Vast potential - JSE MAGAZINE

Vast potential

Labat Healthcare is working towards cultivating the cannabis economy through a proudly SA value chain

In February’s State of the Nation address (SONA), President Cyril Ramaphosa made clear his intention to bring the cannabis industry into the fold, publicly recognising the economic opportunity that the sector presents. ‘This year we will open up and regulate the commercial use of hemp products, providing opportunities for small-scale farmers; and formulate policy on the use of cannabis products for medicinal purposes, to build this industry in line with global trends,’ he stated.

While this year’s SONA may seem a lifetime ago, thus far the President has been good on his word, with a number of promising developments following the announcement. One regulatory landmark was the reassignment of cannabidiol (CBD) – cannabis’ non-psychoactive compound – from a Schedule 7 to Schedule 4 medicine, as categorised by the Medicines Act. This means that CBD products can now be sold without a prescription from a medical practitioner, provided that they contain less than 0.0075% CBD.

Labat has repositioned to facilitate the creation of a holistic cannabis ecosystem

Reports reveal that, as a rapidly growing commodity, cannabis has the potential to unlock more than R100 billion in SA. And given COVID-19’s staggering blow to an already precarious economy, this not-so-humble plant may yet play a leading role in the country’s socio-economic recovery.

Labat Africa, a leading black-owned and -managed investment holdings company with Level 2 BEE credentials, is poised to realise this potential, helping to advance the creation of a cannabis economy across the continent. Headquartered in SA, the group was founded in 1995 – a year after the birth of democracy – by Victor Labat and CEO Brian van Rooyen, listing on the JSE one year later.

‘While initially Labat’s focus lay in logistics, we’ve recently made significant investments in healthcare, with emphasis on the entire cannabis value chain. Investments will be focused on the production of CBD pharmaceutical products, health and wellness products, as well as a planned state-of-the-art hemp processing plant; which will contribute to the food, wellness and industrial markets,’ says Van Rooyen.

In 2019, Labat Africa undertook the strategic directive to reposition its business model, with the objective of becoming a significant global player in the cannabis sector, and a leading healthcare company in Africa. Later that same year, the company announced its future plans in respect of this bold new strategy – which, along with the assessment of each of its businesses – informed the context of this shift, while identifying opportunities that would create economic value.
To this end, the newly restructured Labat Africa launched its healthcare business, Labat Healthcare. Overseen by an experienced leadership team headed up by CEO Michael Stringer, the division consists of Labat Botanicals, Labat Pharmaceuticals, Labat Hemp Processing, as well as CannAfrica (its retail lifestyle arm) and BioData, a renowned medical science and research organisation that drives R&D.

‘We are now on the cusp of an emerging economy that will shift the African continent,’ according to Stringer. ‘Through our value chain, we aim to empower all of our stakeholders; from farmers and retailers, through to customers.

‘For the farming sector, this chain will assist in accelerating land utilisation, as well as community upliftment through job creation and skills development.

‘Hemp offers a sustainable alternative to traditional building materials and plastic, while the medicinal properties of the plant are profound, proving to have a significant impact on a range of ailments and thus improving the quality of life in users.’

Cannabis products have the potential to unlock more than R100 billion in SA.

The intention of Labat’s repositioning was to encompass the full spectrum of production, facilitating the creation of a holistic cannabis ecosystem, while expediting the broader category growth. Yet, as Stringer admits, unlocking its economic potential requires collaboration, and Labat Healthcare has formed a number of relationships that are pivotal in seeing the group manifest this vision.

One of these partnerships is with DeFugo, an Australian biomass-processing company with a strong environmental mandate, which is focused on improving the commercial value of natural-fibre biomass. With a process that is centred on the regeneration of agriculture, DeFugo will assist the group in the development of sustainable products.

Another example of a key partnership that Labat has established is with communications agency Saatchi & Saatchi (Cape Town), which will guide the group in articulating its transition. ‘We’re excited to join forces with Labat Africa, as it morphs into a cannabis-first healthcare business,’ says Firdous Osman, managing partner at Saatchi & Saatchi. ‘We aim to play a role in changing mindsets through making consumers aware of the untapped opportunity this exciting category presents – particularly in a local context – while supporting the group as it carves out new roads within the health sphere.’

Through these strategic collaborations and the establishment of a solid value chain, Labat is well positioned to seize the moment that cannabis has brought to the fore.

‘We’ve seen the growth that the cannabis economy catalyses within our global markets,’ says Van Rooyen. ‘Given our country’s unique socio-economic challenges – which have been greatly exacerbated by the pandemic – we are extremely optimistic around its potential to alter the economic course of South Africa for the better.’


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