Marijuana legalization continues to advance around the world: Malawi's parliament passed a bill last week that will permit the cultivation and sale of cannabis for medicinal use or to process the hemp fibers for industrial use.
Malawi joins four other African countries that have loosened laws relating to cannabis: Zimbabwe, Zambia, South Africa, and Lesotho. Lawmakers are hoping that cannabis cultivation can provide an economic boost to Malawi, one of the world's poorest countries.
Boniface Kadzamira, a former member of parliament who in 2015 pushed for legalizing hemp, sees this as a great opportunity for the country of 19 million people: "It is my strong view that cannabis will in the long run replace tobacco to become our major cash crop -- that will contribute hugely to the GDP."
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Malawi could be a new target for North American cannabis companies
One cannabis company that has already made inroads in Africa is Canadian producer Aphria (NYSE: APHA). In 2018, it entered into a joint venture with Verve Group, which in turn acquired a majority stake in Verve Dynamics, a medical marijuana producer in Lesotho.
Among Aphria's goals in expanding into Africa was to bring down its costs. At the time of the deal, then-CEO Vic Neufeld noted, "Verve is poised to become one of the lowest-cost producers of medical cannabis extracts in the world."
Aphria's strong international presence has been key to its growth. In its most recent quarter, CC Pharma, which generates distribution revenue for Aphria in Germany, contributed 86.4 million Canadian dollars in sales -- more than 71% of the company's total net revenue of CA$120.1 million.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
