Free State cannabis farmer Coenie Venter has urged new entrants in the market to do their research thoroughly, engage with local producers and listen to what the experts say. 

The owner of Ilco Farming is open about his own mistakes since acquiring a SAHPRA license in 2021.

He told Annelie Colman of Farmers Weekly in a recent interview:  “The biggest mistake we made was underestimating the demands and complexities of medical cannabis production and believing it was going to be easier than it is.”

Venter and his wife Ilse, were traditionally grain producers, farming on the road between Viljoenskroon and Kroonstad in north-west Free State. He said this is a “high-risk maize, soya beans and sunflower production area” prone to extreme droughts.

He said the droughts that occurred between 2006 and 2016 “forced us to pursue alternative sources of income to supplement dryland grain production”.

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“We considered a host of alternatives, such as pecan nuts and blueberries. However, as medical marijuana had gone mainstream globally, we decided to embark on the production thereof. Our research showed there is growing long-term demand and potential for cannabis.

“It is a new industry with huge challenges, from cultivation to processing to marketing and export. We made wrong decisions every step of the way, from using the wrong cultivation spaces, wrong cooling systems for cultivation and processing, and wrong genetics.

“Fact of the matter is that we paid expensive school fees and it was a very steep learning curve. I want to caution prospective new entrants into this industry to do as much research as possible, engage existing producers and make use of experts in the field.”

However, when asked whether they would embark on cannabis production, knowing what they know now, he replied: “Yes! We love the industry. Medical cannabis has massive potential worldwide. We had lots of doors closed in our faces along the way, but also met and worked with great people that helped us to go forward. However, we would probably do it very different than we did it the first time.”

He said  it would have been a bonus to have the team they have in place now from the onset. “It took some time to get the right people to take the business forward.” The current management team is Tyler Muller (head of cultivation), Danielle van der Burg (quality control and processing specialist), and Berné van Coller (resident pharmacist).

“Teamwork makes the dream work,” says Venter.

Another major issue was getting offtake agreements. Ilco Farming targeted international markets from the onset because of the “near saturation of the local market”.

He said it took nearly two years before they secured their first international client. Ilco is currently exporting cannabis to Australia. Venter says seeds have been sourced from Israeli company, Leapfrogg Genetics that are suitable for local climatic conditions.,

The rest of this article is background information reproduced from Farmers Weekly:published on 29 July 2024.

New production plant

The first brick of the high-tech Ilco medical cannabis production plant was laid in January 2021 and the plant was officially licensed in November 2021.

Medical cannabis contains a number of cannabinoids compounds such as THC and CBD; THC is a psychoactive compound and is a Schedule 6 narcotic regulated by the South African Health Products Regulatory Authority (SAHPRA).

The Venters’ focus is on the production of high-level TCH cannabis cultivars and their business, Ilco Farming, therefore needed to be licensed by SAPHRA.

Ilco Farming supplies cannabis flower that is used for inhalation (smoking) with high THC and a high terpene profile, so quality is all important. The bud must be dense and the trichome crystals should be visible to the eye. The smell, depending on the strain, can be from fruity to cheesy or grassy.

Ensuring top quality and safeguarding the integrity of their product are paramount for the couple as their products have an impact on their clients’ quality of life.

Controlling the environment in which the plants are grown, dried and processed plays a pivotal role in averting issues such as mould and pathogens.

Additionally, they employ natural pest management methods to safeguard against insect infestations, preserving yields and maintaining the best product standards.

Complying with regulations

The current regulatory framework in the country, supervised by SAHPRA, permits the cultivation, manufacturing, testing and distribution of medical cannabis.

This entails significant capital outlay and observance of strict quality control standards. Ilse says:

“The application for official recognition and permission was quite an intricate affair. We had to apply for a Section 22C licence at SAHPRA in terms of the Medicines and Related Substances Act, No. 101 of 1965. The issuing of the licence was preceded by an audit after construction and completion of the facilities.

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“Our audit was successful, and a Section 22C licence that allows for the cultivation and selling of medical cannabis to other licensed entities was duly issued. Having an offtake agreement was also a prerequisite in order to obtain the licence.”

Compliance with the official Good Agricultural and Collection Practice (GACP) was also required by the state as well as compliance with the official Good Manufacturing Practice (GMP). GACP and GMP each has its unique set of rules and standard operating procedures to ensure the consistent production of high-quality cannabis.

The management of the plant is required to submit regular reports as required by SAPHRA, coupled with physical inspections by SAPHRA representatives. The Venters’ hothouses and warehouses are GAP-approved.

GMP, or Good Manufacturing Practice, is a set of rules and procedures related to the quality assurance, management, and packaging processes of manufacturing facilities and their products. GACP requirements more specifically outline guidelines for cultivation practices.

One possible way for Ilco Farming to expand its market was to export to the EU. However, that would involve securing an EU Good Manufacturing Practices licence, which comes at a cost of nearly R2 million. Germany and Australia were the only two legal export destinations provided for under the business’s SAHPRA licence.

Diversification

The Venters have the option of product diversification, including cannabis oil production or marketing products in small quantities, such as prerolled joints for the medical cannabis smoking market.

Given the problem of local market saturation, focusing on more value-added products could open up new revenue streams for the business.

While product diversification would require investment in research and development, it could afford an opportunity to access untapped niche markets.

The Venters also have the option of selling the unused parts of their cannabis plants to other registered cannabis farms specialising in the production of cannabis oil, creams, lotions and ointments.

Instead of diversifying on their own, the Venters recently entered into a collaboration agreement with two leading South African cannabis producers, which gives them an opportunity to access the international market by exporting cannabis to their partners’ overseas clients.

Israeli Partnership

Ilco Farming also entered into a partnership with Israeli company Leapfrogg Genetics, which will supply them with cannabis genetics suitable for the South African climate.

To that effect, Leapfrogg Genetics, funded by a kibbutz in Israel, is investing in Ilco Farming and is building a system at the Ilco Farming premises focused on the development of top genetics.

Although it was an uphill battle for Ilco Farming to find its feet in the cannabis production industry, Coenie and Ilse Venter remain very passionate about their enterprise.

Their advice to prospective new entrants in the medical cannabis industry is to do thorough research and gain as much information as possible before embarking on production. 

They say medical cannabis in South Africa has massive potential, but the most important advice for newcomers is to not start building infrastructure before a reliable market is established.

Email Ilco Farming at info@ilcofarming.co.za.

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