JSE-listed Labat acquires R11.25 million stake in Northern Cape medical cannabis producer

 ·20 May 2021

JSE-Listed investment holding company Labat Africa says it has acquired a stake in Northern Cape-based cannabis cultivation company, Leaf Botanicals.

The company will pay R11.25 million for 75% of Leaf Botanicals, to be settled by an issue of 11 250 000 Labat shares.

Labat Africa announced in 2019 that it was entering into cannabis market through a “comprehensive plan to expand and further develop an integrated cannabis business in South Africa”.

By way of rationale for the acquisition Labat noted that Leaf Botanicals is licensed by the South African Health Products Regulatory Authority, known as SAHPRA, to cultivate harvest and export medical cannabis. The facility, it said, is both EU(GACP) and USA(GACP) accredited.

“It is in production, with the second harvest expected in May 2021. Leaf Botanicals fits well into the Labat Healthcare segment whose aim is to provide high quality medical cannabis products to a sophisticated and knowledgeable customer base.

“The acquisition brings to Labat an accredited, reliable and credible producer of high-quality medicinal cannabis, resulting in Labat being active in the most significant parts of the cannabis value chain, from flower to customer, thereby ensuring that quality is priority in every part of that chain.”

Through its subsidiary, Africa Cannabis Enterprises (ACE) Genetics, Labat said it has concluded an exclusive distribution agreement with Ace and Axle, a US based company, securing distribution rights in Africa for the next decade.

Ace and Axle produces a premium grade hemp CBD smokable that will soon be launched in South Africa, the group announced.

“In comparison with tinctures, inhaling has been found to increase the bioavailability of CBD, helping users to better reap the powerful healing benefits of this compound. Labat has agreed to supply Ace and Axle with its worldwide requirements for hemp CBD smokables.”

Labat said it will utilise its newly acquired Leaf Botanicals facility to cultivate the raw materials.

The group has moved to positioning itself as “a major player in the cannabis industry” over the past several years through the acquisition of a number of pharmaceutical related businesses.

This includes the acquisition of 70% of a seeds and genetics business, known as Knuckle Genetics. Knuckle Genetics produce high quality cannabis flower, oils and concentrates with a very high (more than 20%) Tetrahydrocannabinol (THC) content for the export market.

It has also has a license to cultivate, manufacture, supply, hold, import, export and transit cannabis in the Kingdom of Lesotho.

Read: New cannabis rules proposed for South Africa – to be introduced within next 2 years

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