How Canadian Cannabis Companies Are Securing their Place Across the Pond
If you’ve been following the cannabis industry, you should know that Canada has legalised the cultivation and commercialisation of medical and recreational cannabis since October 2018 through the Cannabis Act.
The Canadian cannabis industry is estimated to be worth around $5 billion (€4.5 billion) by 2021, but that figure pales in comparison to the assets of the largest Canadian companies operating in the industry.
Combined, the top ten players in the Canadian cannabis industry have an estimated market evaluation of $43 billion (€38.7 billion), eight times more than the entire Canadian industry.
And you might be wondering how such a thing is possible. How are Canadian cannabis companies growing at such an accelerated rate when the local industry is not? Well, the answer is simple. They’re branching out to Europe.
Why Canadian cannabis businesses bloom in Europe
Recently, Canadian companies invested massively in the European cannabis industry. Even though the European cannabis industry was worth just $318 million (€281 million) in 2018, experts predict it will be worth nearly $1.7 billion (€1.53 billion) by 2023. As a result, the Canadian cannabis giants are seeking to get a foothold in the blooming European cannabis market.
One of the main reasons European entrepreneurs do not invest in the cannabis industry is the apparent lack of cohesion in the European legislation. Each EU member country sets its own laws when it comes to cannabis, and, because of this, sometimes entrepreneurs are forced to operate in a legal grey legal area.
On the other hand, Canadian companies have the major advantage of operating in an open market. This means they can get funds by going public, partnering up for investments and starting crowdfunding projects. Additionally, they are already experienced in the cannabis trade, and they bring their know-how with them across the pond.
Canadian cannabis companies invest in the EU
Several North American companies already invested into European cannabis businesses, with more announcing their imminent expansion. Let’s take a look at some of the most important North American players on the European cannabis market so far.
Canopy Growth has an estimated worth of $8.65 billion (€7.79 billion) as of September 2019. In December 2017, Canopy Growth partnered with Danish Cannabis — one of the largest hemp producers in Europe — to form Spectrum Cannabis Denmark. Spectrum Cannabis obtained a license to establish a 40,000 m2 cannabis production facility in Odense, Denmark. This investment should already yield some results as Spectrum Cannabis is expected to produce its first saleable harvest in September 2019.
Canopy also bought the cannabis producer Cafina, Cafina is a Spanish company that’s authorised to grow and distribute cannabis containing more than 0.2 percent of tetrahydrocannabinol (THC) for medical purposes.
In addition, Canopy Growth also bought the British CBD wellness brand This Works. This expansion, along with the company’s internationally certified Storz and Bickel vaporizer facility in Germany and its recent acquisition of Germany-based dronabinol manufacturer C3, consolidated its European foothold.
Another Canadian company, Aurora Cannabis, has also made considerable efforts to expand to the European Union. Aurora has formed a joint venture with Denmark-based Alfred Pedersen & Søn called Aurora Nordic Cannabis. Aurora Nordic received a license to create a fully automated 92,000 m2 cannabis production facility. Just like Canopy Growth’s Danish facility, Aurora’s should produce its first profitable harvest by the end of 2019.
Additionally, Aurora also bought the Portuguese marijuana producer Gaia Pharm, and received the Portuguese Health Ministry’s approval to build a cannabis growing facility. The first phase of this expansion should be completed by 2020, when the facility should reach a production capacity of nearly 2,000 kg of cannabis per year. After the second phase of the expansion, the facility should increase its capacity to 4,000 kg per year.
Tilray, another Canadian giant cannabis producer, opened a €20 million research and cultivation facility in Portugal. Tilray has a cultivation and distribution license from the Portuguese Government, and it can sell its products in pharmacies throughout the EU.
In August 2019, Tilray announced an agreement to export a wholesale shipment of medical cannabis worth $3.3 million (€3 million) from Portugal to Germany. The agreement Tilray signed with Germany-based Cannamedical should be completed this autumn, and it will be the first time Portuguese cannabis will supply patients in Germany.
Atlas Growers, a company based in Edmonton, Canada, aims to invest at least $27 million (€24.3 million) to cultivate cannabis indoors in Denmark. Atlas Growers will open a 15,000 m2 cannabis facility that features 36 individual climate-controlled rooms in Funen, Denmark. The company secured a cultivation license from the Danish Medicine Authority and expects the first harvest in early 2020.
In addition, the Canadian firm will also open a 1,800 m2 processing laboratory that will meet the EU standards for pharmaceutical manufacturing.
Yet another Canadian company, called Aphria, will produce cannabis in Europe through a partnership with the Denmark-based firm Schroll Medical. The partnership will pursue the cultivation and distribution of certified medical cannabis within the EU. Schroll Medical received a license to cultivate and distribute medical cannabis. The cultivation began in spring 2019, and the company expects its first saleable goods in early 2020.
A look into the future
As you can see, many Canadian companies have already invested in the growing European cannabis market. And more of them will follow suit soon. With permissive legislation back home and a lot of money on their hands, North American companies have the resources to crush or buy their European competitors.
As a result, it’s likely that the European cannabis industry will be dominated by North American companies. But that’s not necessarily a bad thing. After all, these companies know what they’re doing, and they’re bringing their best products to Europe in an attempt to outperform competitors.
As North American companies try to outperform each other on the European market, lawmakers will implement cannabis laws across the EU to tax a share of their profits. In addition, intense competition usually leads to greater product variety and lower prices, so European consumers should be its ultimate winners.
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