Labat enters joint agreement with CSIR to produce medicinal cannabis and hemp

In the latest of a series of growth initiatives, venture capital company Labat Africa plans to jointly produce cannabis and hemp with the CSIR at a CSIR facility in Coega.

Brian van Rooyen, Labat’s group chief executive, says the agreement will solidify collaboration and cooperation between CSIR and Labat across the value chain of cannabis and hemp production for industries ranging from pharmaceuticals to textiles to energy.

“It is really about the CSIR wanting to commercialise medicinal cannabis and getting some traction in the industrial side of hemp production and processing. The partnership is collaborative and serves to benefit both parties,” he said.

The agreement makes provision for the use, upgrade and expansion of the CSIR Coega hemp-processing facility, the acceleration of hemp biomass and waste into energy applications in KwaZulu-Natal as well as for the beneficiation of biocomposites and biopolymers that will be applied in the automotive, textile, construction and packaging industries. 

“For the latter, the conversion of natural fibre to biopolymer is where the value-add is. We have several confirmed private sector and state-owned enterprises as clients. One of these is the largest textile manufacturing company in South Africa, which will be using the material in their production rollout,” said Van Rooyen. 

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Scaling up

Industrial hemp is worth $4.9-billion (R71-billion) globally and is projected to grow to $18.6-billion (R269-billion) by 2027. South Africa’s hemp industry is estimated to be worth R28-billion in five years’ time. 

Van Rooyen says that there are currently no large-scale industrial hemp-processing operations in Africa: “The producers around do not have the technological capability and the financial means to scale business to the required global levels. South Africa’s [hemp industry] has remained a cottage industry due to historical regulatory issues, social stigma, minimal technological development and the absence of a reliable supply chain for industrial application.”

The joint effort by Labat and the CSIR will focus on producing some of the fast-moving consumer goods (FMCG) among the 25,000 established hemp-based and hemp-derived products in the nine subsectors of the manufacturing industry, and Labat claims this initiative could result in the creation of 20,000 jobs in South Africa alone.

The agreement on cannabis includes the production and processing of the plant for medical purposes; active pharmaceutical ingredient research, development and production; the proliferation of Labat’s wellness range; as well as further development of tetrahydrocannabinol (THC) and cannabidiol(CBD)-infused pharmaceutical products and other cannabis compounds as well as terpenes using the pharmaceutical technology innovation platform, FuturePHARMA.

Cannabis value chain

This is just the latest in a series of moves by the company aimed at establishing its dominance in the fast-growing hemp industry.

Herschel Maasdorp, Labat’s group executive for business development, says the company wants to be involved in almost every part of the cannabis value chain, from genetics to retail and dispensary.

Labat paid R10-million cash in early March this year for Sweetwater, an approved medicinal quality cannabis production facility in the Eastern Cape, which sells cannabis to clients in Australia and Europe as well as locally to medicinal patients through the Biodata research project. The company plans to increase the production capacity at the Sweetwater facility from 500kg a year to 1.5 tonnes a year. 

Ace Genetics, the genetics, seeds and breeding subsidiary of Labat Healthcare, which has precontractual agreements with international seed banks, recently launched the African Cannabis Genome and Landrace Project at Sweetwater Aquaponics. This aims to map 12 African varieties of the plant, which include Malawi Gold, Durban Poison, Swazi Gold, Rooibaard, among others, at the Ace Genetics Nursery, making provision for a breeding programme that will ensure that indigenous knowledge systems are preserved. 

Through Biodata, Labat has started conducting observational research into medical cannabis as an opioid replacement for pain management. This research was approved by the South African Health Products Regulatory Authority in June last year. BM/DM