Medical cannabis group Cilo Cybin has halted the production and supply of its cannabidiol (CBD) range for the South African market amid continued regulatory challenges over the trade in cannabis.
The company, which listed on the JSE's Alternative Exchange in June last year, is now focused on exporting its CBD products to Australia and countries such as Germany.
While Australia has the largest market, manufacturers were making more money selling their products to European countries, said CEO and founder Gabriel Theron.
“We have decided to completely leave this market [South Africa] until we know where we can and can't play. There are many operators who consider it murky waters. But there are big changes that are happening, which is exciting.”
Some Cilo Cybin products for sleep, pain and inflammation are still available in online stores. Despite cannabis being a $400bn (R7.2-trillion) industry globally, there is still prohibition on the sale of some cannabis products in South Africa. Cultivating marijuana for personal use was legalised in 2018, when the government legalised the sale of cannabidiol, a non-psychoactive compound derived from the cannabis plant.
In June 2024, President Cyril Ramaphosa signed the Cannabis for Private Purposes Act into law. It regulates the cultivation, possession and use of cannabis by adults in a private setting.
The Presidency said: “This [act] will further enable amendment of the schedules to the Medicines and Related Substances Act and provide for targeted regulatory reform of the Plant Breeders’ Rights Act and the Plant Improvement Act, as well as other pieces of legislation that require amendment to allow for the industrialisation of the cannabis sector.”
The department of trade, industry & competition has a legal framework in the pipeline that is expected to clarify the trade of cannabis in the country, and who will govern that.
The health regulator has limitations on the dosage of CBD products. Any product with less than 600mg per package and less than 20mg per dose is allowed without prescription, but above that a doctor's prescription is needed.
Theron said there was a possibility for Cilo Cybin to rebrand and relaunch a range of new products, but this would happen once there were clearer directives from the government.
Cilo Cybin, which is eyeing a switch to the JSE mainboard, was looking to expand into manufacturing psychedelics and move away from cannabis.
“We started out with cannabis because of the hype about it and we were able to manufacture cannabis products to raise the money we needed to expand into other fields,” Theron said.
“Psychedelics are definitely on the cards but there are hoops to jump through with regulations once again. This is forever a growing market and there is already interest from overseas about things we could possibly manufacture in that space.”
Cilo Cybin is set to complete the acquisition of a pharmaceuticals entity by June as it eyes a move to the JSE mainboard.
Theron said the company entered into an agreement in December, just six months after listing as a special purpose acquisition company (Spac).
“Our plan is to move to the main board, which by the looks of it will happen after this transaction is completed. Once that is done then we will focus more on acquiring other assets.”
A Spac is a company that lists on the securities exchange specifically to raise money through an initial public offering to fund acquisitions.
These companies have no commercial operations, as they list on the market to raise funds and are given 36 months to meet their target. Should they fail to meet this deadline, the companies are liquidated and the funds returned to investors.
Theron said that after acquiring Cilo Cybin Pharmaceuticals, along with its 2,500m² manufacturing facility in Midrand, the company had intentions of getting a second licence to expand its operations. A licence to manufacture more products overseas was also on the cards, he said.
This week, Cilo Cybin released its half year results for the six months ended September 2024, showing a 141% increase in its investment income from R1.06m to R2.56m. The headline earnings per share improved to 87c from 51c in March.
“We did a three-year profit projection and based on our results we are now ahead of our projected target for the year, so we are doing much better than we expected,” he said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.