JSE-listed healthcare group Labat Africa has announced a comprehensive plan to expand and further develop an integrated cannabis business in South Africa.
The company, which has interests in information and communications technology, logistics and energy has added Labat Healthcare to its portfolio, into which its cannabis business will be structured
As an important part for the further development of this new and emerging industry in South Africa, Labat has announced its intention to raise R112-million from institutional and other investors during a roadshow to fund the rapid expansion of its healthcare business.
The use of proceeds from the raising will include an amount of R61-million for the botanicals business, R40-million to fund the expansion of the pharmaceutical unit and R11-million to create a network of retail outlets through its current retail arm CannAfrica.
Labat Healthcare has developed a full value chain comprising six key ecosystem components − farming, logistics, processing, refinement, retail and customers.
It will incorporate a high-grade cannabis breeding and cultivation plant, a manufacturing facility for processing of pharmaceutical grade CBD oils and other related cannabis products, as well as a hemp processing unit, and a cannabis wellness warehouse.
“Labat is transitioning into a fully integrated healthcare company with the establishment of Labat Healthcare. We intend to be a leading Medical Cannabis player in the South African healthcare market, supported by the development of a lucrative industrial hemp market in South Africa,” said Labat Group CEO Brian van Rooyen.
Van Rooyen said he was excited about the industrial hemp market as it emerges as a new industry for South Africa and it offers opportunity to support emerging farmers, create jobs, uplift communities, help use land productively, develop skills and contribute to health and wellness.
He said studies conducted by Labat had shown that at least three job opportunities could be created for each 1 ha of land on which cannabis is grown.
Van Rooyen said studies show that two-million jobs, including downstream jobs, can be created through large-scale hemp farming on 500 000 ha of land.
Hemp is used in the clothing and textile industries, and it can also be used in the production of plastic materials and bricks.
“The majority of dashboards found in cars have been manufactured using plastic derived from hemp. I believe that this is the right time to invest in a fully integrated cannabis healthcare business supported by an industrial hemp industry consisting of an end-to-end value chain. A value chain which will accelerate the growth of the cannabis economy and ecosystem in South Africa,” Van Rooyen said.
The Department of Trade, Industry and Competition and the Agricultural Research Council (ARC) estimate the current informal and formal cannabis industry in South Africa to be worth R14-billion and that, by 2024, this could increase to R28-billion, accounting for 70% of the R44-billion estimated African market.
Labat’s strategy is focused on medical cannabis sales to Europe and hence its strong focus on European Union (EU) Current Good Manufacturing Practices certification and entering the pharmaceutical market through the registration of cannabis active pharmaceutical ingredient.
The company will also focus on conducting clinical trials in the medium term through its acquisition of BioData. The key focus will be to develop cannabis-based alkaloids for the treatment of pain and inflammation and to also develop APIs for supply to big Pharma who are currently conducting trials for the treatment of cancer.
Labat Healthcare is intent on establishing a fully integrated medicinal cannabis business which includes already registered and active entities: Labat Botanicals, Labat Logistics, Labat Hemp Processing, Labat Pharmaceuticals, CannAfrica and Labat Intellectual Property Company.
The value chain is aimed at ensuring seamless operations which will ensure the company is well positioned to service its intended markets in South Africa, and internationally.
In the medium term, Labat’s retail subsidiary, CannAfrica will establish cannabis wellness warehouses across the country and the African continent. Labat Healthcare executives will ensure the entire product range is approved by the South African Health Products Regulatory Authority as well as foreign regulatory agencies in the EU.
The Labat Healthcare team will be headed by Mike Stringer, a former MD of Active Pharmaceutical Ingredients facility in Cape Town.