Invest in SA’s flourishing cannabis industry

SilverLeaf Investments, established by industry pioneers and investment experts, has the goal of bringing investors and cannabis-industry investment opportunities together.

The aim is to help steer this new industry towards its potential as it navigates its return to its former glory as a globally revered plant.

In the process, it is leveraging unprecedented opportunities for even small-scale investors to be a part of the fastest-growing industry.

Silverleaf investments
SilverLeaf Investments is a cannabis-focused fund focused on the industry’s local growth

Global legal cannabis market

The global legal cannabis market is currently estimated to be around $30 billion and anticipated to reach somewhere between $75 billion and $100 billion by 2030. That’s formidable in anyone’s books, especially for an industry that is fresh out of the starting gates, long sequestered behind a firewall of prohibition.

But much of the world – save perhaps for parts of southeast Asia – is seeing swift and fundamental changes in attitudes and laws.

Research-based recognition of the plant’s seemingly infinite medical and industrial applications is fuelling a legalisation rethink across most of the globe. And such developments are bringing an end to decades of prohibition and stigma, paving the way for exponential market expansion and industry growth.

More than 30 countries have now legalised medical cannabis, and while precise laws remain patchy in many quarters, there are now half a dozen countries permitting adult use of cannabis. Hemp, once a darling crop globally is also experiencing a dramatic comeback.

“For years it seemed an impossible dream,” says Pierre van der Hoven, joint CEO of SilverLeaf Investments, a cannabis-focused fund focused on the industry’s local growth. “Then, finally, legalisation as the ending of prohibition gained momentum globally.”

Future-forward investment  

 Today this fledgling industry is proving itself impossible to ignore; for any future-forward investor, it would be a pity to miss the opportunity to be part of the current momentum. Investment prospects aside, it is also an opportunity to be part of the creation and development of a whole new industry, one that is set to dramatically drive economic growth and fuel job creation.

Aside from the ongoing penetration of cannabis products into new consumer markets, it’s expected that by 2024, the burgeoning international medicinal cannabis market alone could be worth US$60 billion.

More than 50 countries around the world had legalised some form of medical cannabis. Geneva Business News reports that an estimated 1.2 billion people worldwide suffer from medical conditions “for which cannabis has shown to be of therapeutic value”.

The arrival of CBD

Along with the six countries that have already legalised cannabis for adult recreational use, growing numbers of jurisdictions are considering relaxing cannabis legislation.

Anyone paying attention will have noticed the arrival of CBD, or cannabidiol, which is cannabis’s non-psychoactive, less giggly compound. Over the last couple of years, it’s enjoyed a meteoric rise.

To be clear: CBD completely lacks the “getting stoned” component brought about by THC (tetrahydrocannabinol), the mind-altering substance that’s also found in cannabis. Some describe CBD as the decaf version of cannabis – providing many of the benefits without the buzz.

The absence of psychoactive effects means that CBD is ideal – and most commonly used – for medical purposes. It has been shown to have anti-inflammatory and anti-anxiety benefits, and is a known reliever of insomnia, spasms, seizures, and according to Grand View Research there is “growing adoption of cannabis as a pharmaceutical product for treating severe medical conditions, such as cancer, arthritis, and Parkinson’s disease, and Alzheimer’s disease among other neurological conditions.”

Since the World Health Organization recommended taking CBD off banned substances lists (“no significant side effects”, “no potential for abuse” and “no potential to produce dependence”), legislation has shifted widely and markets have followed.

Cannabidiol oil

In 2015, according to ​The Hemp Business Journal,​ the market for CBD products was worth around $202 million. In November last year, a study by Grand View Research predicted the global market for cannabidiol oil reaching $3 billion by 2025.

In South Africa, Distell recently bought into a local CBD range of products, and there have been a number of buy-outs of cannabis companies by major food and beverage companies in the US.

In short: The industry is diversifying and its products are growing in sophistication. The cannabis plant’s disruptive potential seems unlimited.

Significant too is that hemp – a cannabis crop containing negligible amounts of psychotropic substances – is finding growing recognition in the eco-friendly agricultural space.

