eswatini cannabis deal with stem

Modern Colonialism: Swazi King Wants Legal Cannabis to Pave Way for US Corporations

PORTLAND, Ore. — One morning this fall, Sary Leu was over it.

She grabbed the closest black marker she could find in the little employee break room and wrote the following on the whiteboard: “Swazi journalists, human rights activists and members of parliament are being arrested for speaking out. Small Swazi farmers’ fields are being destroyed under the monarchy’s orders. These things are a result of Stem Holdings’ actions. This is a serious violation of human rights, and we won’t get over it.”

Leu didn’t even bother clocking into her job at Yerba Buena, a marijuana farm just outside of Portland — she knew that would be her last day at the company.

She was right. By that afternoon, she was fired.

“Africa is Africa, and I can’t say anything more.

They don’t have much interest to help the people.

The people are destroying themselves.”

Dan Oran of Profile Solutions

“I just decided to deliberately stir the pot,” Leu says, adding her (now former) coworkers stuck by her after the message. “They said ‘fuck it’ and cleaned up early, and we all got a beer after.”

Later that day she was fired by Yerba Buena, a charming Oregon cannabis farm that carved out a reputation for creating high-quality cannabis products, garnering numerous awards along the way.

That changed in October of 2018, when the farm was purchased by Florida-based cannabis corporation, Stem Holdings, a publicly traded company with entities in eight states. That’s when the dominoes started doing what dominoes do, and it’s not just here.

The Monopolization of Marijuana

Stem has rapidly acquired cannabis and hemp companies across the country, including in Massachusetts, California, Nevada, and Oklahoma. The proposed deal with Eswatini appears to be the first international deal attempted.

Small marijuana businesses, with Oregon as perhaps the most potent example of a national trend, are being swallowed up by larger corporations with little hands-on knowledge of the plant but the business savvy to capitalize on a fruitful and novel industry.

This is nothing new. Leu’s whiteboard message was the result of a months-long sleuthing into Stem Holdings’ overseas interests — primarily its interest in Africa —  by a handful of employees at Yerba Buena who felt something was off.

Four former Stem employees who worked at Yerba Buena spoke with The News Station. Only one of those workers, Leu, agreed to go on the record. The other three requested anonymity due to fear of retaliation from Stem, but they corroborated Lew’s account.

They say Stem Holdings, in a joint venture with Profile Solutions, another publicly traded CBD company, attempted to broker a deal with the Kingdom of Eswatini in 2019 to monopolize the cannabis and hemp industries for 10 years in the tiny African country. The nation — which is only about two thirds the size of New Jersey — is one of the last remaining monarchies in Africa.

The outcome intensified strife between rural cannabis farmers and the government — and the strife hasn’t let up since.

The border of Eswatini and South Africa. By Safa Hovinen

The deal itself was vast: Upon acquiring an exclusive license, the joint venture would be the sole producer, manufacturer, distributor and exporter of medical cannabis and hemp from Eswatini for at least a decade. Stem’s press release announced the facility would span 2,500 acres and include cannabis and hemp cultivation, along with a development lab. Partners in this joint venture claimed they secured rights to water access, electricity and banking services.

Those who tracked the trajectory of the deal are feeling queasy about it.

“It’s clear [Stem] is allocating resources to do things like this. Who knows what else they’re trying to do,” Leu told The News Station. “It’s not whether or not the deal went through, it’s that they’re trying to monopolize cannabis.”

Many inside Eswatini — including journalists, a human-rights lawyer and a cannabis association leader — tell The News Station this deal was a harmful attempt by the monarch and American corporations to monopolize an industry that keeps many of its citizens alive: It’s ‘dagga,’ or cannabis, industry.

“This is a tried fact, people live through cultivating and selling dagga, especially in the rural areas. It is their only source of income,” Sibusiso Nhlabatsi, the human-rights lawyer, says. “You can point to many people who say, ‘I went through school because my father was a dagga dealer, my mother was cultivating and growing dagga.’”

What started as inklings of suspicion from Yerba Buena employees turned into a vast network of Swazi journalists and cannabis watchdogs who have tracked this attempted deal over the past two years.

