A startup marijuana producer believes it can do large-scale cultivation in Lesotho cheaper than Australian rivals.

Tetramed had been planning a $30m listing on the ASX last year, according to CFO Nick Fiori in January 2019 although unconfirmed by the company today, but instead has gone down the equity crowdfunding route.

It’s looking for just over $1m from crowdfunding investors at a $20m valuation. It is raising another $3m from non-crowdfund investors.

The company says in its crowdfunding offer document it is planning to list “on an exchange” in the first half of this year, although it hasn’t specified where that will be.


Australians in Lesotho

Tetramed is an Australian venture.

The company plans to grow cheap medical-grade cannabis in Lesotho and ship raw flowers, cannabis oil and resin to manufacturers overseas.

The company has two medical cannabis licences covering all production and export activities, and has a 400,000sqm property on a 20-year lease.

Tetramed is still building its first production factory, but expects that to be finished by the end of September.

An extension to take it from 4000kg per annum to 12,000kg per annum is supposed to be finished by the end of the year.

The company says in its crowdfunding documents that a phase-three extension to double production would be finished in 2021 and allow it to make marijuana extracts and other finished products.

The company says it has an offtake buyer for the first 4000kg grown.

Its accounts show no revenue and a full-year loss in fiscal 2019 of $1.4m, with over a third of spending going on professional fees.

If the company receives the bare minimum of funds — $250,000 — it won’t have anything to spend from the crowdfunded cash on building the production facility. If it gets the maximum, it will have $600,000 to spend on construction.


Lesotho mystique

Lesotho was the first African country to legalise medical cannabis production in 2008. Marijuana had long been a cash crop for farmers there anyway and sold locally and into South Africa’s black market.

A major attraction is the fact that only one licence is needed from ‘seed to sale’, meaning companies can grow as many crops as they like in a year without having to get each re-permitted, as they do in Australia.

There are risks, however.

According to a Quartz report last year, allegations are flying that licences have been handed out based on connections, not competence, following a change of government. Now, a new government is trying to clean up an industry where even it isn’t sure how many licences have been issued.

Local company Medigrow, which has since been bought out by Canadian Supreme Cannabis Company, started the commercial growing industry in Lesotho and was followed in 2018 by the world’s biggest pot stock, Canopy Growth, which bought Daddy Cann Lesotho to access low-cost cannabis to sell into South Africa.

The same year fellow Canadian Aphria did a $C4.05m ($4.5m) deal to buy a majority stake in licensed Lesotho producer Verve Dynamics.

This article has been updated since publication.