This morning, TSX Venture-listed, LGC Capital Ltd. (TSXV: QBA) announced that the company has entered into an agreement to acquire a 60% interest in South Africa's House of Hemp through their joint venture with AfriAg (Pty) Ltd. House of Hemp is the only certified cannabis growing and processing facility in South Africa.
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About LGC's Joint Venture & The House of Hemp
In June, LGC Capital entered into a strategic alliance with AfriAg (Pty) Ltd. to create a 50/50 joint venture that aims to develop a fully-regulated cannabis growing and processing industry in Southern Africa for export to regulated cannabis companies and legal end users worldwide. AfriAg is 40% owned by AfriAg Global PLC. AfriAg Global PLC trades on the NEX Exchange (a London based exchange for emerging growth companies) under the symbol "AFRI". AfriAg has extensive experience in greenhouse cultivation and distributing perishable food products worldwide and will assist LGC with securing cannabis growing and processing facilities. One such facility is the House of Hemp.
The House of Hemp has a long term lease on the only certified indoor facility for the possession and cultivation of cannabis for research purposes. In this context, "research purposes" includes growing, extraction and packaging. The facility is located at the Dube TradePort AgriZone, which is located within the Durban International Airport, making eventual exports significantly easier.
The site consists of approximately 405,000 square feet of temperature regulated and humidity controlled glass greenhouses and approximately 19,000 square feet of refrigerated pack houses, laboratories and offices.
The House of Hemp was the first private company in South Africa to be awarded an exclusive permit from the Department of Agriculture and the Department of Health to legally cultivate and process hemp and cannabis products and has licenses in place to import cannabis seed and products. The company is currently in the process of securing a second R&D license to grow and export medicinal cannabis and medicinal cannabis products with varying THC and CBD content.
Terms of the Deal
LGC and AfriAg have jointly signed a binding agreement with the House of Hemp for the sole and exclusive right to acquire a 60% beneficial interest in the House of Hemp
Within the next two days, the joint venture will make an initial payment of $19,595 CAD
The joint venture has also committed to pay an additional $37,000 CAD by July 28th to fund House of Hemp's August obligations (including general overhead, salaries and lease payments)
The joint venture will continue paying $37,000 CAD monthly for six months to keep House of Hemp funded while completing transfer paperwork and investigative studies on the most cost efficient ways of commencing scalable production.
LGC and AfriAg (the joint venture) have also committed $4.9 million CAD to commence large scale trial production within the Dube TradePort greenhouses upon finalizing development plans
Regulation of Cannabis in South Africa
A March 2017 court ruling declared some cannabis relevant sections of the Drugs and Drug Trafficking Act of 1992 invalid and unconstitutional. This ruling effectively legalizes possession, cultivation and personal use of cannabis in the home on the grounds that government regulation of what people do in their homes (as long as no one is harmed) is an infringement of the right to privacy and dignity. The South African parliament still has to change sections of the Drug Trafficking Act and the Medicines Control Act before March 2019, but this ruling still marks a major milestone on the path towards the legalization and regulation of cannabis in South Africa.
The South African Medicines Control Council published regulations providing for the use of cannabis for medical purposes in 2016 and expressed a desire to reclassify "cannabinoid medication" as a Schedule 6 substance.
We're excited about the burgeoning cannabis industry in South Africa! If you are too, check back soon for more coverage on cannabis and South Africa from The Daily Marijuana Observer.
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