A budding opportunity: Canada’s cannabis industry looks to Africa for export deals

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Demand from Canada’s burgeoning cannabis industry is helping fuel an emerging new industry in Africa: the cultivation of marijuana as an official export crop.

Lesotho and Zimbabwe have become the first African countries to legalize the growing of marijuana for medicinal and scientific uses and both are eagerly exploring potential deals with Canadian investors.

In one of the first Canadian cannabis deals with an African country, Ontario-based Supreme Cannabis Co. Inc. has invested $10-million in a Lesotho company, with the aim of exporting high-quality cannabis oils to Canada and other markets.

Last week, a Zimbabwean newspaper reported that Canadian investors are scouting for 10,000 hectares of land for marijuana farming in the Mashonaland region of the country.

A Zimbabwean cabinet minister, Obert Mpofu, disclosed last year that a Canadian company submitted an application to produce medical cannabis in one of Zimbabwe’s new investor-friendly “special economic zones.”

Canadian investors are attracted by the climate in southern African countries, which they consider ideal for cultivating cannabis. But they are also aware that some of these countries have a long history of growing cannabis – known as mbanje or dagga in parts of southern Africa – for traditional medicine and other uses. One study by a United Nations agency concluded that Africa has the world’s highest level of cannabis production, accounting for about 25 per cent of global production.

In countries such as Lesotho, people have used marijuana for traditional medicine for centuries, so the crop doesn’t carry the same stigma that hampers production in some countries. Cannabis is routinely grown alongside corn in small farms in Lesotho. One recent UN study has ranked marijuana as the third-biggest source of income in the small mountainous country.

“It’s got a culture that’s supportive of medical cannabis,” John Fowler, chief executive officer of Supreme Cannabis, said. “It doesn’t have the baggage of the negative side of the narco-business as some jurisdictions have.”

Mr. Fowler confirmed that his company recently purchased 10 per cent of Medigrow Lesotho. As a fellow member of the Commonwealth, Lesotho is very suitable for Canadian investment, he said. “When you look at language, you look at laws, you look at stability – it’s quite good,” he told The Globe and Mail in an interview.

He would not comment on whether his company might invest in Zimbabwe, but he said Canadian cannabis companies would do well to look to southern Africa as they seek to leverage their competitive advantage in overseas markets.

Rhizo Sciences, a Seattle-based company, says it is exploring how it can supply cannabis from Lesotho to licensed producers in Canada and other countries that have legalized medical marijuana. In late March, it exported a small amount of medical cannabis from its Lesotho partner, Medi Kingdom, which it shipped to a Vancouver-based laboratory for analysis.

Dallas McMillan, president and co-founder of Rhizo Sciences, said companies looking to invest in the region will need to spend at least $10-million to build production sites that meet the international manufacturing standards required by other countries. But, he said, countries such as Lesotho are keen to attract this type of investment.

“It’s a very clear signal from these African countries that they see this as a viable and real opportunity for their economies,” he told The Globe.

Late last month, the government of Zimbabwe announced a marijuana-legalization plan, including a licensing fee of US$50,000 for those who want to grow cannabis.

Opinions in the country are divided. Christian groups are among those that have criticized the plan, fearing that it will encourage greater drug use.

The production and possession of marijuana was previously punishable by up to 12 years in prison in Zimbabwe.

The government has promised recreational use of cannabis will remain illegal. And it insists that it will tightly regulate the cultivation of cannabis, with careful licensing and strict audits.

Zimbabwe’s state-owned media have been enthusiastic about legalization. “We think that given the immense potential the business has, the government can double the fees without chasing away serious investors,” read an editorial in The Herald, a state-run daily newspaper.

An article by a business analyst in the Herald said the plan will provide “much-needed foreign currency” for the country. “Companies that will pioneer cannabis production in Zimbabwe stand to make huge profits,” he predicted.

Mr. Mpofu, the home affairs minister and former investment promotion minister, said he laughed when he first received the application to produce medical marijuana from a Canadian cannabis company.

“I thought they were joking … but they are serious,” he told a meeting of Zimbabwe’s national chamber of commerce.

“This seems to be big business. ... This company is from Canada and it’s one of the biggest conglomerates in that country and they are producing cannabis for medical purposes under strict condition.”

The deputy finance minister, Terence Mukupe, told a Zimbabwean newspaper that marijuana could become “a billion-dollar crop” for Zimbabwe within the next five years.

Other countries such as Malawi and South Africa are also considering the legalization of marijuana.

Tilray, a B.C.-based cannabis company, announced in February it had exported medical cannabis products to South Africa for distribution to qualified patients through pharmacies. It said it was the first cannabis product that has been legally exported to an African country and it praised the “evolving regulations” for cannabis in South Africa.

Several Canadian cannabis producers are already investing abroad in countries such as Germany, Israel, Spain, Australia, Colombia, Chile, Brazil and Jamaica.