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Sweetwaters the Core of Labat’s New Strategy as Group Unveils Plans to Set Up Commercial Seedbank, Expand Retail and Invest in Rolling Papers and Beverages

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Labat to focus on finding the right ‘business combinations’

Labat Africa is finally hoping to pull off its first-mover advantage in the cannabis value chain with a more aggressive strategy after the pounding of the pandemic and a lack of a clear regulatory framework.  The JSE-listed company has been burning through cash but is a going concern because of drawdown funding it has secured from Californian investors and its recent listing on the Frankfurt Stock Exchange.

The company gave an insight into its strategy when it revealed its latest financial statements to the public on 30 May 2022. Although the damage was bad, it’s not out of line with similar first-mover-advantage groups in all newly-regulated jurisdictions.

Labat’s strategy to seize the cannabis value chain in the course of the next 12 months is still being hampered by the restricted regulatory framework, but that looks set to change in the course of the year. Labat’s cannabis subisidaries fall into its healthcare division. They are: Labat Pharmaceuticals, Sweetwater Aquaponics, Ace Genetics, Labat Hemp Processing, Cannafrica and Biodata. Labat’s strategy going forward is to find the right “business combinations” to maximize efficiencies and get the Group purposefully heading towards profitability.

It says “the company’s vision remains to be the number one cannabis/hemp company in Africa and to maintain that position. The agreements over the last two years ensure that the company is on a profitable and value-creating path. Labat has made massive strides in laying the ground-work to becoming a Cannabis Powerhouse in Africa” It added that “Labat measures its success beyond yield and capacity; the pursuit of quality for a long-term competitive advantage drive to its business strategy”. 

Sweetwaters Aquaponics: a ‘quantum shift’ for the group

Labat says the acquisition of SAHPRA-licensed Eastern Cape facility, Sweetwaters Aquaponics on 1 March 202,2 led to a “quantum shift in the busines, enabling the export of product to overseas customers, with the initial initial customer in Australia ordering a second batch of flowers, following the successful testing of the THC content (26.7%) by SAHPRA. 

Ace Genetics: commercial seedbank to be set up this year

Ace Genetics is to be set up under license at Sweetwaters, a breeding room is under construction and a commercialization strategy is being put in place once the right genetics have been identified. The company says the planned date of transfer of all seeds and mother plants to Sweetwaters “is June 2022 with seed production expected to commence on the 1 August 2022 and the Company will be going to market with its own online Commercial Seedbank immediately thereafter. “

Echo Life deal gives Labat Exclusive Rights to Axle and Axle Pre-Rolls

Labat said last November’s acquisition of Miami-based Echo Life “greatly complements the Healthcare retail business through its unique range of product offering that will be marketed and sold through the CannAfrica retail stores as well as the Labat online retail platform”. In terms of the deal Labat will have the exclusive rights to distribute Echo Life’s pre-rolled hemp smokeable Ace and Axle as well as other products. 

CannAfrica introducing CannAfrica ‘Kiosk Model’ in 5 Shopping Malls

Labat has switched tack on the roll-out of its retail brand CannAfrica; it says the “main objective that underpins the new strategy is the aggressive rollout of corporate owned stores, some of which, will remain corporate-owned, and others, once profitable, to be migrated to franchisees, who are fully paid up in respect of franchise rights. 

The corporate-owned stores will take a different approach to the Melrose Arch, Hartbeespoort Dam and Cape Town stores which are larger stores with significantly higher operating costs. 

The ‘kiosk model’ is being implemented in malls and larger shopping centres and Labat is set to conclude a deal with the Company is at an advanced stage of concluding a deal with the Mowana Property Group to open up CannAfrica Kiosks in five of their prime properties namely: 

Cresta Shopping Centre (Gauteng), Westgate Mall (Gauteng), Menlyn Shopping Centre (Pretoria East), Castle Walk Mall (Pretoria) and the Pavilion (Westville). 

The five kiosks should be opened by the end of June 2022. 

Labat says it has identified that, “as an industry issue, there are no fully dedicated CBD stores operating in South Africa; therefore a considerable amount of time and effort has been put into further extending its product offering. The product lines which the company will be expanding into are minor/rare cannabinoids, vapes, grow kit accessories and other paraphernalia”. 

