LGC Capital Acquires Stake in South African Cannabis Company

An investment holding company with a global focus is now giving investors on the TSXV an opportunity to enter the medical cannabis sector in South Africa.
LGC Capital (TSXV:QBA) announced on Tuesday (July 18) that, alongside its partner, AfriAg, entered the medical cannabis space by signing an exclusive agreement to acquire 60 percent interest in House of Hemp, a company with a permit to cultivate and process hemp and cannabis.
The South African company currently holds a long term lease on an indoor growing facility for the cultivation and possession of sativa, which had been used for research purposes.

John McMullen, CEO of LGC said the move represents a quick way for the company to move towards production, thanks to the facility already in place.
“[The facility] is ideal for large scale cultivation and processing of cannabis with its humidity and temperature controlled environments,” he said in a statement.

Cannabis situation in South Africa

McMullen said in terms of pricing shareholders can look forward to “globally very competitive” operating costs including electricity, labor, and fertilizer.
According to the company, the facility under control by the House of Hemp is the only indoor growing site in the country. The 420,000 square feet, temperature and humidity controlled greenhouse facility is located in the precinct of the Durban International Airport.
House of Hemp is in the process of obtaining a second research and development license, which would make it able to grow and commercialize medicinal cannabis and medicinal cannabis products.
McMullen said LGC plans to use the knowledge and experience from their latest acquisition to “grow our medical cannabis initiative elsewhere in southern Africa and beyond.”
In April of this year, courts in South Africa allowed the use of cannabis for home use. The ruling applies to homegrown marijuana with no particular decision on its use, but limited amounts of medical cannabis were also approved prior to that, in February.
“It’s legalized regulation that we’re after,” marijuana activist Julian Stobbs told VOA News.

Investor Takeaway

LGC’s share price increased  55.56 percent on July 18. Things stabilized for LGC on July 19, when the company saw a 21.43 decline and finished the day back at $0.11. That said, its year-to-date stock surge is impressive, with an overall increase of  266.67 percent.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.