Getting in on the ground floor of a potentially revolutionary venture before it explodes is one of the best ways for pot stocks to grow. That growth may be all at once, or it may be slow and steady, but if the whole sector begins turning towards one trend or one factor that reliably leads to profit, the companies that established an early position in that factor will see the greatest benefit.
This is why Canadian companies are so well-positioned in the cannabis industry. Early legalization allowed corporations across Canada to become first-movers in a number of key markets.
Now, many of these companies are looking for the next region to offer a first-mover advantage. While Europe has gradually been opening up to cannabis enterprise, yielding growth for some CBD companies, one little-known African nation is suddenly drawing a lot of attention from pot stocks across the sector.
Lesotho Might Be the Best Place in the World to Grow Cannabis
The Kingdom of Lesotho is a landlocked country entirely surrounded by South Africa. With a population that’s just over two million, this former British commonwealth nation is one of the smallest on the African continent but is also one of the best educated.
In December 2017, it became the first African country to legalize the cultivation of marijuana for medicinal purposes. While this brought some initial interest from investors, it’s only in the last year or so that pot stocks have begun to realize what a one-of-a-kind opportunity Lesotho provides.
A combination of low-cost labor, accessibility to Europe, and a climate that’s ideal for cannabis cultivation has led Canadian companies to begin racing to Lesotho. The country is washed in sun—enjoying 300 sunny days a year—but sits at a high altitude, keeping humidity perfect. The soil is also especially fertile, yielding high-quality cannabis. This has led the country to become a hotspot of cultivation to feed Europe’s growing demand for cannabis.
On top of that, Africa itself is a market on the rise. By 2023, legal cannabis sales on the continent could be worth $7.1 billion according to the African Cannabis Report.
The government of Lesotho has even been called “very proactive, very co-operative” to the incoming corporations. After the initial round of cannabis cultivation licenses were granted last year, a second round is fast approaching, meaning that more companies will take advantage of the valuable cultivation space that Lesotho provides.
So which pot stocks have been making moves in this country?
Last year, the world’s biggest cannabis corporation, Canopy Growth Corporation (TSX:WEED) (NYSE:CGC), become one of the first to recognize the incredible potential of Lesotho.
In May 2018, Canopy acquired licensed producer Daddy Cann Lesotho for $28.8 million CAD. This move represented the company’s “first step into Africa,” according to Canopy President Mark Zekulin.
The acquisition provided Canopy with two facilities, the first containing 21 million square feet of outdoor cultivation space, and the second containing 322,000 square feet of indoor, outdoor, and greenhouse space combined. At both of these locations, the company is growing CBD-dominant and CBD/THC-balanced cannabis strains.
Despite its early foot in the door, Canopy was not the first cannabis company to establish its presence in Lesotho. That distinction goes to Supreme Cannabis Company (TSX:FIRE) (OTCQX:SPRWF).
In March 2018, Supreme spent $10 million to acquire approximately 10 percent of Medigrow Lesotho Limited. This deal will see Medigrow produce medicinal cannabis oil in Lesotho, which will then be exported to Canada for distribution by Supreme.
Though the African Kingdom offers unique benefits to companies operating in any corner of the cannabis sector, it’s a particularly good investment to pot stocks looking to capitalize on cannabis oil. Spokesmen for the Lesotho government have gone on record saying that they want their country to become “one of the world’s largest exporters” of cannabis oil for pharmaceutical purposes.
At the end of May 2019, South Africa legalized the sale of CBD products. Seeing as Lesotho is located literally in the middle of South Africa, companies in the region are incredibly well-positioned to provide CBD to the nation’s 57 million residents.
Halo Labs (OCTQX:AGEEF) is one of the smaller pot stocks investing in Lesotho. Currently trading at $0.32, it’s not a company with a lot of capital to spend on experimental or frivolous ventures. That’s why, with the funds it does have, it followed Supreme and Canopy into southern Africa.
In July 2019, Halo bought a Lesotho-based medicinal cannabis company, Bophelo Bioscience & Wellness, for roughly $18.4 million. This provides Halo with a little more than half a million square feet of cultivation space and made it the first American cannabis company in the country.
Halo Labs CEO Kiran Sidhu said in an interview that, “Out of all the places we’ve looked in the world—be it Columbia, Cambodia, etc—Lesotho is the best positioned place on the planet right now to grow cannabis cost-effectively, in a perfect climate, with a great regulatory environment.”
It remains to be seen which companies will be the next to hop on the train to Lesotho, but the prospects of this nation becoming the heart of cannabis cultivation and sales to the rest of Africa—and indeed, to Europe and even North America—look incredibly strong. These three pot stocks already have a presence there, and very soon more will be racing to join them.
Featured image: DepositPhotos © Antartis