Johannesburg Stock Exchange-Listed Company Enters Cannabis Industry

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Written by Peter Pedroncelli
Cannabis industry
South African investment company Labat Africa is acquiring pharmaceutical and genetics firms with the aim of entering the cannabis industry. Labat Cannabis launched Sept. 11 on the Johannesburg Stock Exchange and celebrated its 30-year listing anniversary on JSE. Photo provided by Labat

South African investment holding company Labat Africa Group is acquiring pharmaceutical and genetics firms and plans to become a dominant force in the Southern African cannabis industry.

As a listed company on the Johannesburg Stock Exchange, Labat (LABJ.J) offers investors the opportunity to invest in the cannabis market through an established public platform. The 30-year-old, majority Black-owned firm has been listed in Johannesburg for 25 years.

Labat has established a cannabis firm alongside its fuel and logistics and information and communication technology businesses. The new company is called Labat Cannabis, according to a shareholder announcement.

The company says it plans to become “a major player in the cannabis industry” through strategic acquisitions and a license to operate in Lesotho, the first African country to legalize cannabis.

Lesotho legalized cannabis in 2017. Cannabis remains illegal in most of Africa. South Africa in the process of legalizing recreational use.

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Labat has acquired 70 percent of South African seeds and genetics business Knuckle Genetics for 4 million rand ($263,360US). The company produces high-quality cannabis flowers, oils and concentrates with a high THC content (more than 20 percent) for the export market.

Another part of Labat’s strategy includes the purchase of KwaZulu Natal-based pharmaceutical facility Pac-con Pharmaceuticals Proprietary Limited, which manufactures and packages liquids, tablets, capsules, creams and gels for consumers. 

“Pac-con will be utilized to produce high-grade CBD oils and related cannabis products for the retail and wholesale markets,” Labat said in the announcement. 

Labat Cannabis launched Sept. 11 on the Johannesburg Stock Exchange and Labat celebrated its 30-year listing anniversary on JSE.

The acquisitions will be financed through a combination of cash and the issue of Labat shares.

Labat plans to buy a 70 percent stake in Lesotho cannabis grower and manufacturer Zarenka for around $3.8 million, according to Fin24.

cannabis industry
Labat Africa Group CEO Brian van Rooyen has launched Labat Cannabis in an effort to become a major player in the Southern African cannabis industry. Photo provided by Labat

Labat has also acquired a license to cultivate, manufacture, supply, hold, import, export and transport cannabis in Lesotho, BusinessLive reports. Lesotho has been issuing production licenses since 2018.  

The Lesotho Ministry of Health is the licensing authority for cannabis businesses, with applicants vetted through the Lesotho Narcotics Control Board.

The process is restrictive, however. Smallholder farmers cannot afford the $35,300 it costs to obtain a single license, providing big businesses with an advantage in the market, according to DailyMaverick.