The Company also plans to turn the CannAfrica kiosks and retail stores  into “’dispensaries’ for the Biodata Research Project, for the legal dispensing of cannabis flower, other medicines and THC products.

Biodata Medicinal Cannabis to Become ‘Dispensary’ Product

Labat says the “Biodata research project is gaining traction” and plans to use the planned CannAfrica Kiosks as “physical-sign-up-points for the study”.  It says the kiosks will also serve as Biodata dispenseries for medical cannabis for pain management.  It says it is also “engaged with” a number of vape stores to also become Biodata “dispenseries” once regulatory approval is in place.

Rolling Papers into the Value Chain

Labat says it “is currently finalising agreements with a rolling paper specialist company that focuses on cannabis rolling paraphernalia. The business was running informally. However, there has been great traction on the brand and products with sales last year averaging 200 units per day. The business has now been improved structurally and has a focussed strategy of expanding into parts of Africa and the USA. The main challenge facing the targeted expansion Is the lack of working capital which approximates R500 000 for the first three months mainly for stock purchases to fulfil orders.  Labat has engaged the business partner around a possible share transaction as well as a bridging working capital facility over the first three months. The process is currently in the due diligence phase. For its year end March 2022, the company earned revenues of R1.8 million. These products are complementary products for the CannAfrica Stores. 

CBD Infused Drinks to Provide Ammo for Retail 

Labat came up with a new cannabis retail strategy in March 2022 to expand its national footprint and visibility and to increase product offerings,. It believes “a retail beverage offering is indispensable”. 

It says in an Enterprise Development initiative in 2020, Labat was introduced to a start-up cannabis beverages company which it still in equity negotiations with. However, “the company has developed three recipes in collaboration with the CSIR, and have finalised their packaging and branding architecture, and have delivered a premium product, as sample drinks. The product is superior, and of a quality that Labat want to be associated with. The company will now do their first production run, in order to show capability and test the market. A draft Term Sheet in place, to be concluded in the next phase of the Company’s deliberations. It is envisaged to be a share-based deal, for 30% equity, and access to evolving retail distribution channels.”

SAMES to be the Tech Hub

The South African Micro Electronic-Systems Proprietary Limited (“SAMES”) will “remain a technology hub and will also hold the healthcare divisions intellectual property, formulations, ‘know-how’, seed banks, extraction technology, strain development and other technologies needed in complying with Good Manufacturing Practice (“GMP”) standards, including European Union GMP, where applicable”. It says that although SAMES had a healthy start to the year, revenues have decreased “mainly as a result of a worldwide shortage of semi-conductor chips”

 Logistics business to take care of transportation and warehousing 

Labat’s Logistics, although not directly part of the Healthcare division, “will form an integral part of the Healthcare operations with both transportation and warehousing of raw material as well as final products. These are explicit requirements in respect of the GMP accreditation. Furthermore, the final product of the pharma business is expected to sell for between R800 and R1 000 for a 20ml bottle, which will need to be securely transported. The company’s marketing efforts are showing acceptable results and Labat is well positioned for growth based on work completed over the past three years. The Company continues to provide logistic services to large corporates, when and as required.”

Read all Cannabiz Africa coverage of Labat here

The post Sweetwaters the Core of Labat’s New Strategy as Group Unveils Plans to Set Up Commercial Seedbank, Expand Retail and Invest in Rolling Papers and Beverages appeared first on Cannabiz Africa.

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Black Unemployment Rate Stays Higher, African-Americans Get Less Jobs

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In May 2020, the black unemployment rate stood at 16.8% compared to 12.4% among white Americans. While the economic recovery brought down the all-American average from Aprils’ record 14.7% to 13.3%, it ticked 0.1% for African Americans. The ongoing protests over George Floyd’s death due to police brutality, and high rate of joblessness for blacks highlights the glaring social and economic disparity in a country viewed as the torchbearer of the world’s democratic values. 

Many blame the coronavirus pandemic for unemployment among blacks, who predominantly work in state and local sectors that have witnessed major layoffs. However, it is the disparate racial mindset that makes black Americans subject to economic and social injustice. While white Americans are mostly businessmen and white-collar workers, blacks struggle to get jobs. 

