The African cloak-and-dagger Marijuana Market could skyrocket to $7.1 bn by 2023   

05 July 2019 : Immense markets, both domestic for export to Europe, are available if African countries repeal prohibition.

With the legalisation of cannabis in Canada and 11 states in the United States of America, the marijuana market has blown exponentially growing from 0-100 in the past year. But, Africa is a pretty overlooked market in that landscape, mainly because of it is still illegal in the continent, and the abysmal economic conditions in most of the countries.

That being said, Africa possesses the potential to become an enormous cannabis market largely due to its massive population and favorable climate that makes growing weed easier than in its neighbouring continent like Europe.

The current status of Marijuana in Africa

Despite cannabis being illegal in most of the countries in the continent, Africa has been cultivating and consuming cannabis since decades. This concealed industry is generating billions of dollars in the back market from an estimated production of 38,000 tonnes of weed per year, according to the UN.

Countries that permit the “legal” use of marijuana

Lesotho, South Africa and Zimbabwe are the only three countries amongst the 54 countries in the continent that permit “medical use” of cannabis.

Although Zambia does have the legislation that allows the medical use, it hasn't really been enacted. 

The legislation around the cannabis landscape in Africa is pretty hazy, for example, in South Africa, even though recreational use is illegal, cannabis was decriminalised for private cultivation and consumption.( Huh?) On the other hand in Egypt, recreational use is banned, but tolerated. In, Morocco, the prohibition of medical and recreational use is not really executed, even though it is illegal.

Lesotho, is the premier and sole country in the region that allows legal cultivation. The mountainous country is also blessed with favorable climate, abundant water and fertile soil which is perfect for growing weed. Countries like Ghana and Nigeria, grow cannabis in abundance, albeit illegally, mainly for export.

Is there a potential? If yes, then how much?

Legalization could snowball the market and dramatically improve the export opportunities for business and could significantly improve the economy ( Taxes!) and enrich the region. 

In Congo, a 100-kilogram sack of cannabis costs between $96 and $128 - exponentially higher than maize, which fetches $54 for about the same quantity.

Cannabis would also create legal employment opportunities. According to the Morocco Network for Industrial and Medicinal Use of Cannabis, the covert cannabis industry in the country is valued at a whopping $10 billion and employs a colossal 800,000 people.

According to an agency estimates, the African cannabis market could be worth $7.1 billion by 2023, provided the bigger chunk of this value is allocated to the recreational market ($6.3 billion). The medical market estimate is relatively much smaller: about $800 million considering around 420,000 patients.

Cannabis companies with African exposure.

Inspire of marijuana being considered as an illicit drug in most of the African countries, a few nations where it is “allowed” , some international companies have taken complete advantage and established their roots. Lesotho in particular has attracted quite a few foreign investors interested in cultivating cannabis for export.

Last year, a Canadian company Supreme Cannabis Company Inc acquired a 10% stake in Medigrow Lesotho following a CA$10 million investment ($7.45 million). Another Canadian cannabis company, Aphria Inc. went a step further and formed a joint venture with South Africa-based Verve Group of Companies. The joint venture CannInvest Africa acquired a stake in licensed producer of medical cannabis extracts in Lesotho Verve Dynamics for CA$4.05 million.

The most crucial and gigantic deal in Lesotho was made by Canopy Growth Corp. In May 2018, the company bought out Daddy Cann Lesotho PTY Ltd., which has a license to cultivate, manufacture, supply, hold, import, export and transport cannabis and cannabis resin. The overall value of the all-stock deal was around CA$28.8 million at the time.

Although Tilray Inc.( another Canadian cannabis company) has not actually invested in cannabis businesses in the region, but it did start exporting medical cannabis products to South Africa last year. Similarly, Nuuvera (acquired by Aphria), signed an agreement to supply 3 tonnes of purified THC and CBD extracts per year to Verve.

Reporting for EasyKobo on Friday , 05 July 2019 in Lagos, Nigeria

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