Marijuana. Picture: THINKSTOCK
Marijuana. Picture: THINKSTOCK

JSE-listed investment group Labat Africa is venturing into the booming cannibis industry after securing a trading licence in Lesotho and also purchasing two local companies that operate in that sector.

Labat is establishing a fully integrated cannabis business and aims to “occupy and service the entire value chain of the cannabis market”, it said. 

It  also announced the appointment of Mike Stringer as CEO of its new Labat Cannibis SA division.  Stringer has worked on the regulation component of the cannabis industry for the past decade. “He was  key in developing the USA and EU markets together with highly competent agents,” the company said.

Green Fund estimates that the global cannabis market is worth $150bn and a forecast by Barclays expects the sector to be worth $272bn by 2028.

Lesotho was the first African country to decriminalise cannabis. Others, including Botswana, Swaziland, Zimbabwe and Uganda, are at varying stages of rolling out their licensing regimes to attract investment.  SA is the laggard, analysts say.

Labat said its license allows it “to grow, cultivate, manufacture, supply, hold, import, export and transit cannabis”.  

The group has acquired a 70% stake in a seeds and genetics business, Knuckle Genetics. It has also purchased Pac-Con Pharmaceuticals, which manufactures and packages liquids, tablets, capsules, creams and gels.

 “Pac-con will be utilised to produce high-grade CBD (cannabidiol) oils and related cannabis products for the retail and wholesale markets,” Labat said.

Labat Africa CEO Brian van Rooyen says the group will use the Pac-con site in Durban to extract complementary medicines from industrial hemp and cannabis.

Knuckle Genetic “creates and stabilises genetics for specific requirements such as API (active pharmaceutical ingredients)  development and  extraction for a variety of medical ailments”.

According to Labat few international companies have seen large investments not come to fruition.

“Labat will provide a gateway to a number of investors …providing the opportunity to invest in the cannabis market in the Southern African industry on a public platform.”

Labat said that another part of its plan is to create opportunities for small-scale farmers, allowing them to penetrate the industrial component of the cannabis business. 

Labat’s other businesses are in the fuel and logistics industry,  and also in ICT through subsidiary SAMES, which manufactures high-end microchips, among other products.

The cannabis industry will form part of the focus of its pharmaceutical interests, which has been a long-term interest of Labat’s board. Once its restructuring and rebranding is completed, Labat said it will consider unbundling one or more of the businesses for the benefit of shareholders.

ramalepep@businesslive.co.za