High Tide Inc. (CVE: HITI) (NASDAQ: HITI) is following in the footsteps of other Canadian cannabis operators like Aurora Cannabis Inc. (TSE: ACB) (NASDAQ: ACB) and Organigram Holdings Inc. (TSE: OGI) (NASDAQ: OGI) by securing a stake in the burgeoning German marijuana market.
On Monday, High Tide announced that it was taking a 51 per cent stake in the Frankfurt-based pharmaceutical company Purecan GmbH. The price tag for this majority interest is approximately C$7 million.
“Given that demand for medical cannabis in Germany is currently outpacing supply, this merger provides Purecan with a unique opportunity to tap into High Tide’s unmatched procurement expertise and relationships with Canadian licensed producers,” Purecan Chief Medical Officer, Ehsan Omari, said in a statement.
The deal will provide High Tide with access to Purecan’s warehousing setup and strategic logistics framework. The companies are currently working on setting up a telemedicine portal where German patients can arrange to have their marijuana needs fulfilled.
Canada has key role to play in an expanding foreign sector
Purecan has a license to import medical cannabis, and in Germany, about 50 per cent of the supply comes from High Tide’s home country. High Tide currently runs the largest retail chain in Canada (Canna Cabana).
Multiple research firms have predicted that cannabis sales in the European nation will skyrocket for the remainder of the decade.
As highlighted in High Tide’s press release, the UK-based analyst Prohibition Partners expects that the country will go from pulling C$619 million this year to nearly C$1.5 billion by 2028. Moreover, the American firm BDS Analytics estimated last year that the annual total in Germany would rise even higher to C$5 billion by 2027.
The EU nation’s medical pot sector is one of the fastest growing on the planet.
The German researcher Bloomwell Group says there was a 1,000 per cent increase in cannabis business nationally between April and July last year after initial steps were taken to legalize adult-use weed. Grand View Research expects a 14.9 per cent compound annual growth rate in the adult-use sector for the rest of the decade.
Read more: High Tide is king among Canadian cannabis stocks, Ventum Financial determines
Read more: Germany votes to legalize recreational cannabis possession, distribution framework needed
Number of medical patients expected to rise exponentially
Prior to the Bundestag passing legislation permitting possession, cultivation and social clubs, the number of medical patients nationwide sat at approximately 250,000.
Now that the new laws have taken effect and obtaining a prescription has become significantly less difficult, that number could ascend into the millions within a couple of years.
Germany was the third European nation to implement a recreational framework after Malta and Luxembourg.
High Tide had been monitoring the country’s legal developments for a significant amount of time before investing millions into the industry this month.
A growing acceptance of the plant among residents is helping to fuel vast growth in Germany’s rapidly developing industry.
rowan@mugglehead.com
