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Cannabis Country Report Lesotho – How to get a license? How to export products abroad?

December 06, 2021 | Category : Analysis and opinion | Posted By : Deon Maas

This information serves as an introduction to potential cannabis growers in Lesotho. This information is relevant to all growers. The information was correct at the time of publication.

Cannabis Licences in Lesotho

Background

The mountainous Kingdom of Lesotho is one of only three countries in the world that is surrounded by one other country, in this case South Africa. (The other two are The Vatican and San Marino – both in Italy). It’s two biggest exports are diamonds and water. It’s biggest source of income is money sent back by migrant miners who work in South Africa, international aid and illegal cannabis crops smuggled into South Africa. It is estimated that 70% of all marijuana in South Africa is grown in Lesotho. It is considered to be one of the least developed countries in the world. In 2016 the GDP was only US$2.29 billion. Also known as Kingdom of the Sky, it is one of the few African countries where one can go for a ski holiday.

The initial issuing of licenses 

In 2017 Lesotho became the first African country to legalise the growing of medical marijuana. In order to benefit local farmers initial licenses were granted to the Basotho. For a time licenses were free, obtained without fee and were given out with little oversight allegedly to those who could muster the funds to pay off an official. The license fee of USD$35 000 was due within the first 12 months of issue. There were no limitations on the amount of licenses issued and after initial licences were granted in 2018, several international firms were quick to gain the right to cultivation via a series of acquisitions. Within two years of the first licenses being granted, the process was so chaotic that the government itself was unsure of how many licenses exist, reducing their value and dissuading investment. At some point it was estimated that 97% of the licenses were not being used. Some of the licensees were unable to get the business off the ground or raise the necessary funds to pay the license. Attempt to sell the licenses to overseas growers for exorbitant amounts also lead to the general feeling of chaos 

The previous government fell out of power in 2020 after the Prime Minster was accused of hiring a hitman to kill his ex-wife. The new government put an immediate stop to the issuing of new licenses and reworked the licensing rules to be more in line with international standards before starting to issue again. They also raised the price for a license to USD$350 000. There are currently five successful growing farms in Lesotho. 

CBD is not legal in Lesotho as the law doesn’t distinguish between CBD and cannabis 

Advantages of growing in Lesotho 

  • As one of the world’s highest countries above sea level it is the biggest ecological gift to cannabis cultivation – fertile, clean soil, abundant water and clean air 
  • A rich supply of sunshine 
  • High unemployment 
  • Two-thirds of the country’s 2.2 million people live in rural villages 
  • Producing works out to approximately USD$0.93 per gram 
  • 0% corporate tax on profits earned by manufacturing companies exporting outside SACU and 10% in SADC  

Types of licenses 

There are currently seven different types of licenses available

  • Operator 
  • Cultivation 
  • Testing 
  • Transport 
  • Non-academic Research 
  • Supply & Distribution 
  • Manufacturing 

How the process works 

  • Applicants must provide transport for the ministry staff to inspect the proposed export destination for the medical cannabis 
  • A prospective applicant must first meet with the Lesotho Narcotics Bureau and declare their intention to establish such a business to explain the objective and policy of their company 
  • The applicant must provide recent audited financial statements, bank statement and any other information which may be required to prove they have the needed capital 
  • The bureau should respond to the applicant in seven days and furnish them with an overview of the laws which govern the industry, the application evaluation criteria and provide them with the application form 
  • The application form must be returned to the minister of health after being filled 
  • Upon being granted a licence, the applicant has to notify the minister 30 days prior to the commencement of operations 
  • Manufacturing has to be conducted under conditions and controls which minimise the potential growth of micro-organisms, allergen cross-contact, contamination and or deterioration of the marijuana product 
  • An independent laboratory will test the cannabis product for heavy metals such as mercury, lead, cadmium and arsenic as well as microbiological impurity 

In addition the following should be taken note of 

The factors the health minister would consider before granting a license include: 

  • Whether granting the license is in the public interest 
  • The proximity of villages, towns, schools, parks, churches or public institutions to the proposed cannabis business if within 5 kilometres 
  • Whether the number of licenses already awarded is adequate to meet demand
  • Access to roads, clean water and electric power, or whether supplying those is part of the business plan. 
  • The risk of diversion to the illicit market
  • The potential for economic decentralization 
  • Master growers must have at least ten years relevant experience in the cannabis business  
  • All employees are subject to regular drug testing 
  • A full time quality assurance employee 
  • Business would be required to comply with international Good Manufacturing Practice (GMP) standards 

Raising barriers to entry would have two main benefits 

  • Focusing capital and resources on companies more likely to reach market. 
  • Allowing for a robust system without stretching regulators too thin. 

