The cannabis stocks we’ve discovered have established operations in Africa, giving these companies a potential competitive advantage in exports
SmallCapPower | July 3, 2019: Africa is often an overlooked cannabis market, as much focus is put on the large U.S. and European cannabis markets. Due to its large population and warm climate, Africa has the potential to become a disruptive player in the global cannabis market. Prohibition Partners suggests that by 2023E, the African cannabis market could reach $7.1B. Although Prohibition estimates that Africa already produces over 34M kg of cannabis each year, most African countries still officially consider marijuana as an illegal crop to cultivate. As regulations are expected to loosen over time, it will be interesting to see which companies will target expansion efforts in Africa. Today we highlight four cannabis stocks that currently have operations in the continent of Africa, which could provide these companies with a global export advantage.
*Share prices as at close Friday, June 28, 2019, data obtained from S&P Capital IQ
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Halo Labs Inc. (OTCPK:AGEEF) – US$0.49
Cannabis
Halo Labs is an Oregon-based cannabis extraction company with expertise in cultivation, processing, and distribution. On December 12, 2018, Halo Labs announced a letter of intent to enter into a partnership with Bophelo Bioscience and Wellness Pty Ltd, a cannabis company based in Lesotho, South Africa. Under the agreement, Halo Labs is to provide management services and expertise to build, design, and operate cGAP cultivation and cGMP extraction facilities in exchange for a 20% equity position in Bophelo Bioscience, as well as a royalty on future extracted products. On June 17, 2019, Halo entered into an agreement to acquire the remaining shares of Bophelo Bioscience for $24.7M.
- Market Cap: $92M
- YTD Return: 96%
- 90 Day Average Trading Volume: 400,000
The Supreme Cannabis Company Inc. (TSX:FIRE) – $1.56
Cannabis
Supreme Cannabis Company is a Canada-based company that focuses on selling to the wholesale sector of the medical cannabis market in Canada. The Company’s subsidiary, 7ACRES, operates a 440,000 sq. ft. cultivation facility outside of Toronto. On March 20, 2018, FIRE expanded into Africa with its announcement that it has entered into an agreement to which Supreme plans to complete a $10M strategic equity investment into Medigrow, a cannabis oil producer located in Lesotho, a country in southern Africa.
- Market Cap: $458.3M
- YTD Return: 4.7%
- 90 Day Average Trading Volume: 520,000
Aurora Cannabis Inc. (TSX:ACB) – $10.26
Cannabis
Aurora Cannabis is a licensed producer and distributor of medical cannabis products. Aurora is one of the largest and fastest-growing cannabis companies in the world, with a funded production capacity of over 500,000 kilograms per year. ACB is vertically integrated and horizontally diversified across a variety of cannabis value chain segments. Through its wholly-owned subsidiary, CanniMed, Aurora has signed an agreement with Akula Trading Pty Ltd to supply product for the South African market.
- Market Cap: $10.4B
- YTD Return: 44.7%
- 90 Day Average Trading Volume: 6,170,000
Aphria Inc. (TSX:APHA) – $9.21
Cannabis
Aphria produces and sells medical and adult-use cannabis-derived extracts in Canada. The Company has a 1,100,000 sq. ft Leamington greenhouse facility that yields 100,000 kg per year. In January 2019, Aphria announced it completed construction of Aphria Double Diamond, an additional 1.4M sq. ft greenhouse with an annual yield of 120,000 kg, in Leamington, Ontario. Aphria is still waiting on Health Canada approval for the site. In May 2018, Aphria entered into a series of agreements resulting in the formation of a joint venture called CannInvest Africa Ltd. Through this arrangement, the Company obtained a controlling interest in Verve Dynamics Incorporated Ltd. Verve holds a license in Lesotho, for prohibited drug operations, which allows Verve to cultivate, manufacture, supply, distribute, store, export, and import cannabis and cannabis resin for medical purposes or scientific use.
- Market Cap: $2.3B
- YTD Return: 13%
- 90 Day Average Trading Volume: 2,660,000
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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