Over 3 000 new small investors have entered the South African cannabis industry in the past three months through Silverleaf Investment’s JV with Easy Equities. Silverleaf closed its IPO on 31 October 2022, having raised just over R4,2 million to fund cannabis investments.
The interest in cannabis by the younger generation stands in stark contrast to the investment establishment, and has been facilitated by the Easy Equities mobile app technology which allows people to make small investments easily.
This news comes as Silverleaf ties up its second purchase, EcoGreen Analytics, a Cape-based company that offers extensive testing for cannabis and hemp products. It’s first investment was in Gauteng based Druid’s Garden.
Silverleaf CEO Darryl Weisz told Cannabis Africa in an exclusive interview on 1 November 2022 that he was very happy with the IPO as it had been subscribed to mostly by millennials.
“What’s important to us is not how much was raised but the profile of these new investors, whose average age is 33”,
“We wanted to do a retail range that appealed to young adults who are future-conscious. It was very pleasing for us to see the take-up by a new generation of investors. They are attracted by the environmentally-friendly aspect of the plant from both the medicinal and hemp side. They are aware that cannabis is a long-term investment but is like to burgeon into a new industry as they’ve seen with crypto-currencies”.
He says Silverleaf will continue to raise investment funds in anticipation of a change of law that will allow the commercial trade in cannabis. The company is to embark on a roadshow soon to attract more institutional investors to the sector.
Weisz said that while millennials saw the long-term potential of cannabis, older investors were still cautious about investing in the industry because of the lack of enabling legislation and the fact that most cannabis companies were struggling. Weisz said that in the short-term cannabis businesses would find life a lot tougher until such time as legislative restrictions were lifted.
“Targets cannot be met in this regulatory environment. For there to be meaningful growth, this category has to open up” he said, “but it’s going to take time. We’ve always said this industry will need five years to get going but the truth is that it might take more time”.
Weisz said the longer-term outlook was positive as Government commitments were starting to come through, but he said, until such time as the Department of Justice was on board, commercial trade in cannabis could not get off the ground.
“We haven’t reached the tipping point yet”.
Weisz says Silverleaf is not rushing into any new investments fast. It had received over 200 applications for funding and 30 pitch presentations, but that most were not “business-ready”.
An exception was EcoGreen Analytics, which is up and running, and in the process of obtaining additional testing equipment and a SAHPA license.
“We believe that the EcoGreen team will offer a world class service to the local industry who are in desperate need of high quality, value-for-money service in this space to support their export drive” said Weisz.
Disclosure: Cannabiz Africa publisher Brett Hilton-Barber took up an investment in Silverleaf in June 2021 via a related party.