Highlands Investments, a cultivator of medical cannabis – tetrahydrocannabinol (THC) and cannabidiol (CBD) – is only able to sell and ship products to markets and customers who are legally entitled to receive products in their markets.
Therefore, according to Mark Corbett – the managing director of Highlands Investments, from Lesotho – THC medical cannabis output is generally bound for the EU and Australian markets, where medical cannabis is legal.
In January, Highlands launched Canna-Tract, which is billed as Africa’s first cannabis contract-cultivation scheme.
Clients pay either $180,000 per half hectare or $300,000 per full hectare upfront or in instalments, then contract Highlands Investments to grow commercial volumes of medical-grade cannabis at its two sites in Lesotho.
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The Southern Africa region — where Lesotho is located — is one of the best places in the world to grow all types of cannabis, says Sibusiso Xaba, an investment banker and co-founder of The ACA Group, an advisory firm focused on the Africa cannabis market.
Medical cannabis is regulated to similar standards as pharmaceuticals especially in Europe. Cultivation, processing, extraction, formulation requires rigorous thresholds of consumers safety. That requires a broad range of skills that we still need to develop at scale across Africa,” says Xaba.
“Lesotho is a front runner in the legal African cannabis industry,” Xaba tells The Africa Report, especially taking into account the country’s liberal commercial cannabis rules.
The rules are not just tied to commercial cultivation of weed. Corbett says Lesotho is one of the only three countries in the world to legalise manufacture, distribution, import, and export of both THC and CBD.
Gift of height
Lesotho’s geographical placement — one of the world’s highest countries above sea level — is perhaps the biggest ecological gift to its cannabis cultivation. In Lesotho, “fertile, clean soil, abundant water and clean air are a great climate for cannabis,” Xaba says.
For Corbett and his operations, a rich supply of sunshine across Lesotho is another sweetener.
Growing for customers
With ecology and rulebooks in its favour, the Highlands cannabis cultivation contract works this way: customers pay upfront to use the company’s facilities, license for 200 hectares and technical teams to grow the cannabis on their behalf. Corbett says, at the end of the harvest, the product is shipped to the customer.
“Cultivation of cannabis has large barriers to entry,” says Corbett. “For customers, this solves the problem of massive upfront investments, expensive-to-acquire licensing and need for technical experience across fields like agronomy, quality assessments and security.”
Cannabis farming is fraught with other risks too. To minimise losses from theft, RFID — an electronic tracking system — enables Highlands to track the product from seed to shelf. This is also a requirement for ISO certifications standards and the license for Highlands in Lesotho, Corbett says.
So high was the market enthusiasm for the contract cultivation model, that Highlands sold its first contract hectare within two weeks of announcing the model, says Corbett.
“We are now actively working with this customer to package their product for sale. This customer will have his hectare of CBD packed and available for shipping in May this year. Our next grow cycle starts in October and we are now marketing the contract grow model for this next cycle. We are currently busy harvesting our 4th cultivation cycle. We have therefore completed and processed 3 grows already.”
Apart from hosting Africa’s first cannabis contract-cultivation scheme, Lesotho’s medical cannabis industry has grown in other areas too. Last month, Lesotho became the first country in Africa to be granted a license by the European Union (EU) to export medical cannabis. MG Health, which is one of Lesotho’s top medical cannabis producers, revealed that it has satisfied the EU’s good manufacturing thresholds to export cannabis flower, oil and extracts into the EU.
Jobs are scarce in Lesotho, explains Xaba, and the banker believes that young people across Lesotho are genuinely enthusiastic about the economic opportunity that the medical cannabis industry offers. The World Banks says unemployment in Lesotho remains high, at 22.5% of the population, according to 2019 statistics.
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Subsequently, Corbett says, the Highlands model is in partnership with 176 Lesotho landowners to lease their plots for monthly rental fees. In the deal, three South African technical experts will be also be hired as well as 17 permanent local employees. Another 110 seasonal workers from Lesotho are being upskilled to fill in roles of quality assurers, master growers, trimmers, buckers — all from nearby locations.
“This is something that can be scaled well once the model is fine-tuned and can be copied across Africa,” says Xaba, emphasising that rural goods and services economies — not just cities — are best suited for such models of agricultural investments.
“Here there is a skills transfer process that takes place and local growers, processors and operations learn how to run a local facility to international standards, something that is desperately needed if Africa is to compete at an international level,” he says.
Africa still needs cannabis expertise
Lesotho already has a rich traditional, artisanal history of cultivating and using cannabis, which dates back decades. However, commercial expertise from the presence of global investors like Highlands is important for the ultimate transfer of medical cannabis skills and standards to locals. It’s impractical for Basotho citizens to do away with foreign expertise in a hurry, argues Xaba.
“Medical cannabis is regulated to similar standards as pharmaceuticals especially in Europe. Cultivation, processing, extraction, formulation requires rigorous thresholds of consumers safety. That requires a broad range of skills that we still need to develop at scale across Africa,” says Xaba.
Lesotho’s budding success with cannabis, especially medical cannabis, is not an outlier in Africa. Other governments are backing the sector too.
- On 12 May, Zimbabwe repealed a law that required shared ownership between government and private investors in the cultivation of cannabis for medicinal use. Cannabis investors in Zimbabwe can now own and operate 100% of their investments, the country trade commission announced.
- In Malawi, this week, the government signalled its intention to increase subsidies for cannabis cultivation. The goal is to diversify away from tobacco.
- If rules continue to be liberalised, the legal cannabis industry in Africa could be worth $7.1bn by 2023, Reuters estimates.
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