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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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The German Crossroads—Somewhere Between Los Angeles and Germany

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Of all the countries on the old continent, good old Germany is the one that is on the verge of a large-scale legalization of cannabis, which will significantly change the cannabis culture and will have to decide between two paths. Does it go the traditional way of the green Amsterdam school or does it follow the zeitgeist of the purple American-Californian philosophy in its then-new financially strong market? This editorial looks at the current situation in the economic powerhouse of the E.U., ventures a glimpse into the future and clarifies whether there might not be a third alternative path for Germany.

But before we can dare to look into the crystal ball and make predictions, we need to take a look at the current situation. An analysis of the current state before we can turn our attention to the target state. Germany does not have a national, recognized cannabis culture in the classical sense. Nor does Germany have any hotspots for cannabis culture, as Barcelona is for Spain or Copenhagen is for Denmark. While the judiciary in the south of the Federal Republic of Germany is still partly tough on small offenses, the police in other metropolises of the country are already wiser and in Berlin, Leipzig, Hamburg, or Cologne much more generous towards private cannabis users. Nevertheless, in the 16 years of Angela Merkel’s and the conservative CDU’s chancellorship, no sustainable cannabis culture has been able to develop. This does not mean that cannabis has not developed in Germany.

Since 2017, cannabis has been legally available for medical use. CBD products are everywhere and available at every second kiosk (bodega) and every Späti (the German’s favorite word for a small deli). Although the regulations are high you can find CBD flower everywhere, even the recognition factor has developed. The idea of a cannabis culture is in demand, even if THC is missing and cannabis containing THC still often has to be bought in parks around the corner or dubious areas. However, the current state of things also includes the fact that in the country of Bayer and BASF, a new branch of biochemical innovation has quietly emerged, which has already made financially strong experts in the industry such as Boris Jordan of Curaleaf become active. The great hunger in Germany for a social cultural embedding of cannabis and the German spirit of innovation in medical cannabis are two sides of the same coin, which could open up a path between green and purple fronts for Germany and, upon closer examination, make it a logical place for the further development of the worldwide cannabis culture. Clearly, the starting signal for legalization came from politics.

The new government elected in 2021 under the Social Democrats of Olaf Scholz has initiated a turning point. From a German perspective, this seems almost paradoxical, as Scholz took office promising to be the continuation and male version of Angela Merkel, who was known in U.S. circles as the so-called “Teflon chancellor.” So there is no point in looking at the current chancellor and his Social Democrats from the SPD on this issue, since he, like Merkel before him, does not let any issues stick to him. As a matter of fact, the focus has to be turned to the two parties that govern together with Scholz. The more left-wing Green Party Alliance 90/The Greens and the Free Democrats of the liberal party FDP. This government (SPD=red; FDP=yellow; Greens=green), known as the “traffic light coalition”, has defined in its coalition agreement that cannabis will be legally available in licensed specialized shops. The fact that three parties are governing in Germany is a novelty and had been expected with great excitement, as the last attempt at a three-party coalition had failed in the exploratory talks. The hype is real.

The legalization of cannabis had been on the agenda of the Green Party and liberal FDP for some time and was therefore an important unifying factor with media impact. The Greens were founded as a pacifist and alternative party and thus legalization was woven into the party’s DNA. The Liberals recognize the potential of a new market and trust in the individual’s personal responsibility in deciding for or against cannabis. They can also trust in the functions of a newly forming free market.

Despite all the justified criticism of capitalism, the example of cannabis shows some of the strengths of this economic system. The forces of a free market (with state framework conditions for all) set continuous improvement processes in motion, because companies want to set themselves apart from their competitors in terms of quality. Innovation, passion, and product understanding drive the industry to new heights. The customer and their needs must be understood and cannabis must be thought of in a holistic way in this new market. There must be full vertical integration without abusing the credibility of cannabis as a cultural property and allowing cannabis to degenerate as a profit-driven vehicle, as some German lobbyists are already trying to do. This is also a paradox, as some of them come from the CDU.

The best case of how to do it right is the company Boris Jordan invested in. Europe’s leading medical cannabis company—The Bloomwell Group. The Bloomwell Group, based in Frankfurt a. M., shows how cannabis in its dual function as a medicinal plant and cultural asset can work in a corporate context. The company houses three entities. Algea Care, which as the leading telemedicine company on German soil, stands for ensuring therapy and access to medical cannabis. Ilios Santé, the importer and trading arm, and the slumbering giant Breezy. The latter, through a cooperation in the near future, will enable the cashing of prescriptions for medical cannabis and position itself in the German market as the leading lifestyle brand in the cannabis space. Breezy will satisfy the hunger after legalization.

Germany’s sophisticated industry is already positioning itself as a global leader in medical use with cannabis in some areas, showing a clear case. The technical know-how and entrepreneurial spirit are there. The social desire for a credible cannabis culture is great and the political will for legalization is there. Breezy operates in a wonderful biotope where a thriving cannabis brand can manage to combine culture and technology.  In my column for the nationally-published startup magazine Business Punk, I wrote about “the respectful treatment of culture.” Cannabis is the unifying factor of several cultures that need to be embedded industrially and legislatively in a sensible way. It is important to take the different influences and communities with us. My work as a designer in the fashion industry has shown me that it is important to use synergies. First anchored in the niche and subculture, I launched my own streetwear collaboration with soccer team VfL Bochum 1848, a first division team of the Bundesliga. Bloomwell not only knows how to use synergies, but also how to create them.

