The African nation of Lesotho could become a global hub for cannabis production as its nascent cultivation industry continues to gather steam.

Lesotho is a high-altitude, landlocked constitutional monarchy, entirely surrounded by South Africa, with a population of 2 million. It was the first African country to legalize the commercial cultivation of medicinal cannabis and it has emerged as a key battleground for Canadian firms that are spreading their tentacles across the globe.

The high altitude and fertile soils enable growers to produce a high-quality marijuana crop and labour costs are cheap. The black market has thrived for years there, but the government is pro-cannabis now and leading companies have piled in.

Last year, Canopy Growth Corp. (TSE: WEED) snapped up Daddy Cann Lesotho PTY Ltd., which has a license to cultivate, manufacture, supply, hold, import, export, and transport cannabis and cannabis resin, in an all-stock deal valued at C$28.8 million. Halo Labs (NEO: HALO) has also invested in the country’s burgeoning industry, while Supreme Cannabis Co. (TSX: FIRE) owns Medigrow Lesotho, a cannabis oil producer.

Now Toronto-based White Sheep Corp., a firm with projects in Australia, Canada, the U.S., and Europe, has broken ground on a 300,000 sq. ft. cannabis production facility just outside the capital city of Maseru.

The site will have the capacity to produce 58,200 kg per year once fully operational, and the plan is then to expand the facility to 1 million sq. ft. once commercial production is achieved. It will have an extraction department and create a range of cannabis-based medicines.

The White Sheep team conducted a global analysis and it was attracted to Lesotho by the high altitude, low humidity, and sunny climate, plus the political stability, pro cannabis stance and experienced workforce. “Having executed one export of medical cannabis already to Canada, Lesotho is poised to become one of the early global cannabinoid providers,” said Hamish Sutherland, chief executive at White Sheep.

A recent report by Prohibition Partners suggested the African cannabis market could reach $7.1 billion by 2023, and Lesotho is on course to become a leading light within the continent. The Lesotho government has also just granted Namibian businessman Knowledge Katti a license to cultivate, manufacture, and supply cannabis.