CANNABIS CULTURE – Some critics worry this could be an “over-reach.”
Cilo Cybin bills itself as the first firm to win a full cannabis license in South Africa. Their intriguing name reflect the active ingredient in mushrooms that gives one a “magical” feeling.
But with a basketful of plans to exploit Durban Poison, a unique South African cannabis strain; bio-hacking; branding; cultivation; dual IPOs, some critics feel Cilo Cybin is emblematic of the dilemma of South Africa´s cannabis startups: doing too much at once, too fast.
Intriguing name
“We are currently a South African cannabis company in the process of becoming a multinational. We have other entities registered in Panama, and the Netherlands. Our roots started in South Africa, from there we branched out,” Gabriel Theron its chief executive tells Cannabis Culture of their dual intention to do an IPO at home in South Africa, and possibly another one in Luxembourg in Europe in 2022.
Cilo Cybin is the active ingredient in magic mushrooms, and Theron says he picked up this name because they were looking for words or phrases that got something to do with magic to differentiate themselves in the increasingly competitive $1, 9 bn South Africa cannabis market, which could one day become the largest in sub-Saharan Africa.
“Full cannabis license”
Whilst South Africa has largely legalized the cultivation, processing and export of cannabis, the meaning of a “full cannabis license” in South Africa is a bit confusing for would-be investors, especially outsiders.
“You must understand two things about South Africa,” explains Theron. “On one side is an agricultural license that allows you to cultivate cannabis and to export bulky raw material. The second thing is a good manufacturing practice license that allows further process cannabis, flour packaging, oil, a whole range of products.”
This is the meaning of full-cannabis license in the South African context.
He contrasts this with North America particularly the US which he argues, a lot of their cannabis brands are landlocked which means if they produce products from cannabis, they are not allowed to move across state lines or easily go global.
Overstretching themselves?
Buoyed by its “full license” Cilo Cybin wants it all: cultivating Durban Poison, a cannabis strain unique to the Southern African climatic and soil environment; wanting to process it into medicines; exports; partnering with American brands in a way that allows them to be distributors of their products thus assisting them to enter markets like South Africa; planning dual listings on South Africa exchanges and possibly European ones; operating an indoor facility where the environment is controlled, and a processing facility for cannabis where labelling and branding is applied to finished products.
“This is a brilliant full throttle exploitation of the cannabis value chain idea, from farm harvest to shop product, but the weakness is cannabis startups in South Africa are overstretching their abilities,” argues Dennis Juru, president of the Africa Cross boarders Trading Association which lobbies for uniforms cannabis trade rules across countries in the southern part of Africa.
“A major weakness of South Africa´s cannabis startup is they are trying to be everything at once, and too quick: cultivators, cannabis-beer manufacturers, medical-cannabis capsule makers, cannabis chocolate exporters. It tells me the industry is still in confusion and players are not yet sure where the big money along the cannabis value chain. Hence the take-all mentality rather than specialize in one aspect of cannabis.”
But Theron counters that doing a lot at one time is ultimately a wise strategic decision when it comes to South Africa´s cannabis scene because the future of cannabis is not a single outcome. “Our aim is to go all the way because the guys that gonna survive cannabis business in the long run are the brands and not necessarily just the farmers,” Theron says.
Specialist cannabis skills dilemma
As cannabis startups in South Africa adopt hi-tech cultivation methods like the controlled climate indoor facilities, such as Cilo Cybin runs, sourcing highly skilled workers (thermal technicians, agroecologists etc.) will get problematic. According to Reggie Ngcobo, the spokesperson for South Africa’s agriculture minister, South Africa has about 25 000 cannabis workers, but the majority are low-skilled laborers such as leaf pickers and weed packers.
“There´s a rapid interest setting up hi-tech cannabis facilities in South Africa with an eye at supplying Europe´s medical cannabis importers just like nearby Lesotho is doing but finding local specialist skills South African workers and paying them premium salaries is the Achilles heel,” says Carter Mavhiza, an independent public accountant in Johannesburg.
“With all respect I don’t believe our South Africa cannabis startups are at a stage where they can afford to pay competitive salaries for specialist skills.”
Sourcing specialist skills is something Cilo Cybin grapples with too, as it runs an indoor growing facility that produces 220 pounds of cannabis flour a month, 6 harvests per year, controlling light, and humidity as a way to get a refined end product that meets strict EU standards.
“Just like elsewhere globally, cannabis was previously a legally stigmatized industry, this has not been a legal market in the past in South Africa too, and now it´s permitted, and there is a lot of research that needs to go into this,” Theron says.
However, Cheeba Africa, a South Africa cannabis startup, has launched what it calls Cheeba Cannabis Academy, Africa´s first specialist skills school for cannabis training hoping to roll out graduates who have a deep grasp of the medicinal and pharmaceutical side of cannabis processing.
This is a silver lining: “I think (the stigma and skills shortage) it is changing for the better,” sums Theron.
