The Cannabis Industry Could Be Africa’s New Goldmine

Africa is gingerly gravitating towards the idea of cannabis cultivation, a “money machine” industry that has taken roots in various sectors. The sectors comprise healthcare, pharmaceuticals, consumer goods, and agriculture.

Every year, analysts predict what the cannabis industry is worth. And every year that number exceeds expectations. A 2019 report from Prohibition Partners, a research and consulting firm specializing in the legal cannabis industry, estimated that Africa's cannabis business could be worth as much as $7.1 billion by 2023.

Despite this fact, the industry has been scorned by many and inhibited by regulatory restrictions. Fortunately, the legal market has emerged rapidly as more governments legalize cannabis for medical and adult use.

Two cannabis cultivators, Goodleaf and Highlands Investments have merged to form the largest vertically integrated cannabis operations in Africa.

Launched in 2018, Goodleaf is a South African company supplying a range of products containing cannabidiol (CBD) from the cannabis plant, including oils, skincare topicals, sparkling flavored water, natural vapes, and powder sachets. The first store opened a week after the South African minister of health announced the legal sale of CBD products in May 2019.

On the other hand, Highlands is the first and largest grower of cannabis in Lesotho. Licensed in 2017, the company cultivates, manufactures, and exports medical cannabis.

Announced on Thursday, the combined companies valued at $50 million. The terms of the deal signal that Highlands Investments shareholders will have 35% shareholding in the merged entity, with Goodleaf being the majority shareholder, at 65%.

Speaking on the merger, the CEO of Goodleaf Warren Schewitz said: “After the merger with Highlands, we are now the largest cultivator of cannabis in Africa with a 200-hectare ISO-accredited facility in Lesotho. Highlands used to belong to Canopy Growth, one of the largest players globally, but it exited via a management buy-out, which allowed us to get the deal done.”

“Consumers are looking for wellness products where they know the source of origin. This deal allows traceability for our products. It also means a reliable, predictable, high-quality supply from one of the best global cannabis producers. We are excited about the UK and European market; Highlands is already exporting into the medical cannabis market there.”

“Unlocking the cannabis industry will be transformational if we seize it. It’s exciting, because I think it can really impact a lot of sectors. You don’t get many opportunities like this,” he added.

“There are three sectors in the cannabis market: CBD, medical cannabis, and recreational cannabis. Currently, only CBD is legal in South Africa, so we are not yet in the other sectors. If medical cannabis becomes legal, we will definitely venture into that market,” he concluded.