Tuesday , 12 November 2019


Cannabis Central: Foray Into Europe Not Going As Well As Expected

It is predicted that over the next 5 years the CBD industry in Europe will grow more than 400% making it the largest legal cannabis market in the world. This is a great opportunity for companies to enter and/or expand through Europe with far less competition than we’re seeing in the U.S. and Canada and the companies highlighted below have done just that.

By Lorimer Wilson, editor of munKNEE.com, a site for sore eyes and inquisitive minds

1. StillCanna Inc. (OTCPK:SCNNF) has:

  • combined its proprietary strengths in the extraction and distillation of pure CBD from hemp and/or cannabis oils with a number of key acquisitions and initiatives in Poland, Romania and the U.K.

See here for further detailed financial analysis.

In spite of StillCanna Inc.’s acquisitions and initiatives, however, its September 27th share price of C$0.39 was:

  • down 29% from its price at the end of August,
  • down 75% from its peak price reached on April 18th and
  • down 39% from its December 31st, 2018 price.

2. ICC International Cannabis Corp. (OTCPK:WLDCF) has:

  • signed a licensing agreement with Authentic Brands Group to market and distribute CBD-derived health and wellness products throughout Europe under its brands and
  • acquired 49.9% of Wayland Group Corp. (OTCPK:MRRCF), a vertically integrated cultivator and processor of cannabis with production facilities in Canada, Germany, Switzerland and Italy, and assets in Colombia and Argentina that has put the company at the epicenter, both economically and geographically, of the booming market to feed Europe’s growing demand for CBD.

See here for further detailed financial analysis.

In spite of ICC’s efforts to date and stated plans for the future ICC’s September 27th share price of C$0.04 was:

  • down 20% from its price at the end of August,
  • down 92% from its peak price reached on January 15th and
  • down 85% from its December 31st, 2018 price.

3. Aleafia Health Inc. (OTC: ALEAF):

  • entered the German medical cannabis market this past May with a 60/40 joint venture (JV), through its wholly-owned subsidiary Emblem Cannabis Corp., with German pharmaceutical wholesaler Acnos Pharma Gmbh to distribute its branded cannabis oils through 110 distribution centers and 20,000 pharmacies in Germany in addition to other extensive distribution channels across Europe.

See here for further detailed financial analysis.

Aleafia’s stock jumped by 24% with the announcement of the Acnos J/V in May but has continued its decline and, as of September 27th, was:

  • down 3% from its price at the end of August,
  • down 65% from its peak price reached on February 5th and
  • down 32% from its December 31st, 2018 price.

4. Elixxer Ltd. (OTCQB:ELIXF), which changed its name from LGC Capital Ltd. to Elixxer Ltd. on August 6th, 2019:

  • currently sells its cannabis products in over 1,000 points of sale across Switzerland and Italy,
  • has acquired a 49% equity interest in Italian-based company, Evolution BNK, and
  • has acquired a 35% equity interest in Freia Farmaceutici Srl, the only company in Italy – and one of the few in Europe – marketing hemp-based pharmaceutical products authorized by the European Food Safety Authority.

See here for further detailed financial analysis.

ELXR expects their acquisitions to provide significant synergies for the company within Europe but, to date, that benefit has not translated into a higher stock price. It remains very much a penny stock in the true meaning of the word trading at $0.07 and, as of September 27th, was:

  • unchanged from its price at the end of August,
  • down 46% from its peak price reached on April 4th and
  • down 22% from its December 31st, 2018 price.

In addition to the above mentioned companies that have a very small capitalization the following companies are much larger and much more established.

5. The Green Organic Dutchman Holdings Ltd. (OTCQX:TGODF) has:

  • organic hemp CBD oil operations in the EU through its wholly owned subsidiary, HemPoland, which is facilitating its entrance into the German CBD market and through a 50/50 joint venture with Denmark based Queen Genetics/Knud Jepsen A/S, based in Hinnerup, Denmark, which will provide a consistent supply of high-quality organic European-grown cannabis and
  • has signed a distribution agreement with Mediakos, a leading German pharmaceutical distributor,
  • and continues to have in-depth discussions with co-packers and additional distributors to continue expanding its footprint across Europe.

See here for further detailed financial analysis.