In Oregon, Yerba employees first learned of the proposal after being told by their boss that royalty from Eswatini was coming to visit their farm in late 2018. The royals would be coming after hours.

That sparked gossip. So they turned to Google.

Employees were alarmed by the results from over 10,000 miles away: a barrage of local articles by Eswatini press that showed dagga farmers under increased policing. Local reports write that lands were seized and dagga fields burnt. The local journalists seemed to be drawing a correlation between the increased policing and the joint venture’s proposed deal with the monarch.

They also stumbled on the March 2019 press release from Stem detailing the joint venture’s ‘preliminary’ approval to receive the exclusive license.

The press release reads that Stem, along with Profile Solutions, a Florida-based holding company that manufactures and distributes CBD products, had formed a joint venture and were planning to build a growing and processing facility in Eswatini that would be the sole exporter of medical cannabis and hemp for the following decade.

In an email, Ellen Deutsch, Chief Operating Officer of Stem Holdings, told The News Station, “We consider this matter long closed.”

“We do not own a cannabis license or grow facility in the Kingdom of Eswatini and have never operated there,” Stem wrote. “Over 18 months ago we negotiated a joint venture agreement with another company in good faith for them to receive a provisional license.  That was never completed, nor will it be.”

When pressed on why the deal fell through, Stem directed our attention to its partner, Profile Solutions, who Stem said was responsible for executing the deal.

Stem wrote that Profile informed them “the government was not providing a timetable for issuance of the license” and that given this information, Stem felt withdrawing from the deal was “the prudent course of action.”

But Profile Solutions CEO Dan Oran relayed a different story over the phone to The News Station. He claims he never received a letter from Stem announcing its departure from the deal.

“I am still trying to get the license there,” he added, “and if Stem was out, someone else will come in.”

But Oran made it clear that if this deal doesn’t go through, it’s not his only cannabis business option in Africa.

“If I don’t get it by Jan. 10 or 15, I will send a letter that we’re getting out of Eswatini, and we’re not interested in doing business there anymore,” Oran says.

The release says the facility would include cannabis and hemp cultivation, a development lab, and serve as the only exporter and domestic distributor of cannabis and hemp.

These Westerners even promised to bring prosperity to the people of Eswatini, noting, “The implementation of this project is expected to have a positive impact on this incredible South African country by bringing new jobs and new infrastructure.”

The facility was expected to jump start in late 2019, according to the release. But with a hitch: Cannabis is illegal in Eswatini. Even so, it’s still got a booming, if archaic, black market.

“If you have a monopoly, the question is: How are you going to give other people opportunity?”

That illegal market, historically, has been left relatively unpoliced. But in 2018 when the King began aggressively pushing legalization of cannabis, he enacted The Prevention of Organised Crime Act (POCA). The law was meant to quell illegal activities, such as financial laundering and organized crime.

But when Parliament killed a bill to legalize cannabis in June 2020, Dagga farmers felt the monarch was using the POCA to unfairly target them over other illicit activities.

Eswatini sources tell The News Station that’s no coincidence.

Many suspect the proposed deal, the recent push to legalize cannabis and the renewed efforts to squash illegal cannabis farming are bedmates. They say American business interference in the country has exacerbated civil strife between the monarchy and farmers.

“When we connected that with what was happening on the ground, we discovered that [the] company was claiming to have received that preliminary approval, and on the other hand the government was using the provisions of POCA to target dagga farmers,” says Zweli Martin Dlamini, editor of Swaziland News, which wrote a series of investigative stories on the deal this summer.  “So they were grabbing properties and destroying dagga fields of indigenous families.”

Legalization hasn’t happened. Enough members of Parliament vehemently oppose it — fearing it will crumple prices if legalized and take away one of the country’s most lucrative markets — and they’ve been able to blunt the king’s will. For now at least.

A King Verse his People?

Especially for rural indigenous families, dagga has been the crop that’s kept families financially afloat. 

Eswatini’s leader, King Mswati III, has ruled since he was 18.The country is an absolute monarchy. That means this is no UK with a paper giant of a monarch. In Eswatini, the king can override Parliament.

