Cilo Cybin seeks access to EU markets

Cilo Cybin, which is listing on the JSE’s main board on Monday, is seeking entry into the European market. The company has applied for an EU good manufacturing practice (GMP) accreditation that will give it access to the region.

Cilo Cybin CEO Gabriel Theron said the company has shifted its focus offshore because of the regulatory grey area over the trade in cannabis. The group, which cultivates and supplies cannabis products, already has customers in Australia and is seeking clients in Germany

“We’ve really successfully grown very strong in the Australian market. Now we have one of our directors in Germany meeting with potential partners. And we’re going for EU GMP accreditation so we can supply to Europe with no limitation.” 

Cilo Cybin became the first cannabis special purpose acquisition company (Spac) on the JSE’s AltX in June last year. 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. 

Cilo Cybin acquired Cilo Cybin Pharmaceuticals, along with its 2,500m² manufacturing facility in Midrand. This paved the way for the company to move to the JSE’s main board.

Theron said the main board listing will boost the company’s growth plans. “From here we can really grow. We’re in a position now where the group is cash-flush, there is some cash in the bank, we are profitable, and there’s no debt. So that [puts us] in a very, very strong position to really grow the company and our international footprint.”

Cilo Cybin has imported bought a hemp extraction equipment from Europe. “That will make us one of the larger extraction facilities in the world. In terms of South Africa’s capacity, we will probably be between five and 10 times,” said Theron.

In South Africa, Cilo Cybin is reintroducing its in-house cannabis products. Theron said volumes are low, and until there is a clear and stable regulatory environment, the group will focus on exports. “We believe there’s still a lot of opportunity for growth in the cannabis space. Our (export) products range include oils and vapes, and we’re looking at introducing an edible range later this year, as well as topicals later.”

Everything is being sold illegally, and nothing is happening. It’s all products that are produced and not in a controlled manner, so not in a medical environment. The government has issued all these licences, but you’re almost better off not having a licence and being in the market now than having a licence if your market is South Africa

—  Gabriel Theron, Cilo Cybin CEO 

The cannabis industry is one of the fastest-growing sectors globally, valued at $400bn (R7-trillion), with huge expansion opportunities. Cultivating marijuana for personal use was legalised in 2018, when the government made legal the sale of cannabidiol, a non-psychoactive compound derived from the cannabis plant. 

Any product with less than 600mg per package and less than 20mg per dose is allowed to be sold without a prescription, while permission must be sought for anything above the required dosages.   

Theron bemoaned the grey area in regulations and the rise in inferior products that are flooding the market.

“Everything is being sold illegally, and nothing is happening. It’s all products that are produced and not in a controlled manner, so not in a medical environment. The government has issued all these licences, but you’re almost better off not having a licence and being in the market now than having a licence if your market is South Africa.”

In March health minister Aaron Motsoaledi issued regulations to the Foodstuffs, Cosmetics and Disinfectants Act prohibiting the sale, importation and manufacturing of foodstuffs containing ingredients derived from cannabis, hemp, hemp seed oil or hemp seed flour, after raising concerns about unregulated imported foodstuffs flooding the South African market.

The regulations were later withdrawn following pressure from the industry, which lobbied the Presidency.

Cilo Cybin will expand its products to include psychedelics and integrative health technologies with a focus on drug development and advanced biotech.

“Psychedelic is on the radar, but it’s a little bit early,” Theron said. “We just increased our GMP facility, and then after this, probably next year, we will start lobbying with the regulator to see how we can commercially be allowed to manufacture psychedelics because currently it is a schedule 7 [controlled substance], which basically means it’s for research purposes. We can’t do commercial products yet.”