Uganda: Could cannabis become big business?
An Israeli company and its Ugandan partner have launched Uganda’s first venture in the medicinal cannabis market, reports Liam Taylor from Kasese
That’s what a tonne of weed looks like,” says Elad Hochberg, an Israeli farmer, pushing open the door of a windowless room. It is an anticlimax: just a few plastic barrels and stacks of cardboard boxes. But this is no ordinary stash of pot. The cannabis that is stored here, at a farm outside the Ugandan town of Kasese, is grown in tightly controlled conditions. Then it is escorted to the airport by anti-narcotics police, flown out of the country, and sold to pharmaceutical companies. The farm is Uganda’s first – and so far only – foray into the medicinal cannabis industry.
The farm is run by Industrial Globus, a joint venture between Industrial Hemp, a Ugandan firm, and Together Pharma, an Israeli company listed on the Tel Aviv stock exchange. Development started in 2018, and in April the farm dispatched Uganda’s first ever commercial cannabis exports. Nir Sosinsky, Together Pharma’s managing director, says they are currently serving the Israel market but sees potential in Africa and further afield. “We have signed contracts with Brazil and also for export to Germany and Australia,” he explains.
Cannabis growers are trying to change minds – both in Uganda and elsewhere. Benjamin Cadet, a director of Industrial Globus, is a former Red Cross worker who sat in the Ugandan parliament between 2011 and 2016. Initially, he had explored the potential for growing industrial hemp, which can be used for food, rope and textiles. But the strains imported from Europe did not grow well, so he became interested in medicinal cannabis. It is a controversial crop in Uganda, he says. “We have two camps: the science-driven camp and the morality-driven politicians who thought maybe we were going to pollute morals.”
Attitudes are evolving in Israel too. Yohanan Danino, Together Pharma’s chairman, was previously the chief of the Israeli police force. While in office he worked with the health ministry to reform the law around medicinal cannabis use after seeing the benefits it brought to patients. “We should do everything to bring patients around the world this medicine,” he says. “It helps people change their lives.” Cannabis products have a range of uses such as pain relief or ameliorating the side-effects of chemotherapy; in Israel they have even been used to treat soldiers suffering from post-traumatic stress disorder.
Over the last decade, a growing number of governments have come round to Danino’s view. Booming demand for cannabis products in Europe and North America is prompting African countries to rethink their own policies on cultivation. Since 2017, six African states have legalised cannabis farming for medicinal or industrial purposes. Lesotho, the regional leader, has attracted multimillion-dollar investments from as far afield as Canada.
Sosinsky is enthusiastic about the potential of the African market, even though it may take time for lots of African countries to come on board. A 2019 report by Prohibition Partners, a UK-based market intelligence firm, profiles nine African countries and estimates that, if they all fully legalised cannabis use, then the market would be worth over $800m for medicinal cannabis by 2023, and $6.1bn for recreational cannabis by 2023.
Budding prospects
Together Pharma has a facility in Israel, and a licence to build one in Portugal. But Uganda offered several attractions, including a favourable climate, cheap labour, and the licence that had already been acquired by Industrial Hemp, the joint-venture partner. Export restrictions in Israel also made it important to have a base from which to export to the world.
The farm lies on a flat plain at the foot of the Rwenzori mountains. Hochberg, who manages the facility, says that he travelled all over western Uganda trying to find the right site, but “everywhere I went was either too rainy, too humid or too hilly”. In Kasese he found a patch of flat land, with water from a river and reliable power due to a cement factory nearby.
The cannabis grows in vast greenhouses covering 30,000 square metres, or roughly the size of four football pitches. The plants are watered with hi-tech irrigation systems and labelled with barcodes, with strict procedures designed to comply with World Health Organisation standards for Good Agricultural and Collection Practices. “Everything is computerised and controlled,” says Hochberg. “It’s a combination between pharmaceuticals and agriculture.”
Several varieties are grown at the farm, selected to meet the needs of the market. In one greenhouse the plants are rich in CBD, a chemical with therapeutic uses. In another they contain THC, the substance which gets smokers high.
“We are harvesting the buds,” explains Hochberg, peering through a magnifying glass at the tiny hairs, like golf tees, which hold the resin. “All the THC is covering the plant, especially the buds, like a sunscreen.”
Except for Hochberg, all the other workers at the farm are Ugandan. Emmanuel Emokol, the chief agronomist, has studied at university in Israel, where he abandoned a PhD programme to join Together Pharma. He says his family knew about “herbal medicines like you would
get from the forest”, but they did not know much about cannabis. Nor do Ugandan scientists, so Emokol is already one of the country’s leading experts. “Every day you are faced with a challenge,” he explains, “and you have to come up with a solution right away because there is no other agronomist in this country who knows about this.”
After harvesting, the buds are dried, checked and cleaned before being packaged for export. The farm employs about 110 workers for these kinds of manual tasks, mostly from the surrounding villages, who earn wages starting at USh16,000 ($4.30) a day.
A long queue
Ugandan policy towards cannabis is currently a haze of confusion. Although Industrial Hemp acquired a licence in 2012, no other company has done so. Scores of entrepreneurs have applied unsuccessfully to the health ministry. In February, Ugandan media reported that the cabinet had failed to reach consensus on proposed regulations to guide the medicinal cannabis sector, and progress has since stalled with the onset of the Covid-19 pandemic. The health minister, who is currently campaigning in elections, did not respond to a request for comment from African Business.
“The opportunities for cannabis and marijuana in Uganda are enormous because the demand for alternative medicines is only growing worldwide,” says Donald Wasake of Brothers Intelligence, a Kampala-based consultancy, who has advised about 25 firms who have applied for licences. “All those people there are in the queue waiting for their licences. For [Together Pharma] to be working right now while all these local businesses are not working is leaving a sour taste in the local businesses’ mouth.”
There are strict requirements to enter the industry, covering areas such as security and minimum levels of capital. “Which Ugandans have this kind of money?” asks Wasake. “Aren’t you setting us up to fail in our own country?”
International firms like Together Pharma have the capital and experience to overcome those restraints. But they face other kinds of risks. The global market for cannabis is still young, which makes it unpredictable. Together Pharma’s shares soared in value in 2018 but are now trading at just 18% of their peak.
But Danino, the former police chief, is optimistic that demand for cannabis will grow as more governments loosen regulations. “The market is going to be so big,” he says with conviction. “The biggest question is how long it’s going to take.”