License requirements 

  • Certified ID documents of directors and police clearance certificates 
  • Proof of right on operating land 
  • Aerial map of operating site 
  • Proof of adequate funding in a Lesotho bank account 
  • Letter of intent of the buyer 
  • Site plans of the activity 
  • Floor plan of the premises 
  • Details of record keeping plans 
  • Security arrangements 
  • Environmental Impact Assessment license 
  • Product needs to be tested by a certified laboratory 
  • Licenses are valid for one year  

How it works practically 

We had an interview with a person who had grown legally in Lesotho. They wish to remain anonymous. 

”In 2017 the then Minister of Health liberally handed out 140 licenses to locals. This was in an attempt to keep the growers local and stimulate the economy legally. A lot of illegal growers used the opportunity to get licenses if they were connected. Unfortunately, most of them were subsistence growers and they are incapable of raising the money for the licensing fee which was payable in arrears. This means that most of them continue to grow illegal cannabis while hoping to find an international partner to come up with the necessary cash. Currently, only 17 of the issued 140 licenses are being used. Most of the licensees are seeing this as a get-rich-quick scheme and therefore are expecting exorbitant financial contribution in order to share their licenses with international growers. Because the business is not economically that viable here yet, a lot of international companies are reluctant to enter into this agreement. This means that what the government saw as a huge injection into foreign cash flowing in, has not been realised. There is no official structure for GMP compliance and because the harvested cannabis has to be exported through South Africa, there is a lot of cannabis waiting in warehouses for the right paperwork in order to get it out of the country. The financial entry level for subsistence growers is too high, so there is a lot of unhappiness and farmers feel that they are losing ut due to the government not making the laws very clear. The big growers who are taking matters into their own hands are successful despite the government rather than because of the government. It also helps if your partner is a powerful Basotho.” 

Some background on Lesotho 

Longform name: Kingdom of Lesotho 
Legislation: Parliamentary Constitutional Monarchy
Ruling party:  ABC (All Basotho Convention)
Currency: Maloti

History

Cannabis, or matekoane as it is known locally, has been grown in Lesotho since 1550 when the baKoena people traded it for land with the San tribes. By the nineteenth century, it was a staple crop in the kingdom. Long used as medicine by the native Basotho people, it’s easier to grow and more lucrative than other crops such as maize and sugar cane, and the nation’s abundant water and fertile soil provide ideal conditions. Many families rely on the extra income from selling illicitly to recreational drug users, to cover basic costs such as sending their children to school. British colonialism not only robbed the Basotho of their land but also of their right to grow cannabis. The usage of recreational cannabis is still illegal in Lesotho. 

Economy

Ethnic groups:Sotho 99.7%, Europeans, Asians, and other 0.3% 
Median age: 24.7
Urban population:29.5%
HIV/AIDS adult prevalence rate:21.1%
Food or waterborne diseases: Bacterial diarrhea, hepatitis A, and typhoid fever 
Youth unemployment:34.4%
Food security: Severe localised food insecurity
GDP growth rate: -1.6% 
Inflation rate:5.3%
Agricultural products: milk, potatoes, maize, vegetables, fruit,
beef, game meat, mutton, beans, wool 
Industries: food, beverages, textiles, apparel assembly,
handicrafts, construction, tourism
Labour force in agriculture: 86%
Population below the poverty line:49.7%
Export partners: United States, Belgium, South Africa
and Switzerland 6%
Export commodities:Diamonds, clothing, low-voltage protection
equipment, wheat products and footwear 
Airports with paved runways:3
Airports with unpaved runways:21

Geography

Landlocked, an enclave of (completely surrounded by) South Africa; mountainous, more than 80% of the country is 1,800 m above sea level 

Geographical Location: Southern Africa, an enclave of South Africa 
Land boundaries total:  1,106 km 
Coastline: 0 km (landlocked) 
Terrain: Mostly highland with plateaus,
hills, and mountains 
Elevation:Highest point: Thabana Ntlenyana 3,482 m,
Lowest point:junction of the Orange and
Makhaleng Rivers 1,400m
Natural Resources:Water, agricultural and grazing land,
diamonds, sand, clay, building stone 
Agricultural land: 76.1%
Permanent crops:0.1% 
Irrigated land: 30 sq km 

Weather

Natural Hazards:Periodic droughts
Weather:Cool to cold, dry winters. Hot, wet summers 

Environmental Issues

  • Population pressure forcing settlement in marginal areas results in overgrazing. 
  • Severe soil erosion 
  • Soil exhaustion  
  • Desertification 
  • Highlands Water Project controls, stores, and redirects water to South Africa 

Security Issues

Lesotho is a source, transit, and destination country for women and children subjected to forced labour and sex trafficking and for men subjected to forced labour.  

According to the World Health Organisation Lesotho has the highest rate of tuberculosis in the world, along with high crime and unemployment rates, and one of the lowest life expectancy rates of any country. There are currently no known terrorist organisations active in Lesotho.  

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