Africa gears up to become a major player in EU cannabis market

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JOHANNESBURG - US cannabis oil and concentrates manufacturer Halo Labs said this week it had entered into a non-binding letter of intent to acquire Bophelo Bioscience & Wellness, a move that would strengthen its position in Lesotho which is fast becoming Africa's export gateway to the global cannabis market. Lesotho is the first African country to legalize the cultivation and manufacturing of medicinal cannabis, becoming one of the most sought-after locations for cannabis operations in the world. It has has issued a limited number of licenses since legalization in 2016 and has been exporting cannabis since early 2018. "Halo’s planned acquisition of Bophelo brings together two socially-minded companies on a shared mission to better the communities in Lesotho," the company said in a statement. Halo’s initial partnership with Bophelo included operation of the five-hectare cultivation and production site and purchase of its entire production in exchange for a 20 percent equity stake and a royalty on cannabis sales. Halo now intends to purchase the entire issued share capital of Bophelo for nearly 41 million common shares in the capital of Halo, worth approximately USD $18.4 million.

"This transaction is expected to strengthen Halo’s position in a region strategically set to become the international breadbasket of Good Agricultural and Collecting Practice (GACP) and EU Good Manufacturing Practices (GMP)-grade cannabis isolates and distillates," it said.





"GACP and GMP designations demonstrate Halo’s capability to grow and manufacture at scale while adhering to high-quality standards and enables distribution to European and international pharmaceutical and nutraceutical companies in these attractive and growing markets."

It said beyond providing a source of low-cost cannabis inputs and products for Europe and other regions, Africa boasted a strong consumer market, with data showing over 83 million annual cannabis users on the continent.

The current market is estimated at $37.3 billion in combined legal and illegal sales out of the total $344.4 billion worldwide.

"The high-altitude, low-humidity climate and access to water, as well as low cost utility, tax, and labor rates mean cannabis in Lesotho can be cultivated naturally at a very competitive cost," Halo Labs CEO Kiran Sidhu said.

"While most of the licenses issued to date restrict cultivation to 2-3 hectares and indoor or greenhouse growing, Bophelo operates one of the largest sites in Lesotho at 5 hectares. The state has also given Bophelo preliminary approval to expand up to 200 hectares and has indicated they would consider granting permission for outdoor growing from 2019 onwards, following consultation with the International Narcotics Control Board."

Sidhu said Bophelo had secured this site with a 20-year lease and option to renew for an additional 30 years.

- African News Agency (ANA)