Visit of His Majesty King Ingwenyama Mswati III of the Kingdom of Eswatini to the 108th (Centenary) Session of the International Labour Conference (ILC) in Geneva. Photo via the ILC

The king has been heavily criticized for living lavishly. He wore a diamond-studded suit to his birthday party two years ago, travels in private jets and owns a fleet of pricey cars. He currently has 15 wives. All of this while the country continues to experience economic stagnation due to weak agricultural production and persistently high unemployment.

Over 60% of the tiny nation’s populous live under the poverty line, and over a quarter of the adult population lives with HIV.

Political unrest has intensified over the past decade.

The News Station spoke with sources within Eswatini who have been closely following the deal since it became public knowledge in late 2018 who tell us it’s reliably difficult to get accurate and forthcoming information from the country’s monarchy. It took months of digging from local publications, primarily Swaziland News, to unearth what happened.

And still, despite Stem declaring the deal kaput (which their business partner at Profile Solutions says was news to him), sources in Eswatini are hesitant to put it to rest.

It’s unclear if the intensified policing of illegal cannabis — enabled by the POCA — was due to the talks between the joint venture and the monarchy. But Eswatini sources say the correlation was uncanny.

“It was ironic, the coincidence that at the time there were rumors that his majesty struck a deal with a company to cultivate dagga,” Nhlabatsi, the human rights lawyer, tells The News Station. “The people in the business were being attacked, arrested, properties being forfeited to the state. You need to be blind not to see the connection between the two.”

The odd thing about the proposed deal is that cannabis remains illegal in Eswatini, and the deal’s success appears to be incumbent upon legalization.

“They put the cart before the horse,” Nhlabatsi says, adding that it roiled already-fraught relations between the king and rural farmers.

Image via the Eswatini Cannabis Association

A member of the Eswatini Cannabis Association, who asked to remain anonymous due to fear of retaliation from the government, told The News Station that cannabis is a crop that’s provided food, education and health to the indigenous people who “otherwise had no hope.”

Profile Solutions, Stem’s partner, initially broadcasted the potential deal in Oct. 2018. In a press release, the company wrote it had been granted “preliminary approval from the Eswatini Ministry of Economic Planning and Development to establish an exclusive growing farm and processing plant for medical cannabis & hemp.”

But it wasn’t until January 2019 that Profile announced its partnership with Stem. 

Dlamini says his publication found the joint venture accessed those close to the king for preliminary approval. He says Prince Shlangusemphi — King Mswati’s brother and former Minister of Economic Planning and Development — was the point person for the potential deal.

“At the government level, the company was not approved,” Dlamini says. “But the highest authority was the king, and they were approved by the highest authority.”

In a statement to Swaziland News this summer, after Dlamini’s articles about the deal raised questions about the future of the country’s cannabis production, a leader in the Ministry of Health denied that the joint venture had ever been granted a license.

“They put the cart before the horse”

Sibusiso Nhlabatsi

Stem Holdings firmly denies having ever been granted a license to be the sole cannabis and hemp producer in the country and says it has no intentions of doing business in the country in the future.

But Oran of Profile Solutions said that the government promised him the license, and then “came back and said they had too many requests for companies like you,” and that no license has yet been issued. Oran said his “person on the ground” told him that the prince said last week his company would get the license.

Oran tells The News Station it’s up to the government what they want to do with cannabis production.

“If they want to give it to farmers, let the farmers deal with it and god bless them. We’re not telling them what to do,” Oran says.

“Africa is Africa, and I can’t say anything more,” Oran said earlier in the call, “They don’t have much interest to help the people. The people are destroying themselves.”

At the end of the phone conversation, Oran warned The News Station, “If you don’t say exactly what I said, I will make sure everybody knows that you didn’t do the right thing.”

Profits for Foreign Corporations?

Sean Hocking, editor of Sydney, Australia’s Cannabis Law Report, calls the joint venture’s attempt to broker a deal and monopolize cannabis production a classic colonialist move. He says this intended deal isn’t the first of its kind where overseas players have attempted to invest in Africa’s fertile soils.

