Lesotho’s Highlands Investments is to move into higher value cannabis products in a bid to move beyond being a low-cost producer of high-quality flower. That emerged in an exclusive interview with CEO Mark Corbett, who says that fulfilling the company’s 8,5 tonne off-take agreement with North Macedonia will be extremely challenging from a logistics perspective.
But he says, it’s all systems go and the massive order will be fulfilled before year end in two tranches: 2 tons being shipped in September and 6,5 tonnes in November 2021.
World’s largest legal cannabis order coming out of Lesotho
“It’s comfortably the world’s largest legal cannabis order to date” Corbett told CA via zoom on 16 August 2021 “and the logistics involved are astounding.”
The order is the culmination of four years of hard work, says Corbett, beginning with the take-over of Canopy Growth’s 50 million Canadian dollar investment in a top-of-the-range cultivation facility in Lesotho. “That’s how long it took us to get the business over the line”.
North Madeconia is emerging as a springboard into Europe, says Corbett. “They’re able to process our flower and export the extract into the EU”.
“Being a low-cost producer was the foundation that Canopy Growth put down” he says, “but as the market grows, more opportunities open up”.
He says Highlands is now ready to “pivot” higher in the cannabis value chain: “Eight tonnes of flower translates into 800 litres of oil. Believe me, four barrels of product is much easier to move internationally than 40 containers of dried flower”.
Corbett was speaking out of his new offices in Kloof St Cape Town following Highlands’ merger with leading consumer CBD brand Goodleaf. He said the fit between the companies was working as Highlands was focusing on the B2B market and Goodleaf was developing its footprint in the B2C market. Highlands will provide Goodleaf with some of its raw material requirements but will continue to look to supply the rest of the market as well.
Aiming higher up the value chain
He says Highlands has entered into a relationship with GES Labs in Cape Town to produce isolates, distillates and oils, pending their licensing approval by the South African Health Products Regulatory Authority (SAHPRA).
Highlands has a license in Lesotho to cultivate 200 ha, but is currently utilizing 11 ha. “We’ll stay with 11 ha next year, but we can go to 20 ha straight away without additional investment”. Instead of expanding cultivation area, Corbett is more interested in getting more value out of existing space.
“We’re already moving into a higher value market with an order of granulated flower for Australia” says Corbett. Essentially this is a white-label order of granulated medicinal cannabis for the Australian importers to label and distribute.
Corbett says one of the limitations in the industry right now is getting the right genetics. Highlands is importing both high-THC and high-CBD seed from the UK, Spain, Colombia and Canada. “We’re restricted in what we can buy because of the lack of registered seed banks that are suitable to our requirements. Seed consistency has been an issue and this affects yields which will become crucial as the market becomes more competitive. The real gap in the market right now is on the genetics side”.
Corbett on SA cannabis reform: “Optimistic but frustrated”
He says Highlands would “love to support local genetics” and is interested in the potential of local landraces, but that more research is needed. “This is an area we will be looking at in the future”. Although Highlands has a SAHPRA-issued cultivation license in South Africa it will maintain its cultivation only in Lesotho for the immediate future. The Maseru government, he says, is committed to the cannabis industry and works closely in helping to secure export permits and facilitate logistics.
This is not the case in South Africa, he says, where government departments seem to be pulling in opposite directions. “We are passionate about South Africa but we’re frustrated at the lack of clarity around a legal framework for cannabis” he said. His optimism is fuelled, however by increasing interest from the Department of Trade and Industry in moving the process forward. “Warren (Schewitz, CEO and founder of Goodleaf) and I had a good meeting with them and the Department of Agriculture two weeks ago and they’re asking all the right questions”.