Lesotho became the first country in Africa to legalize and start the exploration of medical grade cannabis. Which is good news for investors that gravitate towards investments that generate measurable social and environmental impact alongside financial returns. Until recently, African governments have been reluctant to follow the trend of legalization seen in Europe and Americas. Lesotho’s legalization signals a shift towards more liberal policies in the continent.
The challenge for many of these investors is finding a good balance between social impact and financial return. Medical grade cannabis is one of the industries that satisfies both conditions making it a perfect impact investment product. Estimates by Cowen & Co show that the U.S. market for medical cannabis will reach more than $55.8 billion by 2025. The overall global price for cannabis in the world is estimated at $10 per gram. This price is projected to significantly increase over the years. The global medical cannabis market size was valued at $11.4 billion in 2015 and projected to grow with compound annual growth rate (CAGR) of 17.1%. Financial returns are sound and projections in the years to come, promising. So, what is the social good?
The market is experiencing growth because of the increased awareness on its various medical applications such as pain management, manage side effects of chemotherapy in cancer patients, osteoporosis in menopausal women, epilepsy and Schizophrenia just to name a few.
Medical marijuana is mainly classified into two types, namely cannabis sativa and cannabis indica, which originate from the countries of the western hemisphere and central & south Asian region respectively. The growing number of countries legalizing the use of medical marijuana in various parts of this world is one of the key factors driving the usage rate of cannabis in therapeutic application.
The country’s climate, political and economic environment makes it perfect for companies looking into impact investment. This emerging market in Lesotho has the first-mover advantage in Africa and the potential to turn the country into a global powerhouse in production and supply of both raw or finished cannabis medical products. Cannabis growth is not new to the country, its use and growth dates to 16thcentury and majority of the produce transported to South Africa illegally. Late last year and beginning this year, the government legalized its growth for medical and scientific purposes and has already given licenses to several local and international companies.
Lesotho’s climate characterized by clean water and air and its high-altitude location makes it perfect for cannabis growth. Lesotho grows a unique Sativa cannabis, Doug’s Varin, which has high levels of THCV. This strain is used by practitioners to treat ADD/ADHD, fatigue, inflammation, pain, panic attacks and Parkinson’s. Its been argued that cannabis grown at high altitude is more potent than that grown at sea level. Some growers claim that sunlight at high altitude receives less atmospheric filtering which increases cannabis trichome production which results in a more potent cannabinoid for plants grown at high altitude. Lesotho, also known as the magical kingdom in the sky, is perfect for growers of this school of thought. Lesotho is the only sovereign state in the world that lies entirely above 1000 meters in elevation. its lowest point of elevation is 1,400 meters.
In April 2018, Zimbabwe following in the footsteps of Lesotho become the second country in Africa to Legalize the growth of medical cannabis. Previously, production and possession carried a sentence of up to 12 years in prison. The Ministry of Health is currently accepting license applications from individuals and companies. The five-year renewable license allows applicants to carry, transport and sell fresh and dried cannabis as well as cannabis oil. Zimbabwe has gone through a series of political changes since the resignation of its long-standing president, Robert Mugabe. The current leadership is pro-business, looking to rebuild the economy and attract foreign investment.
How can we help?
Globetrotter Seven can help potential investors navigate the regulatory frameworks of these countries and find investment ready companies. For investors, social entrepreneurs and businesses interested in opportunities in Africa that join us for our business to business pairing trip to Lesotho in November!