The data on black unemployment rate understates the bigger problem of disfavoring in the United States. African Americans face inequalities in access to healthcare, education, housing and means of prosperity. Their wages, income, health status and economic condition continue to suffer due to persistent racial discrimination visible socially, economically and physically.

The Deep-Rooted Economic Disparity

Historically African Americans are at the receiving end of economic development in the United States. In August 2019, when joblessness was its lowest in the country in decades, the black unemployment rate was still 2% above the 3.4% whites without a job. Whenever a recession hits the US market, African Americans are more vulnerable due to the fragile economic safety net they rely on. As the economy rebounds, their recovery is again slower compared to the white population. 

Much blame for the high black unemployment rate and their economic backwardness goes to racial discrimination that continues since the US came into existence. African Americans were enslaved, and brought to the country to work for the prosperity of white farmers. Despite their support in the War of Independence, their enslavement continues, and they were denied economic advancement. Black people were excluded from the political process, and forced to serve the white men. 

The abolition of slavery in 1863 failed to restore their property rights completely and White Americans continued to enjoy privileges in job and commerce. The sustained racial segregation and discrimination of black people by whites led to the Civil Rights Movement in the 1960s. Though it resulted in social, economic, and political reforms in favor of African Americans contributing to Barack Obama’s elevation as the first black US President, blacks continue to face systemic injustices. The absence of equal opportunities, wages, and education keeps them disadvantaged and the black unemployment rate remains higher than that of white Americans.

Why the Black Unemployment Rate Stays Higher

The foremost reason for the high black employment rate in the United States is “historical and systemic educational and economic disadvantages” meted out to them. For centuries, white Americans are “patronized” to maintain a “disproportionate economic edge” at the workplace. African Americans struggle to get better and quality jobs as they have too many hurdles, including lower pay, higher job insecurity, reduced benefits and fewer opportunities, compared to white people. 

Systemic barriers also put obstacles for black Americans. They are victims of occupational segregation making them vulnerable to wage discrimination at the workplace. Blacks are viewed as fit for lower-paid jobs, and employers prefer whites over them for stable, well-paying offers. Whether it is a slowdown or economic recovery, they are “last hired, first fired.” About 55% of them have private health insurance compared to 75% among white workers.

The lack of entrepreneurship and fewer African American-owned businesses also contribute to the higher black unemployment rate. They lack the wealth to support their education, start a business, or move to a particular place and access better jobs. They face monetary barriers preventing their education, and end up with higher debt than white Americans. However, this has more to do with racial profiling in jobs than the absence of qualification among black people. Their systemic economic exclusion is as old as the US history.

Even after slavery was abolished, the offices created to resettle formerly enslaved people encouraged them to enter into a contract with their former masters, and continue to do the same occupation. States, such as Carolina, made laws barring African Americans from doing any job other than farming or domestic servitude. White-dominated legislatures approved acts that prevented the relocation of blacks, or their hiring for distant job openings. 

Unfavorable agriculture policies and Ku Klux Klan terror in the South drove African Americans to the North during the 20th century. However, the lack of good education and employment discrimination forced them to accept lower-wage domestic and service vocations. The trend continues despite technological advancements leading to high-paying jobs in the country.

Intentional government inactions are also to blame for the higher black unemployment rate. Federal and state statutes enforcing non-discrimination at the workplace are never strictly implemented. Many of the agencies, including the US Equal Employment Opportunity Commission, remain only largely symbolic, while social discrimination perpetuates economic inequality. This, in turn, has forced African American workers to endure lower-income, fewer jobs and exclusion from better opportunities.

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Rhode Island Rakes In $1.6 Million in First Week of Recreational Pot Sales

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Rhode Island’s new adult-use cannabis market opened for business earlier this month, and so far, business is good. 

Local news station WPRI, citing the state’s Department of Business Regulation, reported this week that “Rhode Island’s six marijuana dispensaries — five of which are currently authorized to sell to recreational customers — collectively sold just over $1.63 million worth of marijuana from Dec. 1 to Dec. 7.” 

“Less than half of those sales were for recreational marijuana, at about $786,000. The rest, about $845,400, were sales to medical marijuana patients,” the station reported. “For comparison, during the last week of October — the most recent full week available prior to recreational sales — the dispensaries collectively sold $1 million worth of medical marijuana.”

