Canadian firm backs out of deal in South Africa
Montreal, Canada based LGC Capital has canceled its participation in a deal with South African company House of Hemp (HoH). The parties had previously announced plans to develop a medical research, cultivation and commercial production facility at a 424,000 sq. ft. indoor cannabis growing operation in the Dube TradePort AgriZone near Durban’s International Airport. Under the deal, LGC was to partner with SA farm transport firm AfriAg, with both firms taking a 30% interest in HoH.
“The absence of medical cannabis legislation in South Africa unfortunately means that House of Hemp’s business is no longer one that suits LGC’s business objectives of investing in near-term cash-flowing businesses,” LGC CEO John McMullen said in backing his firm out of the deal. “As a result, House of Hemp no longer fits with LGC’s investment objectives.”
Whiff of corruption
But the deal also had been clouded by revelations that some in HoH circles had close connections to former president President Jacob Zuma’s scandal-ridden government. Zuma was charged April 6 with corruption in relation to a 1990s arms deal, and his government was wracked by corruption charges before he left office Feb. 15, 2018. Critics had claimed the venture would benefit only foreign investors and those with close ties to Zuma’s scandal ridden admnistration. Zuma faces 16 counts of corruption, racketeering, fraud and money laundering in the corruption case.
“Anyone who is trying to apply for cannabis commercial licenses knows that the delay lies with the MCC (South Africa’s Medicines Control Council) stringent criterion and its tediously long bureaucratic processes,” House of Hemp owner Dr. Thandeka R. Kunene wrote in a lengthly response to coverage of the LGC pullout by South African by blogger William Wallace of thehighco.za, a frequent HoH critic.