The future of hemp and medical cannabis in Namibia

Namibia has the opportunity to create a dynamic, highly opportunistic, forward-looking industry, serving the fast growing cannabis and hemp industries in Africa and around the globe. 

Cannabis and hemp cultivation and their various products are currently some of the fastest growing industries in the United States, Canada and many other parts of the world. It is projected that when recreational use is universally adopted, the total market value will be in excess of that of spirits and beer.

The current strategy for South African cultivators is to supply and work with compliant distributors and producers of the world to create a sustainable business model and develop their growth-oriented market opportunity. South Africa, Lesotho, Swaziland and Zimbabwe have already approved licenses to produce hemp and medical cannabis products.

Namibia’s cannabis industry

With Namibia not being on the forefront of the hemp and medical cannabis industry, when licensing opportunities arise it is foreseen that Namibian entrepreneurs will form partnerships with entities that have industry experience and a deep, rich history of successfully working in the legal hemp and cannabis markets. This is the model followed by Namibia’s neighbours.

Whether these foreign entities will be allowed any majority shareholding in local companies is to be seen. Cultivation and value addition can play a major role for Namibian industry as it can ensure local job creation and create growth for the Namibian economy. Enabling rural economies should be the focus of any government decision.

Financing requirements normally include growing space, whether indoor or outdoor, and related facilities development (commercial real estate, agricultural properties, and equipment). Each type of crop has its requirements depending on which end products are being sought.

At this time, no entity in Namibia grows, processes, owns, handles, transports, or sells medical cannabis or hemp, as there has not been government approval of any type towards this industry. It is believed that eventually Namibia and all African countries will establish a regulatory environment more conducive to corporate ownership in hemp and medical cannabis collectives. This framework needs to ensure that operations are in full compliance with local and international regulations while anticipating the future evolution in business opportunity which will develop as countries provides increasing regulatory certainty worldwide. 

How Namibia should take the lead

The Erongo region, which has access to world-class logistic solutions to serve Africa and the world and has a sunny, dry climate is the ideal production area for this commodity. There are strains that suit many different climate types, so all regions in Namibia can benefit, however trials will be required before farmers should commit to this cash intensive business.

The future of Namibian hemp and medical cannabis is bright with many ancillary business opportunities including: 

• Licensing and trademarks 

• Sponsorship of research and development of new plant strains and medical derivatives with focus on pharmaceutical, fibre and food applications

• Evolving the banking, financing, and Point of Sale (POS) solutions 

• Nationwide compliance engine for industry participants

The job at hand

The cannabis market in the world is transitioning from being a criminal activity to a regulated human rights industry. The speed of this international transition is outpacing outdated laws and perceptions and this is mainly due to consumer pressure.

Currently, there are 39 countries that have legalised medical cannabis, and the number is growing monthly: Argentina, Denmark, Luxembourg, Romania, Australia, Estonia, Macedonia, San Marino, Cambodia, Equador, Malta, South Africa, Canada, Finland, Mexico, Spain, Chile, Germany, Netherlands, Switzerland, Colombia, Greece, North Korea, Turkey, Costa Rica, Israel, Norway, Uruguay, Croatia, Italy, Peru, USA (not all states), Cyprus, Jamaica, Poland, Zimbabwe, Czech Republic, Lesotho and Portugal.

Namibia has not moved with the changing times like its neighbours and is putting medical consumers at risk due to unclear laws and regulations. It further is missing economic development opportunities with delayed actions.

The question is why is the Namibian government so dismissive towards the potential of these industries when there are zero negatives? Recreational consumption poses a different set of questions.

Approach and methodology

The eradication of stigmas and a process of education and support are key to gaining support for the industry. At the core of this industry lies the health, food and fibre economic opportunities that can ensure all Namibians will benefit from the economic benefits of this plant and its properties.

Namibia’s legislation

No sale or possession of THC and CBD products is allowed, except for medical professionals on CBD and only in certain cases.

The truth is that medical use is already happening in Namibia with CBD products available all over the internet and THC-laced and CBD products can be found on the shelves of retail outlets. This causes confusion for the market and needs to be clarified without delay. Starting the process without clear rules is not the way to go, as allowing the importation and sale of illegal substances locally in the open market is counter productive towards future policy and only benefits the few.

The five work streams to be used in the legislative process:

• Legal framework

• Organisational requirements

• Process flow and management

• Communication / awareness 

• Information availability and accessibility 

Namibia will need to cultivate, manufacture, supply, hold, import, export and transport cannabis flower, resin and oils as well as hemp fibres, oils, seeds and powder.

Why should Namibia consider the cannabis industry?

