Cannabis in Africa: will 2020 be the breakthrough year?

Posted on December 26th, 2019 by Bill Weinberg and tagged , , , , , , , , , , , , , , , , .

AfricaMuch media hype anticipates an imminent cannabis boom in Africa, and foreign investment is indeed pouring into a few key countries on the continent. But some dreams have also come to naught—and a few initiatives have displayed some of the worst tendencies of corporate agribusiness in the developing world.

Cannabis cultivation in Africa goes back centuries, and legal production has now taken hold in some countries on the continent—with several more anticipating embrace of the new industry. Overseas investment is coming in, and recent media reports predict an African cannabis boom in 2020.

The UN Office on Drugs & Crime (UNODC) in its 2007 overview report Cannabis in Africa estimated 10,000 tons produced annually on the continent—a figure that has certainly only increased. There is clearly tremendous potential in daylighting what is already a thriving underground economy.

There are now four legal producers in Africa. South Africa decriminalized personal cultivation via a judicial ruling in 2018. That same year, the South Africa Health Products Regulatory Authority (SAHPRA) issued the first licenses for commercial cultivation of medical marijuana—now numbering four in all. In May 2019, SAHPRA rescheduled CBD, clearing the way for essentially free sale of CBD extract and derivatives. 

Far in the lead is South Africa's small and landlocked neighbor, Lesotho. Long a major illicit producer, is now aggressively embracing commercial cannabis production as a ticket out of poverty and under-development. In 2017, it issued Africa's first commerical cultivation licenses, again for the international medical market. Investment has since poured in.

Things have moved much more slowly in traditionally authoritarian Zimbabwe, which also legalized medical marijuana cultivation in 2018, by order of the Health Ministry. The last entry is Uganda, where plans for commercial cultivation were held up by demands from conservative cabinet members for a legal review earlier this year.

Progress is also reported from Malawi, where CNN reports the government is now cultivating hemp on a trial basis, with an eye toward permitting production of CBD strains. And Eswatini (the former Swaziland), another small land-locked neighbor of South Africa, is following Lesotho into a licit cannabis economy, with a bill or legalize cultivation now pending.

The legal logjam in Uganda appears to have just broken. A report in Taarifa Rwanda newspaper indicates the first licenses in Uganda have been approved, with 7,000 hectares now under cannabis cultivation. Among the biggest of 90 firms under license in Uganda is the Israeli company Together Pharma, which intends to export to Canada.  

Media predict continental boom
More Israeli capital seems poised to follow. A bullish write-up in the Times of Israel last month was entitled, "With Israel as partner, Africa can turn cannabis into an economic game changer."

Times of Israel enthused: "With abundant land, an experienced labour force and climates conducive to cannabis cultivation, if legitimized, cannabis could contribute to a continent-wide economic uptick... Israel is a global leader in advanced cannabis production solutions, including unique extraction techniques, targeted formulations, plant quality monitoring technology and novel delivery platforms. This can offer greater cost-efficiency and standardization to ensure the health of Africa's expanding cannabis industry."

On Dec. 19, Bloomberg news agency offered a similarly bullish report on the cannabis boom in Lesotho. It notes that since the landlocked kingdom became the first African country to issue cannabis cultivation licenses, foreign investors including Canadian companies Supreme Cannabis, Canopy Growth and Aphria have "poured tens of millions of dollars into a handful of facilities, drawn by the low cost of production."

MG Health, Lesotho's biggest legal producer, received C$10 million ($7.6 million) from Supreme Cannabis last year in exchange for 10% of the business, which was then known as Medigrow Lesotho. MG Health CEO Andre Bothma told Bloomberg the company plans to employ as many as 3,000 workers locally once it reaches full production in a few years—up from 350 currently. It is now growing a CBD strain, and primarily exporting extract to South Africa, although Bothma said the company also anticipates entering European markets. "We have first-mover advantage in Africa and we think the market is huge," the CEO added.

The Bloomberg account emphasized one particular lure of production in Africa—low overhead: "As cannabis rules loosen around the globe, companies are turning to low-cost regions for supply. MG Health says that even in its start-up phase, it’s producing in Lesotho for about 93 cents a gram, less than the $1 or more per gram that it cites as the norm elsewhere."

Low production costs have long been a goad to foreign-backed plantation agriculture in Africa—and attendant land-grabbing.

