The King of Swaziland has become involved in a royal fight over his desire to grant an exclusive cannabis license to US multinational, Stem Holdings.
King Mswati III has been accused of going behind the backs of the royal family and the cabinet to sew up a secret deal with Stem at a series of meetings in the Swazi capital Mbabane in 2018. He’s also been accused of unleashing the police on senior government figures involved in illegal cannabis growing to get them out the way.
Stem has smartly exited stage left in order to avoid getting caught in the mess and some Israelis in Florida made a lot of money.
Swaziland’s intentions to legalize cannabis production for export have so far resulted in a stand-off in parliament, police raids on cannabis farms allegedly linked to the King’s political enemies, a major row within the Swazi royal family and no investment in the industry of any kind. Intriguingly, the former head of Israeli military intelligence No licenses have yet been granted, more than two years after Swaziland announced it would change the law to legalize cannabis for export in order to boost the flailing local economy.
The licensing process had hardly got off the ground when it appeared that Stem jumped the gun by publicly announcing it had an exclusive 10-year hemp license in Swaziland. It’s CEO, Adam Berk issued a press release on 25 March 2019 saying that : “Stem Holdings Inc. is pleased to announce it has executed a definitive agreement dated March 22, 2019 to acquire South African Ventures Inc. SAV has a joint venture with Profile Solutions and a working capital surplus of approximately $11 million. The JV has received preliminary approval to become the only licensed growing farm and processing plant for medical cannabis and industrial hemp in The Kingdom of eSwatini (formerly known as Swaziland) for a minimum of 10 years” .
This prompted an outcry that no due process had been followed and that no other license applications had been considered, prompting opposition leaders to accuse the King of getting a kickback. Stem was blindsided by the outcry, and fearing that any controversy could compromise its licenses in the United States, made a hasty exit.
Ten days after committing R176 million to its southern African venture, it issued the following press release saying “Stem is pleased to announce it has now closed its previously announced acquisition of South African Ventures. In connection with the closing of the Acquisition, Stem has issued the former shareholders of SAV an aggregate of 8,250,000 common shares of Stem”.
The purchase consideration is expected to be 8,250,000 common shares of Stem, valued at approximately C$19 million based on its closing trading price on March 21.
South African Ventures has a joint venture with Profile Solutions Inc., which makes and distributes cannabis products through its Elite Products International Inc. subsidiary. The target company has a working capital of approximately C$11 million. South African Ventures owns a 49% stake in the joint venture, with the remainder owned by Profile Solutions.
One year later he only beneficiaries of legalization in Swaziland has been Profile Solutions , the 49% US partner of the Stem subsidiary South African Ventures, which was compensated with Stem shares worth 11 million Canadian dollars. Profile Solutions, distributes the Elite range of
The Eswatini Cannabis Association chairman, Saladin Magagula, said the Stem issue showed the danger of the Swaziland cannabis industry being captured by white monopoly capitalism.
“As much as we support Foreign Direct Investment, we don’t want white monopoly capitalism to completely take over the business from indigenous Swazis. We want everything to be grown and processed here, even if we involve investors, at least the growing part should be done by the citizens” he said.
Dr Simon Zwane, the Principal Secretary in the Ministry of Health confirmed that various companies, including Stem, had applied for licenses but no ne had yet been granted.