#10Q: Herschel Maasdorp on CBD market growth

Herschel Maasdorp is the CEO at Cannafrica, the lifestyle cannabis brand of Labat Healthcare, which is in the process of being launched, given the growing popularity globally of cannabidiol, or CBD as it is known widely. While the South African Health Products Regulatory Authority (SAHPRA) bars CBD companies from making claims that a product can “diagnose, cure, treat, mitigate or prevent” any medical conditions, the industry is showing growth with the rise of ‘self-care’ during the pandemic. Maasdorp admits that while certainly no cure for corona, there’s substantial evidence in support of CBD’s anti-bacterial, anti-anxiety and anti-inflammatory properties.

1. What is the business case study for launching this new division?

The roll-out of a lifestyle retail brand as part of a comprehensive market approach in the cannabis economy, is indispensable. As a healthcare company, we have the responsibility to onboard a newly educated and discerning consumer, in parallel with the introduction of the new category, Cannabinoids, into the market. Utilising a sophisticated data-driven approach, we are able to responsibly usher our lifestyle consumers by means of various tools, instruments and channels, to access a cannabis-based or cannabis-derived product line that is enabled with the latest biotech available in the world.

2. Tell us about the new offering?

Cannafrica is a fully integrated cannabis business, and the CBD lifestyle division of Labat Healthcare (part of the JSE-listed Labat Africa, making it the first CBD brand to feature on the stock exchange). The official launch is later this month. Aiming to be the ‘Apple’ of CBD brands, the strikingly eye-catching product range will initially include a collection of tinctures, soft-gels and pet care products; and will expand over the next few months to include supplements, personal care products, beverages, edibles and even a line of mini grow boxes. While the brand will initially focus on e-commerce, with sales predominantly driven through its soon-to-launch website, retail outlets are planned for the near future.

3. What are the challenges?

The current challenges mainly relate to the current regulations. Thanks to CBD’s recent rise in popularity and therefore demand, a lot more players have entered the market – and not all of them play by the rules – which means that consumers were not always guaranteed of the integrity and safety of the products they used. New changes gazetted on 22 May 2020, now classify CBD as a Schedule 0 human medicine under Category D, which resulted in many merchants being forced to change their product lines, causing a widespread outcry across the industry. I believe, however, that the development of a clear, stringent regulatory framework is paramount. This framework will also act to empower the consumer, safeguarding them against unscrupulous manufacturers. We, as a business, are grateful for these new guidelines in what was previously a grey area, and we have thus been able to put the necessary licenses and protocols in place. Ultimately, market share will start to shift to those which already have a pharmaceutical license in place and who adhere to the new guidelines.

4. How does the CBD sector need to innovate to thrive?

The data is clear, and it is fairly well-known how well CBD has performed in the USA, Canada, UK and Europe. There is a much larger conversation underway regarding the rarer Cannabinoids such as CBN, CBG, CBC and others, coupled with delivery systems and bioavailability of the active ingredients and the use of nanotechnology. We are excited about pioneering this space here, locally, and the rest of our targeted markets.

5. How can the sector educate consumers and build credibility?

There is a great responsibility on us, as an industry, and so it is vital that we avoid making unverified claims. We need to consistently engage with our consumers, using every opportunity to educate on what the compound can – and most importantly – cannot do. We must commit to ongoing education that will empower our customers, while adhering to the parameters laid out in the regulatory framework. Remaining transparent and ethically accountable is non-negotiable. This will ultimately serve to promote and protect our credibility as an industry, earning the trust of consumers and other stakeholders, which will ensure our long-term viability. CBD is not just another new health craze. CBD is here to stay; and brings with it a host of health benefits for all those who use it.

6. How has Covid contributed to the growth of the CBD industry?

In a disease pandemic, wellness becomes a high-value currency. CBD has shown that it may contribute towards promoting homeostasis by boosting endocannabinoid activity, leading to a growth in demand as consumers seek to enhance their immunity. In short, it demonstrates immune-enhancing qualities, which makes for an attractive value proposition given the current climate. Another reason is the sharp spike in conditions such as depression and anxiety – a social symptom of the pandemic. A post-Covid landscape is a fertile breeding ground for increased chronic stress, anxiety, depression – and as many users will attest, stress management is an area where CBD shines. There is significant and compelling evidence in support of this – one study that investigated cannabidiol as a potential treatment for anxiety disorders showed that systemically administered CBD lowered acute increases in heart rate and blood pressure. It also conclusively demonstrated its efficacy in mitigating anxiety related behaviours relevant to multiple disorders, including post-traumatic stress disorder (PTSD), generalised anxiety disorder (GAD) and seasonal affective disorder (SAD), among others; with a notable lack of anxiogenic effects. Finally, CBD’s liberation from prescription status a few months ago is yet another contributing factor.

7. What do you want to caution the industry on?

There exists an unfounded belief in certain quarters that CBD may protect against contracting Covid; or mitigate its worst side-effects. While one Canadian study tentatively showed that certain strains of CBD may potentially lower the risk of contracting COVID-19, the lab conducting the study was quick to caveat that far more research was needed. I would caution anyone on subscribing to this theory without concrete evidence; and I would strongly advise those in the industry to steer clear of making this implication, tempting as it may be. Our industry has fought hard for our credibility (and still has some way to go); and making grandiose and unproven claims will only serve to undermine this.

8. Tell us more about your strategy?

We are a Cannabis-based healthcare business. Suffice to say that we are claiming the (mostly) vacant and voiceless space of CBD, Cannabinoids and full plant extract and providing thought leadership, consumer education, technical and advisory assistance to the market. Our recently acquired medical research and development company, Biodata, plays an important role in the domain of clinical trials, observational studies, new product development and new drug applications towards a fully integrated model that will enable and discern between that which is retail, and that which will be the scope of pharmaceutical dispensary.

9. How do you inspire others?

To lead from the front, one must be available to listen, to seek advice, and be compassionate. Usually, time and love are the two key elements for inspiration.

10. What is your superpower?

My memory. My ability to recall finite details and numbers, when necessary.

– Receive the Retailing Africa newsletter every Monday and Thursday • Subscribe here