Earlier this year, UK-based cannabis industry consultancy Prohibition Partners released its African Cannabis Report, emphasizing a refrain also oft-heard from agribusiness, oil and mineral interests: Africa holds great potential, but "infrastructure and facilities are lacking," so "Implementing new production centres may prove costly and time-consuming."

The specter of cut-and-run capitalism
This raises the question of whether the cannabis industry in Africa will be more of a responsible player than these other economic concerns have. So far, there have been a few bad signs.

NBC News reported earlier this month on a sobering case from Cameroon, where British firm Trade Park said it had lined up investment from globe-spanning tobacco and drug companies to carve a 154-square-mile cannabis plantation out of the rainforest and bring thousands of jobs to impoverished locals.

But things didn't work out that way. "Instead, four years after Trade Park Corporation signed its first papers with local officials, there is nothing to show for the project but angry investors, some stakes in the ground and a few dirt roads already being reclaimed by jungle."

Many of the major backers boasted by Trade Park—including German pharmaceutical giant Bayer (controversial producer of glyphosate herbicide) and US tobacco major Altria (reviled makers of Marlboro cigarettes)—told NBC they'd never heard of the project. The residents of the locality where the project was planned, Meyomessala, are clearly bitter. "Trade Park could not honor its commitments," Christian Mebiame Mfou'ou, mayor of Meyomessala, wrote to reporters when asked about the project.

Trade Park's plans only came to light this month when a huge cache of corporate records was leaked from Formations House, a UK firm that specializes in contriving offshore "shell companies" for shady clients. This drew a flurry of investigations into the affair.

The Organized Crime & Corruption Reporting Project (OCCRP) found that locals had been hired to cut roads into the bush for the project in anticipation of a visit to review the site by British investors and a high-level delegation from the Cameroon government. But the company appears to have cut its losses and pulled out shortly afterward—leaving the hired road crews unpaid for their labor.

"We were all involved in digging roads that made it easy for the delegation to move within the forest," Mvondo, a member of the local Bulu indigenous group, told investigators. "No one paid us and until today they still owe us."

Neither the cannabis plantation nor the promised jobs have materialized, and the local people have returned to subsistence farming.

These revelations from Cameroon come almost exactly a year after all too similar ones from the Democratic Republic of Congo (DRC). There was a brief media splash when a Canadian company called InstaDose Pharma was reported to be poised to drive down the price of CBD globally by dumping a vast quantity on the market, produced from hemp grown by cheap labor in the DRC.

Typical gushy treatment was offered by Canada's Financial Post on Dec. 27, 2018: "Flying under the radar for the past few months, InstaDose Pharma is ready to hit the market with 2 million liters of CBD oil in 2019. InstaDose Pharma has over 200,000 farmers harvesting cannabis out of the Democratic Republic of the Congo on over 100,000 hectares of land." The report predicted an imminent drop in CBD prices of over 96%.

Such reports disappeared as quickly as they had come, and no Congolese CBD flooded the global market.  Equity Guru website scoffed in a withering headline: "Instadose: When the scam is so brazen that it becomes unintentional comedy."

The most credible report that Equity Guru could find—dated Oct. 24, 2018, attributed to Congolese media, apparently posted to (but since removed from) the InstaDose website and now online at Financial News Media—merely said that the DRC's deputy agriculture minister, Noël Botakile, had "welcomed the initiative."  Not that cannabis was already in production at the sites, named as in Lualaba and Kasai Central provinces. Much less that finished CBD products were ready to go to market.

The DRC, of course, has been wracked for generations now by horrific internal conflicts, making it the site of one of the world's worst humanitarian crises. Resource extraction under the control of lawless actors has fueled the conflicts—such as the notorious "blood coltan" in your cellphone. The families of children abused in near-slave labor conditions in Congolese cobalt mines recently launched suit against tech companies including Apple, Google, Tesla and Microsoft in the US courts. Israeli firms have been particularly criticized for dealing in "blood diamonds" from other African conflict zones. And Cameroon is also at this moment descending into internal conflict.

Those concerned with responsible business pratices in the cannabis industry would do well to keep a close eye on Africa. The last thing we want is to be seeing headlines about "blood CBD" a year or two down the lines.

Cross-post to Cannabis Now


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