BOKANG Matsipa, one of the pioneers in the medical marijuana production sector in Lesotho, has welcomed government’s decision to hike the license fees for obtaining a production license.
Mr Matsipa, who is a former director of medical cannabis producer, Medi Kingdom, said the government’s intervention is timely as the nascent industry was developing a bad reputation for selling operating licenses to third parties.
Minister of Heath, Nkaku Kabi, recently announced that the government has increased the licence fees for growing medical marijuana from M500 000 to M5 million to discourage entities which secure licenses for speculative purposes.
The new licensing regime, which comes into effect on 1 March 2019, is also meant to ensure that all licensed companies have the capacity to venture into the industry.
The minister said it is important for licence holders to demonstrate a certain level of progress so that their licenses may be renewed. An operator’s license has to be renewed annually.
“We have embarked on this campaign because we want to see progress made by the license holders since we believe they had applied for those licenses for a reason,” Mr Kabi said.
“We want to see the facilities being set up and physical structure on the ground, bearing in mind the magnitude of this type of business and the finances that are needed to operate it.”
He said while the industry is highly profitable, it is also capital intensive.
“For this reason, we have increased the licence fees from M500 000 to M5 million. For instance, to be at the stage of production it is at the moment, Medigrow Lesotho has already raised M300 million, with more costs still to be incurred.
“This says to us that the industry is highly capital-intensive, although it is also highly profitable. I understand that at full production capacity, this facility will produce about 12 000 litres of cannabis oil per annum, which can raise revenue of over M2 billion per annum.”
And in response to the minister’s announcement, Mr Matsipa told the Lesotho Times that the increase was a welcome move which would bring orderliness in the industry.
“This is a good move by the government because the industry was developing a bad reputation.
“It will also bring order and restore the image of the country which was being tarnished due to the practice of selling licences to third parties,” Mr Matsipa said.
He also welcomed the inspection of licence holders’ production sites saying this would give a clear picture of the progress which the holders would have made.
“This is also an indication that the government is committed to developing the industry for the benefit of its citizens especially on the health aspect.”
Mr Matsipa, however, insists that while foreign investors are allowed to enter the industry, they should be forced to reserve a certain amount of shareholding in their ventures to locals.
“Let us do it like in the mining sector, where the government holds a certain number of shares in trust for the people. Foreign investors should be prepared for this.”
For his part, Kotsoana Potsane, a former small-scale recreational marijuana farmer said it was unfortunate that government is discouraging selling of licences to third parties because it is the only realistic way in which locals can substantially benefit from the capital-intensive industry.
“This is effectively going to reduce the participation of Basotho in the industry while opening up opportunities for foreign investors.
“If you block these speculative practices from locals, which is their way of getting something out of the industry, you are reducing their participation in the industry. This is cruelty of the highest order from our government,” Mr Kotsoane said.
MediGrow chief executive officer Andre Bothma said government has the responsibility to protect the industry’s survival.
“It may be viewed as controversial by other quarters of the population but the minister, being the regulator, has fiduciary responsibility to protect the long-term survival of the industry while also taking charge of ensuring health benefits of the plant are enjoyed by Basotho in general,” Mr Bothma said.