Booming demand for medicinal cannabis from Europe to Australia has seen a South African producer sell all of its output for next year in advance.
SafriCanna signed sale deals with Germany and Australia for the bulk of the production, Bassim Haidar, chief executive officer of its largest investor, Optasia, said in an interview.
The company started construction of its facilities in the capital, Pretoria, in 2019 and shipped its first flowers in June.
In the same month, it agreed with German-based DEMECAN to supply medicinal cannabis flowers.
To meet rising demand, SafriCanna aims to increase production fivefold by 2024. It will spend $40 million on expanding its facilities in Pretoria to produce 25,000 kilograms (55,000 pounds) of cannabis flowers a year from 5,000 kilograms currently, Haidar said.
The legalization of medicinal cannabis in more than 40 nations has led to an explosion in demand for a product that can be used to help treat nausea, Alzheimer’s and chronic pain.
SafriCanna is among a handful of African companies to have met the European Union’s strict good-manufacturing-practice standards, allowing it to export cannabis flowers as an active pharmaceutical ingredient to Europe, Haidar said.
The global medical cannabis market was worth $26.1 billion in 2021 and is expected to expand at a compound annual growth rate of 10.4% through 2027, according to research firm IMARC Group.
A 51-year-old Nigerian-born entrepreneur, Haidar chose to invest in South Africa’s cannabis industry because of its infrastructure, cheap land and good climate, he said.
According to Prohibition Partners, the country’s cannabis industry is predicted to be worth R27 billion by 2023.
Other investors in the company include Nir Aloni and former MTN Group Ltd. CEO Sifiso Dabengwa.