho, as well as a pharmaceutical plant in South Africa to manufacture CBD-based products.
Lesotho has pioneered the export of cannabis after the 2008 legislation made it possible to grow, process, and export the plant for medical use. The cannabis trade has been in existence for decades in Lesotho where growers have paid school fees, build houses, paid lobola and opened businesses with the proceeds of the illegal export of the plant to mainly the neighbouring South Africa. Kotsoana Potsane, also known as Mopresidente oa matekoane, said although Lesotho was making strides in this sector, the fact that it was unlawful to deal in cannabis unless you were licensed, made it difficult for the local dealers.
“Many of us cannot afford the expensive licences and so we are basically trafficking a contraband, which makes it expensive if you are caught or it becomes costly for the end consumer,” Potsane told Public Eye on Wednesday this week. He said although lucrative, he had since stopped delivering cannabis to clients in South Africa but he was now concentrating on supplying the local market.
A few years ago, Potsane at the invitation of the then Minister of Health Nkaku Kabi, was amongst a government delegation that visited New York, USA, on a fact finding mission about the potential opportunities of the Lesotho cannabis. “We went there to do research and the Americans were mainly interested in the indigenous knowledge of how Basotho planted, used and traded cannabis,” he said. While Basotho smoke cannabis as a recreational drug, many use it as a medicinal plant ingested as decoction, tea and juice for the treatment of flu and other internal infections such as reproductive, degenerative and respiratory.
Government granted the first licence to Medi Kingdom in 2017 following research work, which gave cannabis a facelift in the country. Over two years, Lesotho had become a force to be reckoned with for international investors eyeing cannabis as an asset class. So far, Lesotho cannabis is owned by several top rated companies listed in the Toronto Stock Exchange. In June 2018, the giant Canopy Growth, with €6.4 billion (M83.2 billion) in capitalization, announced the acquisition for approximately $28.8 million (M432 million) for the license and activities of the Highlands company founded by South African Jody Aufrichtig.
A few weeks earlier, Aphria, with a capitalization of €1 billion, had created a joint venture with Verve Dynamics, also a licensee in exchange for a cheque of €2.7 million (M35.1million). In 2018, Canadian Supreme Cannabis, with a capitalization of nearly $200 million (M3 billion), acquired 10 percent of the local company Medigrow for $10 million (M150 million).
So far, a dozen companies in Lesotho employ more than 3000 people and the sector expects to create in excess of 30 000 jobs beyond 2022. Low labour costs, a climate of 300 days of sunshine per year, low humidity and a low-polluted environment, position Lesotho as a destination for matekoane cultivation. An attractive tax legislation is another bait for up to 70 foreign investors who have already been granted licences.
However, these requirements make it hard for the local businesses to enter the market, condemning all small farmers like Kotsoana to remain illegal. Otherwise, Canadian Supreme, Medigrow has been able to invest €17.4 million (M261 million) in its site, which currently has 18 greenhouses (5,000 sq m). On average, a litre of CBD oil is sold for between €5,400 (M70 200) and €19,000 (M247 000). Other research shows Hemp, low in THC, can be used to make building materials, clothing, paper, and even batteries.