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Labat’s new ventures show confidence in Africa’s growing cannabis economy

Labat Healthcare

Labat Africa Ltd – a JSE-listed, black-owned and managed investment holdings company – has made clear its intention to be a major player in the world’s booming Cannabis economy.

The company recently announced its exclusive distribution and supply agreement with global hemp and Cannabidiol
(CBD) smokable brand, Ace and Axle. In addition to this, Labat has also acquired a 75% stake in Leaf Botanicals Pty Ltd, a Cannabis growing and cultivation facility and one of the first companies in South Africa to be issued with a cultivation and export license.

These latest ventures form a strategic part of the company’s imminent repositioning, which will see it shift to a healthcare business that encompasses the entire Cannabis value chain. Says Brian van Rooyen, CEO at Labat: “We’ve recently made significant investments in healthcare, with a focus on the production of CBD pharmaceutical, health and wellness products; as well as the growth and cultivation of European Union (EU)-compliant, high-Tetrahydrocannabinol (THC) containing Cannabis for the European medical industry.

Leaf Botanicals, located in Upington, Northern Cape, is best known for its association to Carpe Diem. Established in 1932, Carpe Diem is one of the largest growers and exporters of organic table grapes, raisins and pecans in South Africa. Carpe Diem’s founder and award-winning farmer Johann van der Colff is a 25% of shareholder Leaf Botanicals, and is widely recognized for his knowledge of organic farming.

Leaf Botanicals currently has a one hectare cannabis grow cultivation space and a 300sqm, South African Health Products Regulatory Authority (SAHPRA)-licensed processing facility, which is fully compliant with the World Health Organization’s Good Agricultural and Collection Practices (GACP) guidelines for medicinal plants, as well in accordance with the United States (US) Good Manufacturing Practice (GMP) regulations.

As part of Labat’s strategy, Leaf Botanicals will focus on producing high quality medical grade cannabis flower for the export market. Van Rooyen says that Labat intends to establish an indoor grow facility in accordance with GACP and GMP specifications, to produce high quality medicinal grade cannabis intended to service its pharmaceutical offtake in Europe.

The company has plans to develop a world-class, EU-compliant 8000m² indoor grow facility over a three year period, to meet its offtake commitments and serve the pharmaceutical market. By the end of the final construction phase, the company will be able to deliver between eight and 10 tons of high grade THC flower to the export medicinal market.

Through ACE Genetics (Africa Cannabis Enterprises – a 100% Labat-owned subsidiary), Labat has concluded an exclusive distribution agreement with Ace and Axle, securing distribution rights in Africa for the next decade.

Ace and Axle, a US-based company, produces a premium grade hemp CBD smokable that will soon be launched in South Africa. Says van Rooyen, “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 – without getting high.”

Van Rooyen explains that in addition to the exclusive distribution agreement, Labat has agreed to supply Ace and Axle with its worldwide requirements for hemp CBD smokables. “Labat will be utilizing its newly acquired Leaf Botanicals facility to cultivate the raw materials under the guidance of van der Colff, regarded as one of the country’s leading farmers.”

With Cannabis being the fastest growing commodity in the world, Labat aims to play a driving role in unlocking its potential across the continent, recognizing the economic opportunities it presents.

Concludes van Rooyen, “Through the Leaf Botanicals acquisition and Ace and Axle venture, we hope to extend our influence across every sphere of the sector, encompassing the full value chain in order to facilitate a holistic, self-sustainable Cannabis ecosystem.”

Monday morning 24th May 2021 saw Labat’s Share price shoot up 75% on the breaking of this news to R0.63c a share.

Labat looks like a solid buy and R1 a share not far off.