The world’s largest cannabis company Canopy Growth (TSX:WEED)(NYSE:CGC) is expanding its medical marijuana business in continental Europe with two new deals with the U.K. and Luxembourg.
The Ontario-based weed giant said Monday its pharmaceutical division, Spectrum Therapeutics, will widen its cannabis production and distribution network into the two countries to help transform healthcare in Europe.
With the Canadian pot market stumbling to meet economic expectations in the first year of legalization, Canopy continues to target international markets where much of the industry’s future growth opportunities are expected.
European Update: Canopy Growth Secures Exclusive Opportunities in the UK and Luxembourg
Details here: https://t.co/XVPzQYIBq7
— Canopy Growth (@CanopyGrowth) October 21, 2019
Canopy gains U.K. licences
The company said Spectrum Therapeutics has gained licences from the U.K.’s Medicines and Healthcare products Regulatory Agency (MHRA) and Home Office to store and distribute cannabis-based medical products across the country. The licence also permits Canopy to import the medical marijuana products directly from Spectrum’s global supply networks, eliminating the need for third-party suppliers.
“We are delighted to have been granted licences from both the MHRA and Home Office in order to provide a solution to one of the most significant barriers for access in the U.K.,” Spectrum regional managing director, Cosmo Feilding Mellen, said in a release.
The company said the U.K. facility is the first to be designed to provide patients with faster delivery for their medical marijuana prescriptions.
“Medicinal cannabis has been available in the UK for less than twelve months, and in that time, we have established cost-effective UK infrastructure to meet the needs of patients,” added Mellen.
Luxembourg supply deal
Canopy also announced that Spectrum won a two-year contract to be the exclusive supplier of medical cannabis to the Grand Duchy of Luxembourg. Spectrum’s licensed facilities in Denmark and across the globe will supply the small, landlocked nation with medical pot until Dec. 31, 2021.
The Luxembourg government decriminalized medical cannabis in 2018 for patients with severe conditions such as cancer, neuro-degenerative and painful diseases. Medical professionals with special training are able to prescribe cannabis to the eligible patients.
“We are proud to share news of this decision from the government of Luxembourg, connecting patients to medicine supplied through our European platform,” said Paul Steckler, Canopy’s co-managing director in Europe, said in a statement. “Luxembourg is a country with big ambitions when it comes to medical cannabis, and we are excited to have earned the opportunity to supply this new market.”
The company got the green light from Luxembourg to import medical cannabis and has completed its first shipment to the country’s medical pharmacy division.
In August, Luxembourg confirmed plans to be the first European nation to legalize recreational cannabis. With a population of 600,000 it may not seem like valuable market to investors, but the country’s health minister has also called out neighbouring European Union nations to relax their drug laws causing analysts to ponder if the tiny nation could be a catalyst for legalization in the world’s largest economy.
Luxembourg Health Minister Etienne Schneider and Justice Minister Félix Braz are two key proponents of the cannabis reform legislation and both traveled to Canada last year to study the polices of the first developed nation to legalize pot. During the visit, the pair took a tour at a Canopy greenhouse to understand the legal industry better.
With the two new European deals, Canopy Growth now has operations in 12 countries besides Canada and the U.S., along with partnerships in Brazil and Spain. The only other marijuana company to rival Canopy’s international footprint is Aurora Cannabis (TSX:ACB)(NYSE:ACB), which operates in 25 countries — including Luxembourg and the U.K.
However, because Constellation Brands (NYSE:STZ) invested $5 billion into Canopy last year and the company has more than $2 billion left in cash reserves as of last quarter, it’s far the richer of the two companies. Aurora, on the other hand, has around $300 million in cash reserves as of its last quarter.
Canopy’s overseas wheeling and dealing might not be finished yet with all that cash on hand.
According to cannabis research firm New Frontier Data, France leads the E.U. with the largest demand for marijuana at US$10.5 billion. Next in line, Italy has a value of US$9.7 billion, and in Germany it reaches US$9.5 billion. The U.K. comes in fourth at US$4.6 billion
The company’s interim CEO Mark Zekulin went on a media blitz last month to calm investors and reassure the billions its invested over the past five years will pay off in the long haul. Shares of Canopy have plunged more than 60 per cent since its April high of $69.90.
This year, Canopy Growth acquired German medical cannabis firm C3, British skincare and wellness outfit This Works, and Spanish pot producer Cafina.