Hemp – used in foods, medicines, bio-composites, clothing and textiles, paper substitutes and packaging, biofuel, health products and cosmetics – has many eco-friendly benefits. Fast-growing, it thrives on little water, and is considered a “mop-crop”, able to purify contaminated soil. Growing hemp generates very little waste, and what there is entirely biodegradable.

Legal cultivation of hemp

In South Africa the widespread, legal cultivation of hemp is only about to start. Hemp cultivated for industrial use, as well as for CBD extraction, will fuel explosive growth in the coming months.

Legislation around the cultivation of cannabis for medical use was passed a few years ago – it is allowed under license from SAHPRA but remains expensive and complicated. Cultivation for personal adult usage is allowed in terms of a constitutional court ruling in 2016 but the sale of cannabis remains prohibited.

Van der Hoven, a surfer who grew up in the Eastern Cape, says many rural people there survived – and still do – thanks to small-scale cannabis cultivation.

He says, growing up, he was unaware of the medical uses of cannabis. “Hearing about the health benefits was the first major light bulb moment.”

That prompted the revelation that this industry could dramatically improve the lives of the people in some of the poorest areas of the country.

While “The Global Cannabis Report” recognises the pace with which cannabis stocks are becoming mainstream in places such as the USA and Canada, it also highlights the reality that Africa is in dire need of investment in order to take advantage of rising global demand.

According to the report, “Africa is lacking the infrastructure and facilities necessary for cannabis production. As such, corporate social responsibility (providing much-needed infrastructure, or supporting local workers) is of paramount importance for foreign investors and producers looking to set up in the region.”

Stimulate local investment in cannabis

SilverLeaf Investment Fund hopes to stimulate local investment in the industry. “I am convinced this industry can help us address our problems especially in the areas of job creation and rural economic development,” says van der Hoven.

Van der Hoven’s fellow CEO, Cliff Giesenow, says that “When this unregulated market is professionalised and legitimised, South Africa will become a powerhouse green economy with one of the most conducive cannabis-growing climates in the world.”

What’s more, SilverLeaf Investments believes that the cannabis industry is strongly aligned with the South African government’s strategic development priorities, which include growth within the agricultural and agri-processing sectors that can lead to foreign exchange earnings through export. And, at all levels, there is tremendous room for job creation, community involvement, and skills development, all of which have knock-on effects for economic transformation, rural economic development, and general economic growth.

Where SilverLeaf Investments is aiming to be of service is in addressing the gap that exists between the industry’s potential and its current funding deficit. Many early stage companies are running out of funding and runway to take off.

There is a massive need for initial investment to foster growth in the local industry and development for the value chain. The country’s cannabis industry needs scaling up alongside the implementation of an array of ancillary services and business beyond cultivation.

All of these need investments and supply chain support. Which translates to a great investment opportunity.

It’s not a time to procrastinate. Van der Hoven believes that – right now – cannabis represents a once-in-a-lifetime investment opportunity. Once the industry “normalises,” he says, returns will also normalise. “The opportunity exists to get in now at the bottom of the hockey stick growth curve and make exceptional returns.”

Which is where SilverLeaf Investments provides a crucial service. The fund provides an entry point into investment opportunities even for those with limited access to capital and funding. And it provides great tax benefits. SilverLeaf Investments is a Section 12J investment fund offering a 100% tax deduction in the year the investment is made. It’s targeted internal rate of return is between 20% and 30% over five to seven years.

And SilverLeaf Investments is not simply a funding mechanism, but wholeheartedly committed to the industry’s overall growth. Investments are targeted across the value chain with carefully chosen businesses identified for their potential to flourish and their significance to the industry.

Headed up by van der Hoven and Giesenow, SilverLeaf Investments brings together a team with strong fiduciary input and governance oversight. They have industry expertise, keen knowledge of the playing field, a diverse and widespread network and credibility garnered from years of wide-ranging and varied business experience in corporate and start-up industries.

SilverLeaf Investments has partnered with Jeff Miller and Malcolm Segal’s Grovest, a trusted boutique investment firm which is South Africa’s first and largest Section 12J fund administrator.

SilverLeaf Investments is now open for investment in its fundraising season with opportunities to invest from as little as R50 000.

Download the PDF here: https://www.b2bcentral.co.za/wp-content/uploads/2021/02/SilverleafInvestments_27012021-1-1.pdf



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