Halo Labs buys Lesotho cannabis producer Bophelo for R262m
Transaction is expected to strengthen Canadian company’s position in the mountain kingdom
Canadian-listed Halo Labs has agreed to buy Lesotho-based medicinal cannabis producer Bophelo Bioscience & Wellness for about $18.4m (R262m) as it looks to expand into global markets.
“The transaction is expected to strengthen the company’s position in Lesotho, a country quickly becoming the continent’s export gateway to the global cannabis market,” said Halo, a cannabis company listed on Toronto’s NEO Exchange.
Lesotho, the first African country to grant medical marijuana licences for cultivation and patient use, “is making strides toward becoming the worldwide export hub for cannabis”, Halo said.
Other companies listed in Toronto, including Supreme Cannabis and Canopy Growth, have recently made large investments in SA’s small neighbour. Supreme Cannabis invested in Medigrow Lesotho, while Canopy Growth bought DaddyCann Lesotho.
While Lesotho is attracting investments for its commercial cannabis sector, the industry in SA is still in its infancy.
Prof Sylvester Chima, associate professor and head of the programme of bio and research ethics and medical law at the University of KwaZulu-Natal, said the SA Health Products Regulatory Authority was still in the process of establishing regulations regarding the commercial use of cannabis and its related products.
Chima said investments like this one in Lesotho would be helpful in providing jobs in SA.
“Furthermore, it will assist in bringing elements of the ‘underground’ economy into the open so that income from such enterprises can be properly regulated and taxed” for the overall benefit of the SA economy, he said.
Halo’s initial partnership with Bophelo, which is chaired by SA business person Louisa Mojela, included the operation of its 5ha cultivation and production site and the purchase of its entire production in exchange for a 20% equity stake and a royalty on cannabis sales.
But Halo now wants to buy out Bophelo using 40.8-million of its shares. It said in a statement it intended appointing Mojela as chair of Halo. It said her appointment will be valuable for the company as it continues to expand.
“Ms Mojela successfully founded and listed Women Investment Portfolio Holding on the JSE that has grown to be worth over $250m today,” Halo said.
The US-based company is eyeing exports to Europe and other parts of Africa.
The cannabis market in SA, which recently decriminalised the private use and possession of marijuana via a court ruling, is expected to be worth $1.9bn by 2023, Halo said, citing the March 2019 Prohibition Partners Africa Report.
Halo CEO Kiran Sidhu said Lesotho’s “high-altitude, low-humidity climate” made it a competitive cannabis producer. The country also benefited from access to water, low utility costs and taxes, and competitive labour rates.