Current global medicine market values:

1. Sleep $10bn
2. Pain $24bn
3. Anxiety $5bn
4. MS  $18bn
5. Psoriasis $8bn

Cannabis statistics:

• Canada medical – $1.3bn
• Canada adult use – $4,9 – 8.7bn
• Global medical – $180bn

As of July 2018:

• Cannabis black market – $7-10bn
• Legal recreational cannabis – to be confirmed
• Beer / wine / spirits – $9 / $6 / $5bn

(Sources: Health Canada / Deloitte / Eight Capital)

The legalisation of the cannabis industry for medical and total legalisation is the single biggest opportunity to hit the capital markets in the past 20 years.

The current world players and market caps on competing industries: Beer, pharma, tobacco and spirits.

Industry leader

Excluding adult recreational use, it is estimated that medical cannabis has a yearly market potential of $180bn. It is therefore important to note over the next few years which industries the cannabis industry will be taking sales from and in what percentages.

Given the data available, it is realistic to expect yearly Namibian cannabis sales could be in the region of N$650m per year. This is based on calculated percentages.

Sales are expected to rise significantly once prohibition has been lifted and adult use is allowed, however this is not a prerequisite for legalising medical cannabis.

From the above it is clear that some industries will lose market value to cannabis, with the positive outcome for this scenario the fact that Namibian medical cannabis is produced locally, thus providing local jobs and keeping the money within the Namibian economy.

When export opportunities are calculated and the amount of foreign exchange that will enter Namibia, it is foreseen that this industry will be larger than the total current Agriculture GDP market value of N$1.2bn per year. It is a genuine once-in-a-life-time opportunity, however cannabis and hemp products are only commodities and as such will be tied to world pricing, just like any other commodity such as gold. There is consensus among industry professionals that the US$8,00 per gram retail for Medical Cannabis will fall to US$1,00-1,80 when the market reaches maturity. The above GDP figures are based on US$1,50.

Qualifications

All cannabis and hemp production can fit into the Namibian circular bioeconomy model and focus should remain only on sustainable, renewable and high social impact projects and business units. 

Business as usual is unable to cope with today’s environmental and social demands as outdated business models are exposed in the world’s declining economies, creating more problems than solutions.

Focus needs to be on current and future resource availability and ways to overcome problems within these limitations that are financially viable, sustainable, uses renewables where possible and can create value streams to empower and build industry to ultimately create zero waste from operations.

Namibia needs to follow Good Manufacturing Practice (GMP) in order to market the product to international buyers at higher current prices.

The answer to the question about who should be allowed to grow and produce medical cannabis and hemp products is: only Namibians and Namibian companies must hold licenses that are not available for sale to foreign entities. Innovative empowerment initiatives can assist with local job and skill creation.

The start-up costs for a small fully integrated compliant medical cannabis unit will be about N$5 million and it will create a total of 50 full-time sustainable jobs directly with a large number of indirect jobs in the sector. There are auxiliary services required to test, produce, package and transport the products. Hemp also requires high input costs for seeds, irrigations and processing.

Benefits

The real benefits for the Namibian economy lie in job creation, additional taxable revenue, incoming foreign exchange and investment, knowledge transfer, education and environmental benefits are important. These results will have a positive impact on Namibia for generations to come.

This proposal, I believe, is the way forward for Namibian decision makers to drive this change for the benefit of all.

I foresee real returns for stakeholders and investors, however the time frame available to create future value is limited to acting within a reasonable time before the rest of the world takes the opportunity out of our hands.

Conclusion 

Namibia has an economic problem that is leading to a social dilemma. Our expenses are trumping our income as a country which causes higher levels of debt and associated costs of servicing this debt. Namibia’s credit worthiness has taken a hit due to our currency volatility and lack of growth and there is no positive projection for our Namibian economy for the next 20 years and beyond at current levels of economic activity. 

Namibia is over exposing itself to institutions and countries who are providing debt finance, which in turn will take Namibian jobs and money out of the system. 

The belief that stimulus packages from the World bank, IMF and afore said entities will kick start our Namibian economy has been proven not to work as it only adds more debt and uncertainty into the equation. 

The only solution for Namibia to regain its economic independence to a level where we are liquid as a country is to change the business-as-usual mentality. It has now been shown over and over again that our actions have not financially benefitted our country. 

This paper talks about solutions and the only way out of the negative situation we are in is to leap over traditional, old technologies and unresponsive behaviour. 

By integrating our economy into a circular bioeconomy and driving change in sustainable and renewable behaviour for all industries, Namibia can leap over Fossil fuel and other future irrelevant technologies to become self sufficient in many sectors. 

Medical cannabis and hemp offers an opportunity to assist the Namibian economy and environment in many ways and there are workable solutions available in our Namibian context. 

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