JSE-listed venture capital company Labat Africa has signed a memorandum of understanding (MoU) with the Council for Scientific and Industrial Research (CSIR) that will see both parties engage in the production and processing of cannabis and hemp.

The agreement will solidify collaboration and cooperation between the CSIR and Labat across the value chain of cannabis and hemp production for industries ranging from pharmaceuticals to textiles to energy, says Labat CE Brian van Rooyen.

“The agreement is about the CSIR wanting to commercialise medicinal cannabis and getting some traction in the industrial side of hemp production and processing. The partnership is collaborative and serves to benefit both parties,” he adds.

The CEs from Labat and the CSIR also agreed on accelerating cannabis and hemp processing for energy, automotive, textile, packaging and construction products.

The agreement makes provision for the use, upgrade and expansion of the CSIR Coega hemp processing facility, the acceleration of hemp biomass and waste into energy applications in KwaZulu-Natal and the beneficiation of biocomposites and biopolymers that will be applied in the automotive, textile, construction and packaging industries.

“For the beneficiation of biocomposites and biopolymers, the conversion of natural fibre to biopolymer is where the value-add is. We have a number of confirmed private sector and State-owned enterprises as clients. One of these is the largest textile manufacturing company in South Africa who will be using the material in their production rollout,” says Van Rooyen.

The Industrial hemp market is worth about $4.9-billion, or R71-billion, globally and is projected to grow to $18.6-billion, or R269-billion, by 2027. South Africa’s hemp industry is projected to be worth R28-billion in five years’ time.

“No large-scale industrial hemp processing operation exists in Africa currently. The producers do not have the technological capability or the financial means to scale the business to the required global levels. South Africa has remained a cottage industry due to historical regulatory issues, social stigma, minimal technological development and the absence of a reliable supply chain for industrial application.

“Our agreement with the CSIR paves the way toward creating a larger, more sophisticated hemp industry, through the development of industrial hemp technologies in order to create that reliability within and throughout the supply chain, locally in South Africa as well as in the Southern African region,” says Van Rooyen.

The collaboration will focus on producing some fast-moving consumer goods among the 25 000 established hemp-based and hemp-derived products in the nine subsectors of the manufacturing industry, all of which can create as many as 20 000 jobs in South Africa.

Further, the agreement on cannabis includes the production and processing of the plant for medical purposes; active pharmaceutical ingredient (API) research, development and production; the proliferation of Labat’s wellness range; and further development of tetrahydrocannabinol-, cannabidiol-infused pharmaceutical products, other cannabis compounds, as well as terpenes using the pharmaceutical technology innovation platform FuturePHARMA.

FuturePHARMA is an open innovation facility integrating molecular engineering and continuous pharmaceutical manufacturing for Africa.

CANNABIS INDUSTRY

“The MoU ties into Labat’s latest moves in the industry. We look to be involved in almost every part of the cannabis value chain, from genetics to retail and dispensary,” says Labat business development executive Herschel Maasdorp.

Sweetwaters, recently acquired by Labat in a strategic cash transaction, champions a team of highly skilled geneticists, breeders, growers and researchers producing high-quality cannabis for clients in Australia and Europe, as well as for local dispensing to medicinal patients through the Biodata research project.

Sweetwaters has and continues to service their offtake agreement.

Further, Labat Africa, through Biodata, has started conducting observational research into medical cannabis as an opioid replacement for pain management. The research was approved by the pharma-ethics committee of South African Health Products Regulatory Authority in June last year.

“Labat has also begun to engage with medical aid companies on the probability of recognising and providing cover for cannabinoid-based medicines for its clients.”

Additionally, Labat Healthcare’s genetics, seeds and breeding subsidiary Ace Genetics has pre-contractual agreements with international seed banks and has launched the African Cannabis Genome and Landrace Project at Sweetwaters Aquaponics to map 12 African varieties of the plant, which include Malawi Gold, Durban Poison, Swazi Gold and Rooibaard, besides others, at the Ace Genetics Nursery that will make provision for a breeding programme that will ensure that indigenous knowledge systems are preserved.

“Our company’s vision remains to be the number one cannabis company in Africa and to maintain that position. With all of the acquisitions, and a focus on increasing revenues, building efficiencies and creating a sustainability model for all subsidiaries, the recently signed agreements over the last two years ensure that we are on a profitable and value-creating path,” says Van Rooyen.