Lesotho licences: how one small nation is leading the African continent

29.03.2019

In 2017 the Kingdom of Lesotho was the first African nation to legalise the cultivation and export of medical cannabis. As of next month it is set to issue its second wave of medicinal cannabis cultivation licences. With international companies searching for lower cost production facilities and the government putting the right conditions in place, Lesotho is hoping to use its first mover advantage in the cannabis industry to help boost local employment and international investment.

Advancing the local industry

While they declined to name names, government officials have told Prohibition Partners they are holding advanced talks with several North American and European firms looking to enter the Lesothian market. With companies like Aphria, Supreme Cannabis and Canopy Growth already operating in the country the government are no strangers to negotiating with international operators.

The African Cannabis Report™ shows that the African legal cannabis market could top $7.1bn by 2023 if key markets legalise medical and recreational cannabis. Lesotho, as a regional first-mover, is set to play a crucial role in servicing and supplying the African market. The landlocked nation, encircled by South Africa, legalised medicinal cannabis in December 2017, enabling the many farmers previously growing the crop for the black market to become legitimate. The government believes that the legal cannabis industry could be the solution to the dwindling agricultural industry and is aiming to capitalise on cannabis by encouraging international investment in both cultivation as well as processing.

After initial licences were granted in 2018, several international firms were quick to gain the right to cultivation via a series of acquisitions. Now, with a second wave of approvals nearing, Lesotho could experience another wave of commercial activity and see it further cement its leadership position on the continent.

The government recently introduced changes to the licence fees to address the issue of people speculatively getting licenses without actually establishing production facilities. Firms can expect to pay around US$37,000 for licences, which has limited the ability of domestic businesses to establish themselves against larger international players but has ensured that those who are granted licences intend to grow.

Cannabis cultivation is entrenched in Lesotho’s culture, it is estimated around 70 percent of the cannabis in South Africa is grown in the kingdom’s high-altitude fields.

Licensing the rights to grow

A spokesman for the office of Lesotho’s Prime Minister, Dr Motsoahae Thomas Thabane, told Prohibition Partners that the government will hand out more cultivation and export licences this year, recognising the employment boost the trade has already provided.

“We want to be known internationally as the best cultivator of medical grade cannabis anywhere in the world,” the spokesman said in an email. “We are proud of becoming the first African nation to produce cannabis legally, and we can only see this improving the lives and the health of the people of our great country.”

Cannabis cultivation is entrenched in Lesotho’s culture, it is estimated around 70 percent of the cannabis in South Africa is grown in the kingdom’s high-altitude fields.

Challenging environment

According to the World Health Organisation Lesotho has the highest rate of tuberculosis in the world, along with high crime and unemployment rates, and one of the lowest life expectancy rates of any country. The United Nations Development Programme (UNDP) classifies Lesotho as one of the least developed nations in the world with almost six in ten of Lesotho’s population living below the national poverty line.

Lesotho’s socio-economic problems and its small geographical size could ultimately hold it back, but for the moment; a second round of licences, continued international investment and a forward-looking government means that medicinal cannabis could be just the thing that helps the struggling economy to establish itself on the world stage.

For a more detailed analysis of the Lesotho market and market intelligence on the total African legal cannabis industry, download The African Cannabis Report™

Lesotho licences: how one small nation is leading the African continent

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