JSE listed healthcare group, Labat Africa which announced in September 2019 that it was entering into cannabis market has announced a comprehensive plan to expand and further develop an integrated cannabis business in South Africa.

The company, which has interests in ICT, 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 Capital Raising process is co-ordinated by The Company Sponsors; Arbor Capital and the details can be obtained from the Company’s website www.labat.co.za

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 consisting of 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.

Brian van Rooyen, CEO of the Labat Group commented: “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”.

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 utilise land productively, develop skills and contribute to health and wellness.

He said studies conducted by Labat have shown that at least three job opportunities could be created if cannabis is grown on one hectare of land.  In his State of the Nation address in February, President Cyril Ramaphosa said the government intends to release 700 000 hectares of land for farming. Van Rooyen said studies show that two million jobs, including downstream jobs, can be created through large scale hemp farming on 500 000 hectares 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,” said Van Rooyen. “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” he added.

The Department of Trade and Industry (the dti ) and the Agricultural Research Council (ARC) estimates that the current informal and formal cannabis industry in South Africa is worth R14 billion and by 2024 this could rise to R28 billion, 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 EU cGMP’s (Current Good Manufacturing Practices) certification and entering the Pharmaceutical market through the registration of Cannabis API’s. 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 API’s 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 (SAHPRA) 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 (API) facility in Cape Town. Stringer brings a wealth of experience after spending almost a decade working on the regulatory component of the cannabis sector in South Africa.