Medigrow’s billion rand Coega industrial cannabis project gets underway this month as equipment arrives on site in the Eastern Cape and the first hemp seeds are ready for delivery to small-scale rural growers.
Max Matavire, City Press
21 January 2025 at 09:00:00
Medigrow’s Coega project is called Instango Extraction (Ntsango being the isiXhosa name for cannabis) and could change the face of the Eastern Cape economy. The bold plan is a joint venture with the Eastern Cape government in which Medigrow has pledged R1 billion investment over five years to create an industrial cannabis economy that could generate between R6 billion and R26 billion and bring 30 000 traditional growers into the mainstream.
The provincial government will cough up R4 million from its side to buy seeds, fertilizer and equipment.
The first tranche of the investment has been paid and in support of the project the Eastern Cape government says it will procure six tons of hemp seeds, 1 000 litres of herbicides, 1.3 tons of fertiliser and fencing to assist hemp farmers who will make money by selling the cannabis to Medigrow for processing.
City Press reports that next week the first delivery of hemp seeds will take place to 30 select farmers.
Imported equipment valued at R30 million is already on site, awaiting assembly in readiness for actual production which starts in February. The initial investment is for setting up the indoor cannabis cultivation facility, cannabidiol (CBD) extraction, packaging and pre-roll manufacturing.
The project, on a 10 000-hectare piece of land, will see the processing of cannabis into various medicinal products and oils, and will create about 30 000 job opportunities when fully operational.
The cannabis industry is estimated to inject between R6 billion and R25 billion into the country's gross domestic product (GDP).
Small-scale rural farmers currently growing cannabis illegally will now be properly licensed and given hemp seed to grow the cannabis plant which will be sent to the Medigrow processing plant where it will be processed into finished products for export.
Medigrow chief executive Edgar Adams, in an interview with City Press, said they had invested a lot of money into the project and so "there is no chance of it failing".
He said that, after realising the medicinal properties of cannabis – and also driven by the death of his nine-year-old daughter due to cancer – he committed himself more deeply to the development of the cannabis industry.
"The project is going smoothly and moving according to plan, and there is great commitment and buy-in from the Eastern Cape provincial government.
"We are handing over hemp seed to 28 selected and licensed rural farmers on 27 January 2025. The equipment valued at R30 million is already on site and actual production starts next month (February)," Adams said, adding that the end products would be earmarked for export markets such as the US, Europe and Australia.
Adams said workers union Nehawu, through its holding company Nehawu Holdings, was also a shareholder in Medigrow.
Adams added: "During production, we try to maintain international standards because we export the finished product to European markets. We receive the product raw from the farmers and we do all the processing here at Coega. The products processed from the dagga will be CBD isolate; and tetrahydrocannabinol (THC), the psychoactive part of the hemp plant which also has numerous other medicinal uses".
Medigrow was established in 2017 and, until recently, has been operating as a consultancy for medicinal cannabis producers, and assisting them to obtain the required legislative licences.
The Eastern Cape Rural Development and Agrarian Reform Department last week said the project is the first stage of the first commercial pilot project on hemp flower cultivation, supply and delivery.
The Department said: "The Plant Improvement Act allows for commercial cultivation of hemp, and its cultivation is regulated via a permit system whereby prospective hemp entrepreneurs (farmers, importers, processors, manufacturers and wholesalers) need to have a permit from the department before venturing into legal commercial hemp business."
The Eastern Cape government has injected R4 million into the project. Eastern Cape Premier Oscar Mabuyane, who has been a strong advocate for the introduction of the cannabis industry due to the plant's abundance in rural areas where it grows wildly, has previously been quoted as saying: "We cannot be missing in action when our province is endowed with a crop that can be ploughed and processed to make medicinal products and create jobs."
The legislation signed by President Cyril Ramaphosa last year is the first major legislative step he undertook in the long-awaited regulatory reform and structural changes promised by the National Cannabis Masterplan in the 2022 state of the nation address, where large-scale promotion of job creation and economic prosperity for rural communities through the industrialisation of cannabis were touted as potential gains from the sector.
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