“You get the exclusive lease, you do what you do, and the locals — who cares? Same sort of colonial-type business process that’s been happening for centuries, Hocking told The News Station.

Beau Whitney, an economist who studies the cannabis and hemp industries, has a more nuanced take. He says foreign investment in Africa has the potential to revive these countries and infuse money into cash-strapped, sub-Saharan countries.

“If they’re intending on doing infrastructural development and building highways and cell towers and bridges, then yeah, it will be beneficial,” Whitney told The News Station. “If it resulted in them partnering with the small farmers to leverage their skills and abilities and channels anyway, then that would be beneficial. too.”

But Whitney also recognizes deals don’t always pan out in such an idyllic manner.

“If it’s just a fleecing of the country and revenues come back into the U.S, that’s never a good thing,” Whitney says.

This isn’t just Eswatini. And this isn’t the last such Western takeover of fertile, African soil analysts expect to see.

“You run into this time and time again — it’s not indigenous to Eswatini — it’s something everybody’s concerned about,” Whitney says.

While monopolization of cannabis isn’t new, Yerba Buena employees felt a rub that they couldn’t shake: They say their parent company attempting to monopolize an African’s nation’s staple industry — all while promoting Yerba Buena as the gold standard of ethics and good ‘ole Oregon homegrown weed — didn’t feel ethical. It felt wrong.

While in 2019 Stem Holdings publicly branded the deal as a vast employment opportunity for Eswatini citizens, in an email to The News Station Stem said it had “hoped that our investment would create employment and economic value for the country,” but Nhablatsi calls it a “public relations stunt.”

“If you have a monopoly, the question is: How are you going to give other people opportunity?”  Nhablatsi asks. “The only thing they’d be able to do without contradiction [is] they want to make money for themselves and give a fair share to his majesty, and nothing more.”

And here in the states, Stem employees who spoke with The News Station say Stem flashed its corporate chops at Yerba Buena, too, albeit on a much smaller scale. They say it used the little farm as the figurehead of an idyllic local business.

“There’s a questionable culture about how to treat cannabis employees, but prior to Stem, [Yerba Buena] was adamant about doing the right thing, the good thing,” Leu said. “Stem doesn’t value that.”

When Yerba Buena was first acquired by Stem, former employees say it was primarily run by women. In Stem’s press release announcing the acquisition, it touted the farm as “committed to building a diverse workforce as women make up half of the business’s employee base, as well as people of diversity comprise a third of the staff.”

Now, former employees say no women remain. Former workers tell The News Station they soured on the company since it acquired the farm in late 2018. For some, the Eswatini rumors cemented their concerns.

            Screen grab of the Kingdom of Eswatini’s website from December 2020.

On the Kingdom of Eswatini’s website, a page remains that details the intentions of the government to legalize cannabis: “The Government of the Kingdom of Eswatini, in anticipating significant economic and medical benefit from the legalization of cannabis for medical and scientific use is working on an enabling legislative environment for this purpose.”

It’s unclear when the page was created, but it alludes to a license being issued when legalization occurs. Legalization has eluded the king, yet the web page — or advertisement to western corporations — remains.

“It is on this premise that the Ministry of Health has prepared regulations to this effect and is in the process of conducting consultations before sending it forward for the necessary approvals,” the page reads. “These regulations set forth conditions and requirements under which a license to deal in cannabis business will be issued.”

Those who have been paying close attention to the fallout from the proposed deal say they’re hesitant to think the attempted monopolization of Eswatini’s cannabis is truly quashed — whether by Stem, Profile, or another deep pocketed global corporation.

“We may never know,” Dlamini says. “Because in this country everything changes by night.”

Sophie was born and raised in Portland, Oregon. She attended college in the South and worked for NPR in Georgia as a Couric Radio Fellow before moving back to Oregon and working for Willamette Week. She currently freelances and fills her free time with frequent existential crises.

Sophie was born and raised in Portland, Oregon. She attended college in the South and worked for NPR in Georgia as a Couric Radio Fellow before moving back to Oregon and working for Willamette Week. She currently freelances and fills her free time with frequent existential crises.

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