Rhode Island legalized recreational cannabis use in May, when Gov. Dan McKee signed a bill that was passed by lawmakers in the state General Assembly

The law made it legal for adults aged 21 and older to cultivate and possess marijuana, while also establishing the regulatory framework for cannabis sales. 

“This bill successfully incorporates our priorities of making sure cannabis legalization is equitable, controlled, and safe,” McKee, a Democrat, said in a statement at the time. “In addition, it creates a process for the automatic expungement of past cannabis convictions. My Administration’s original legalization plan also included such a provision and I am thrilled that the Assembly recognized the importance of this particular issue. The end result is a win for our state both socially and economically.”

Additionally, the law “will give courts until July 1, 2024, to automatically expunge past convictions, and those who want their expungement sooner may request it,” the governor’s office explained in a press release at the time.

Late last month, McKee and the state’s Department of Business Regulation’s Office of Cannabis Regulation announced that “five licensed medical marijuana compassion centers have received state approval to begin selling adult use marijuana on or after December 1.”

The five “compassion centers” that were given approval to begin adult-use sales are: Aura of Rhode Island (Central Falls); Thomas C. Slater Center (Providence); Mother Earth Wellness (Pawtucket); Greenleaf Compassionate Care Center (Portsmouth); and RISE Warwick (Warwick).

“This milestone is the result of a carefully executed process to ensure that our state’s entry into this emerging market was done in a safe, controlled and equitable manner,” McKee said last month. “It is also a win for our statewide economy and our strong, locally based cannabis supply chain, which consists of nearly 70 licensed cultivators, processors and manufacturers in addition to our licensed compassion centers. Finally, I thank the leadership of the General Assembly for passing this practical implementation framework in the Rhode Island Cannabis Act and I look forward to continuing our work together on this issue.”

Matt Santacroce, who is serving as interim deputy director of the Rhode Island Department of Business Regulation, said last month that the state was “pleased with the quality and comprehensiveness of the applications we received from the state’s compassion centers, and we are proud to launch adult use sales in Rhode Island just six months after the Cannabis Act was signed into law, marking the Northeast’s fastest implementation period.”

“We look forward to continuing to work with the state’s cannabis business community to ensure this critical economic sector scales in compliance with the rules and regulations put forward by state regulators,” Santacroce said. 

The launch of recreational sales on December 1 was only one change to Rhode Island’s existing marijuana policy to arrive this month. 

WPRI reported that, on the same day, “the state also stopped charging medical patients to obtain or renew their medical marijuana cards,” adding that “there is an expected revenue loss from the pending plan to expunge marijuana possession charges, which will eliminate court fees from those crimes.”

The post Rhode Island Rakes In $1.6 Million in First Week of Recreational Pot Sales appeared first on High Times.

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D.C. Council Approves Cannabis Bill To Promote Equity, Provide Tax Relief And Eliminate Medical Marijuana License Caps

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On Tuesday, lawmakers in Washington, D.C., approved a bill that would significantly alter the city’s medical marijuana program. The bill would, among other things, remove licensing caps on cannabis businesses, reduce taxes for operators, increase efforts to promote social equity, and establish new categories of regulated businesses, such as on-site consumption facilities and cannabis cooking classes.

Additionally, it would allow current “gifting” operators, who sell non-cannabis items in exchange for “free” marijuana products, to transition into the permitted market while granting authorities the ability to crack down on those who continue to operate unlawfully.

The measure, which had been revised by the Committee of the Whole earlier in the day, was passed by the full D.C. Council by a vote of 7 to 4. 

A second reading vote by the Council is still required before it can be sent to the mayor’s office.

Pro-reform lawmakers have voiced concerns that the bill’s most recent iteration may have unintended consequences for social fairness by granting preferential treatment to already established medical cannabis outlets.

Legally, adults would be able to selfcertify their medical marijuana use according to the Medical Cannabis Amendment Act. 

Council Chairman Phil Mendelson (D) introduced the legislation on behalf of Mayor Muriel Bowser (D).

A note prepared for the hearing by the Committee of the Whole states that the most recent print “retains a majority of the adjustments and additions made by” the Committee on Business and Economic Development (CBED), which passed the measure last week. 

It had progressed out of a different panel before.

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