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SA cannabis industry scales new highs in the global market

South Africa's growing cannabis industry is taking major strides, with two of the top players Highlands Investments and cannabis investment group Labat Africa sounding out good prospects for the coming year. Picture: Nqobile Mbonambi/African News Agency (ANA)

South Africa's growing cannabis industry is taking major strides, with two of the top players Highlands Investments and cannabis investment group Labat Africa sounding out good prospects for the coming year. Picture: Nqobile Mbonambi/African News Agency (ANA)

Published Jan 23, 2022

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South Africa's growing cannabis industry is taking major strides, with two of the top players Highlands Investments and cannabis investment group Labat Africa sounding out good prospects for the coming year.

Labat Africa said this week it was diversifying its healthcare offerings through large scale acquisitions and retail expansion following the acquisition of a 100 percent share in Miamiowned CBD lifestyle brand Echo Life, which comprises of a diverse FMCG (Fast-moving consumer goods) product portfolio and has obtained exclusive rights to distribute American prerolled hemp smokable Ace & Axle as well as their other products and will be launching Delta 8 soon.

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Highlands, on the other hand, said in an interview that having executed a 2.1-ton export on Christmas Day, it was working on a 6-ton order for medical cannabis to Europe via Macedonia for extraction.

Highlands cultivates, processes and packages high-quality THC and CBD cannabis flower for the production of medical grade cannabis products and currently employs 15 full-time staff and about 100 seasonal workers.

They help with the trimming, packaging, drying and harvesting of the crop.

The group presently has 20 hectares growing capacity in the country out of its 200 hectare availability, opening

up its prospects for the near future. The current crop has been harvested off 11 hectares out of the 20 hectare capacity.

“Germany has very high standards, and South Africa is struggling to meet those, but the market is growing.

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“Australia is another potential market we are looking at. It is opening up slowly.

“We are looking at doing about 11 tons of product this year, and that is the maximum we are allowing ourselves to do just this year,” Highlands managing director Mark Corbet said.

He said with the right legislation in place, the potential for the industry to create jobs was massive in the medicinal market.

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For its part, Labat said the new potential comes off the back of its listing on the Frankfurt Stock Exchange (FSE) and a R300-million cash injection from California-based GR Global Ventures in exchange for ordinary shares, funds of which will be allocated over a three-year period.

Echo Life and Ace & Axle will form part of Labat’s retail portfolio that already includes Cannafrica, a medicinal and luxury CBD lifestyle brand with three outlets in South Africa and an online store and three more stores opening in the coming months.

In addition, e-commerce exists for Cannafrica, Echo Life and Ace & Axle, respectively.

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“Labat is a first mover in the cannabis economy and a market leader. We are involved across the value chain in the cannabis industry, from farming and manufacturing to beneficiation, distribution and, more recently, retail,” said Labat’s group executive for Business Development, Herschel Maasdorp.

Labat is going into the market with retail products that are compliant with health regulators.

Cannafrica’s products, which include cannabidiol medicinal drops, edibles, and supplements, are aligned to South African Health Products Regulatory Authority regulations, whereas Echo Life adheres to standards set out by the US Food & Drug Administration.

The Ace & Axle pre-rolled hemp smokeables is an interesting new addition to the market, which though not directly competing with tobacco products, is positioned as a healthier alternative to both the young adult segment of legal smoking age and for nicotine smokers looking to measurably cut down on cigarettes.

Ace & Axle is a premium choice retailing at R189 for a 20 pack, which is competitively priced for a market that is retailing these locally at around R300 for a pack.

Labat sprung into retail in the thick of the Covid-19 pandemic when it opened its first of three Cannafrica stores in Cape Town in October 2020.

It has since evolved the Willowbridge Cape Town store into a retail 2.0 offering, which is South Africa’s first cannabis experience store and has also opened additional outlets in Johannesburg and Hartbeespoort as well as an online store.

Maasdorp said the substantial evidence that supports CBD’s anti-viral, anti-anxiety and anti-inflammatory properties made it highly attractive in the midst of a global pandemic.

“With the impact of the lockdown reportedly causing depression, stress and anxiety among members of the public, CBD products provided some relief,” he said.

Labat Healthcare chief executive, Stanton van Rooyen, said its transition from the informal sector to a formal economy enhanced Labat’s retail business, while it also offered a springboard to Europe and the US through the FSE-listing and its deals with American-based products.

“Labat’s responsibility is to ensure that we take the proposition of South Africa – with its quality raw materials and processing capabilities – to the globe by being part of the largest capital markets in Europe and the US,” said Van Rooyen.

According to Statista, the US is the globe’s biggest and most sophisticated cannabis market valued at $61 billion (R938.77bn).

Recreational cannabis alone is predicted to exceed $40bn in annual sales by 2026.

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