Global Cannabis Report: Lesotho’s Early Mover Advantage Waning
Prohibition Partners says the cannabis boom in Lesotho is slowing down with about 10 main players left in the game, and despite the uptick in exports they are facing capital-raising and compliance challenges.
Prohibition Partners/ACA Group
19 December 2022 at 08:00:00
Lesotho was the first African country to issue licences for commercial medical cannabis activity.
Since 2018, Lesotho has had an active legal cannabis industry, seeing approximately US$200 million in foreign direct investment, and creating over 3,000 jobs in the industry over the last four years.
Some of Africa’s leading cannabis exporters are based in Lesotho, having been early movers in the global cannabis supply chain.
Despite significant challenges and political turbulence, Lesotho’s cannabis industry has continued to see more exporters come on line and scale their production. Lesotho’s licensing regime has been viewed favourably due to its multifunctional nature. This means that a cannabis operator needs a single licence to be able to cultivate, process, extract and manufacture cannabis products.
This is far less complicated than most jurisdictions that require separate licences for various functions in the cannabis value chain. Lesotho also does not require licence holders to build their facilities before being granted licences; an approach that is often praised by local growers.
However, Lesotho has faced criticism relating to; high licence fees, an inadequate vetting system for granting licences, lack of regulatory enforcement and concerns over fake licences that have been sold to unsuspecting buyers. Estimates, in terms of the number of licences issued vary, with some local operators suggesting that over 200 licences have been issued to date.
These concerns have tainted Lesotho’s reputation in the global cannabis industry. However, many of these concerns are being rectified with licence renewal fees being enforced to eliminate speculators from the market.
Lesotho continues to be dominated by approximately ten major operators who export, or are preparing to export, medical cannabis.
Some of the most well established names in the Lesotho market include:
MG Health: The first African cannabis company to be granted EU-GMP certification. The company has mainly been selling products to the German market.
Hemp Africa: The company has been exporting cannabis to Israel since 2018, and continues to expand distribution channels.
Highlands Investments (Canopy Growth): Highlands recorded one of the largest export transactions to North Macedonia in 2021, selling nine tonnes of high THC flower.
Lesotho continues to see growth in its cannabis industry, as more operators complete their fundraising rounds and grow facilities.
However most licensed operators have had significant challenges around; capital raising, meeting compliance standards, inadequate product quality and achieving meaningful sales due to slower than anticipated commercialisation.
This means that the industry is likely to be highly concentrated with a select few operators being able to weather these challenges to build sustainable businesses.
As South Africa, Uganda and Zimbabwe make progress, Lesotho’s early mover advantage is quickly waning.
Editor's Note: This report was compiled before the Battle for Bophelo.
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