In my role as VP of Marketing, I was able to win rap star and entertainment mogul Xatar as our first brand ambassador and partner. Germany offers high-growth investment opportunities in the coming years and it’s up to the cannabis enthusiasts from the beginning to pave the market with an emotionalized approach and help shape our common culture.

Maybe we’re gonna be talking about the German Blue strains soon? Who knows…

The post The German Crossroads—Somewhere Between Los Angeles and Germany appeared first on High Times.

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Final Legality of Private Cannabis Clubs Still a Long Way Off, But Liddell Relieved as Prospect of Jail Time Recedes

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After lengthy delays there will be more lengthy delays

The Haze Club (THC) director Neil Liddell says he’s relieved his Western Cape High Court application hearing to have the legality of private cannabis clubs was wrapped up in a day – although it could take between two to six months for Judge Maud Slinger to write up her judgement. The THC application was finally heard on 6 June 2022 after over a year of delays.

Judge Slinger is known to be fastidious when writing judgements, so, in the words of Liddell’s lawyer, Andrew MacPherson of Brink Ward: “this is just the beginning”.

MacPherson says that whatever the outcome of the application, the matter is likely to head back to the Constitutional Court as both the State and Liddell will appeal the judgement if it goes against them.

“It does make me feel better, the chances of going to jail are less and less”

“I’m feeling good. It was a long day in court yesterday but thankfully it all got wrapped up in one day and we didn’t have any further postponements” Liddell told Cannasphere Africa TV in an exclusive interview   on 7 June 2022. Host Trenton Birch asked Liddell whether he felt more confident in court now than when he was arrested almost two years ago as the cannabis sector had transformed significantly since then.

Liddell replied: “I don’t think this affects the case so much, but it does make me feel better because the chances of going to jail are less and less as the industry moves forward, as legislation comes closer, as we see which way the Government is trying to move this industry, so I definitely feel better about it, but I don’t think it affects the case too much though”.

Liddell said that the court arguments were quite “detailed in the letter of law” but that “sitting there as a layman, the Judge did give the State a bit of a grilling, more so than us, so hopefully that’s positive feedback”.  But, as he conceded: “One never knows.”

State Has Compromised Itself Over PCC’s

The State’s case has been compromised by a change in attitude of Senior State Law Advisor Sarel Robbertse who had provided an affidavit opposing the legalization of PCC’s. However, in Parliament last week, he admitted that they could serve value as a harms reduction mechanism in the Cannabis for Private Purposes Bill.

The post Final Legality of Private Cannabis Clubs Still a Long Way Off, But Liddell Relieved as Prospect of Jail Time Recedes appeared first on Cannabiz Africa.

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KZN Start-Up Tri-Medi Canna Clinches UK Partner to Set Up Cannabis Export Facility in SA

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Apollon: SA on shopping list after Jamaica

Listed UK pharmaceutical company Apollon Formularies has taken a 49% stake in a joint venture with KwaZulu-Natal cannabis start-up, Tri-Medi Canna (TMC). TMC CEO Bandile says the new company would cultivate, process and distribute cannabis-based medicines through a licensing agreement with Apollon, which provides primary and secondary markets for equity and debt products

Apollan, which listed on the UK’s Aquis Stock Exchange last year, has a licence in Jamaica to cultivate, research, process and sell medical cannabis therapeutic cannabis products for  various illnesses including prostate and breast cancer. Apollon will earn royalties for patent formulations and any new drug discovery will be under the joint partnership. 

According to Businesscann release on 2 March 2022, the deal highlights are:

• “Apollon will receive a gross royalty on sales for all Apollon products sold within South Africa before extending its commercial reach to the wider SADC region under a renewable, mutually exclusive license agreement, the initial term of which is 12 months”;

• “Tri-Medi Canna will become a shareholder in Apollon via share subscription totalling £300,000 over two tranches, the first of which will be for £150,000 at 2.5p per share”.

Mkhize said that the new company would build an EU Good Manufacturing Processes (EU-GMP) facility and would work with emerging farmers and provide training for communities in KZN. 

Focus will be on medical cannabis

He said Tri-Medi Canna was established to focus on medical cannabis, a booming industry that the company said is forecast to be worth up to $7.1bn (R113.7bn) in Africa by next year,  with SA potentially accounting for 70% of that. 

Stene Jacobs, COO of Apollon Formularies for Europe and Africa, said Apollon had been seeking opportunities to expand its operations internationally so it can make its proprietary medical cannabis formulations for various cancer conditions available to a wider patient base. 

He said SA was the first large foreign jurisdiction after Jamaica where Apollon was expanding and it envisaged the local market as a springboard for entry into the rest of southern Africa.

“There is an appetite for what we do. We are already in discussions in Angola,” he said. 

Jacobs said the joint venture would include skills transfer and would partner with the University of KwaZulu-Natal and University of Johannesburg to help develop new products.

BusinessDay Live quoted Jacobs on 19 June 2022 as saying the new JV would double the number of patented cannabis formulations owned by Apollon.

Deal will double Apollon’s patented formulations

“We spent the last nine years creating formulations. We have four international patents, and will have four more in the next few months,” he said. 

In Jamaica it has its own dispensary and treatment centre, which also caters for patients from the UK and US, said Jacobs. He sees SA providing a similar opportunity for medical tourism in the future. 

Jacobs said SA should be an epicentre of growing cannabis, given the favourable climate.  “South Africa has the opportunity to build on its reputation as the regional best-in-class operator and to showcase its already successful cultivation and plant genetics abilities”.

The post KZN Start-Up Tri-Medi Canna Clinches UK Partner to Set Up Cannabis Export Facility in SA appeared first on Cannabiz Africa.

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