MARIJUANATION

BACKGROUND

In partnership with five of your friends, you have decided to set up a company, creatively named MarijuaNation (Pty), to invest in commercial medicinal cannabis growing and processing in Gauteng.

This enterprise has been inspired by the announcements by the Gauteng Provincial Government (GPG) that it is looking for interested parties to submit business partnership proposals as part of the GPG's new cannabis industrialisation plan. The GPG intends to support the cultivation, processing and distribution of cannabis at an industrial scale in the province in order to "unlock economic opportunities and job creation". It will support any companies that would like to invest by:

(i) Providing part of the funding needed (up to 40%);

(ii) Offering leases on state-owned previous mining lands which needs to be rehabilitated, to grow the cannabis;

(iii) In partnership with the Department of Agriculture, Forestry and Fisheries (DAFF), and Department of Health (DoH) amend the existing legislation to allow for the sale of legal cannabis;

(iv) Supporting them in their application to the South African Health Products Regulation Authority (SAHPRA) for a cultivation licence (these are mandatory and are normally granted for 5 years)

(v) Provide access to any proposed domestic and export markets that the investor may identify;

(vi) Developing quality assurance and certification standards; and

(vii) Developing partnerships with universities and research institutions to help develop commercially viable cannabis plants. The companies must submit viable business plans, and be able to prove that they will create economic opportunities and jobs through their activities.

The primary use of the cannabis grown in the province will be for medicinal purposes, and the products must not be sold recreationally. While there are no regulations to guide the use of cannabis for medicinal purposes, and there are no standards for the types of medicinal products that are derived from cannabis, the GPG and DAFF are hopeful that these will be in place by the end of the next year, 2023.

MarijuaNation has therefore decided to set up a pilot project to invest in growing, processing and selling refined cannabis projects for medicinal purposes. In preparation you have already identified 50 acres of suitable land that was previously used for mining in Gauteng and have secured the lease on this land for one year.

SCOPE OF THE PROJECT

You have defined the scope of the project as follows:

(i) Project objectives: To grow, harvest and process cannabis for medicinal purposes and thereafter to sell it to customers in domestic and export markets

(ii) Project activities:

a. Prepare the land and plant quality cannabis plants from local and international sources,

b. Harvest and process the cannabis to get tetrahydrocannabinol (THC), the refined end product

c. Identify medicinal products containing THC that can be profitably marketed to customers in domestic and export markets, including health beverages and herbal products

d. Manufacture and sell the identified products in the target markets, with the help of GPG

e. Write the outcomes of the above activities out as a case study and if the venture proves profitable, apply for funding to expand the project.

(iii) Project duration: The project may start immediately, and you estimate that:

a. Ground preparation will take one month,

b. The growing period for the plants will be 6 months,

c. Market research can take place concurrently with the growing of the plants, for six months

d. Harvesting and production will take a further two months

e. Within three months from the end of production all stocks of the product you have developed will be sold out.

(iv) Project deliverables:

a. Developed approved medicinal products containing THC

b. The profitable sale of all the products to customers to be identified

c. Proof of job creation or economic opportunities created amongst the local community, and

d. A case study report to apply for further funding

REQUIRED

In order to provide you with a part funding the GPG has requested you to, amongst other requirements, develop a risk management plan in which you should:

1.Identify and explain the top ten potential risks associated with this project, in your view. (40 marks)

2. Using a risk assessment matrix, analyse the identified risks. (30 marks)

3. Develop a risk response matrix to outline how you would deal with each of the risks. (30 marks)

Important:

Please highlight any assumptions you make in the development of the risk plan As this is a relatively clear-cut project, there is no need to restate the project scope or objectives in the write-up to the risk plan [Total: 100 marks]