Cannabis company set for JSE Spac listing
Cannabis company Cilo Cybin is gearing up for its debut on the JSE in May as it launches a range of its cannabidiol (CBD) products in retail stores and online.
Cilo Cybin has partnered with Arrie Nel Pharmacy Group, which has more than 90 pharmacies across the country, and with a number of doctors, to sell products including CBD oil and vapes that can help with insomnia and pain and provide other benefits, the company says. The range will also be available on Cilo Cybin’s website.
Talks are under way with other retailers over stocking the products, said Cilo Cybin founder and CEO Gabriel Theron this week. The company is negotiating with potential distributors to take the brand to other countries, including Australia, India and the Arab states.
Entry into retail is part of the strategy to boost the brand as it embarks on raising funds through the listing of a new holding company. Theron said Cilo Cybin will be the first cannabis company to list through what is called a special purpose acquisition company (Spac), a mechanism that is becoming increasingly popular in developed markets. Globally, Spacs raised $160bn (R2.5 trillion) last year, but are relatively rare in Africa.
Cilo Cybin shareholders have created a new holding group that will raise capital through an IPO with the purpose of acquiring an existing operating entity, Cilo Cybin Pharmaceuticals, which is the company producing CBD products.
Theron said the prospectus has been completed and shareholders are finalising regulatory issues before issuing details of the listing and information about the com
pany’s plans and strategy.
Cilo Cybin has so far attracted interest from 1,000 prospective investors who range from individuals with R1,000 to invest to wealthy families in Europe, said Theron.
“We are looking at May for the listing and June/July for the acquisition,” he said.
Theron said the plan is to set aside 20% of the shares for the public and the rest for institutional shareholders.
Cilo Cybin has spent the past two years researching, building its production plant and manufacturing its product, after receiving the required regulatory approval to grow, process and package cannabis products.
“We took our time before launching because we wanted to make products that are credible and of high quality that will still make us relevant in 10 years or more.”
The cannabis industry is one of the fastest-growing sectors globally, with expansion opportunities including edibles, teas and other over-the-counter supplements.
Locally, any product with less than 600mg per package and less than 20mg per dose of THC, the main psychoactive compound in marijuana, is allowed without prescription. The department of trade, industry & competition estimates that the sector could be worth about R28bn a year.
To stimulate growth, more legislative changes are needed to facilitate the commercialisation of cannabis. President Cyril Ramaphosa said in his state of the nation address last month the hemp and cannabis sector has the potential to create more than 130,000 jobs and the government will streamline the regulatory process.
Theron said the government should address the recreational use of cannabis, and that “instead of being illegal for public use it should be regulated just like alcohol and tobacco so that this industry can grow”.
In SA the illegal market for cannabis with high levels of THC — for recreational or medicinal use — was valued at roughly R33bn in 2020, according to Euromonitor.
South Africans have been allowed to grow and smoke dagga in their homes since a Constitutional Court ruling in 2018.