Like most other pot stocks TGODF’s stock price continues to be quite weak at C$2.25 and, as of September 27th, was:

  • down 33% from its price at the end of August,
  • down 59% from its peak price this past March and
  • down 8% from its December 31st, 2018 price.

6. OrganiGram Holdings Inc. (NASDAQ:OGI) is well positioned in Europe having undertaken the following investments over the past year:

  • acquired 26% of the outstanding shares of Serbian-based hemp and CBD producer Eviana Health Corporation (CSE:EHC) to provide Organigram with a source of low-cost, high-quality CBD for the burgeoning medical market within Europe.
  • acquired a 25% interest in alpha-cannabis Pharma GmbH (ACG), a German company which is strategically positioned to serve more than 20,000 pharmacies in Germany, Austria and Switzerland.

For a detailed financial analysis please go here.

OrganiGram stock, as of September 27th, was:

  • down 13.9% from its price at the end of August,
  • down 55% from its peak price earlier this year and
  • unchanged from its December 31st, 2018 price.

7. Tilray Inc. (NASDAQ:TLRY) has made an effort to establish itself in Europe by:

  • acquiring U.K.-based company, Smith & Sinclair, a developer, producer and marketer of boozy candies, edible fragrances and other unique cocktail treats which gives Tilray a way to develop novel cannabis products as it tries to differentiate themselves and attract new customers. This acquisition should give a major boost to the company’s efforts to get into the CBD-infused edibles market just in time for the legalization of CBD-infused edibles in Canada at the end of 2019.
  • signing an agreement, through its Portuguese subsidiary, Tilray Portugal Unipessoal Lda., with Cannamedical Pharma GmbH to export $3.3 million worth of medical cannabis to Germany this autumn which will give Tilray access to a much larger market than that of its home country of Canada.

For a detailed financial analysis please go here.

The performance of Tilray’s stock has been terrible this year although it is showing signs of stabilizing. As of September 27th the stock was:

  • unchanged from its price at the end of August,
  • down 74% from its peak price on February 28th and
  • down 63% from its December 31st, 2018 price.

8. Aurora Cannabis Inc.  (NYSE: ACB) continues to move forward in cementing its positioning in Europe’s medical cannabis market to ensure that it is ready to enter new markets as regulatory barriers fall and demand rises.

As production ramps up throughout Canada, supply could outpace demand by as early as 2021 and, to sell its domestic excess supply, Aurora is expanding into European markets and, to that end, Aurora has:

  • created a European subsidiary, Aurora Europe GmbH, to manage its affairs in Europe with divisions in:
    • Germany (Aurora Deutschland GmbH),
    • Poland (Aurora Polska) and
    • Netherlands (Aurora Nederland B.V.),
  • entered into a joint venture with Alfred Pedersen & Son for a 51% interest in Denmark-based Aurora Nordic Cannabis A/S, which is one of only a few companies with a license to cultivate in Europe, making Aurora:
    • the continent`s largest producer of cannabis and
    • the leading exporter to, and distributor of, medical cannabis in Germany and
    • a significant seller of cannabis in Denmark, Sweden, Norway,  Finland and Iceland, through Aurora’s wholly-owned subsidiary Pedanios GmbH (a leading wholesale importer, exporter, and distributor of medical cannabis in the European Union, based in Germany) with excess capacity being distributed to other EU countries with the support of Pedanios,
  • won the right through its subsidiary, Aurora Deutschland, to supply Italy (the second-largest European medical cannabis market) with a total of 400 kilograms (880 pounds) of medical marijuana over the next two years,
  • acquired 51% of Gaia Pharm in Portugal, soon to be renamed Aurora Portugal, on the heels of it receiving approval from the EU to construct a cannabis cultivation facility there which is expected to be completed (first phase) in the third calendar quarter of 2020,
  • completed its first commercial export of cannabis oil to the United Kingdom,
  • began construction of an indoor cannabis production facility in Leuna, Germany with completion expected within 12 months and initial shipments of locally grown cannabis expected to become available to German medical patients starting in October 2020.

For a detailed financial analysis please go here.

As of the close of business on September 27th Aurora’s stock was:

  • down 13.8% from its price at the end of August,
  • down 52% from its peak price on March 18th and
  • down 6.6% from its December 31st, 2018 price.

9. Canopy Growth Corporation (NYSE: CGC) is making major investments in Europe to expand production there over the next two years as follows:

  • acquired Spain-based licensed cannabis producer Cáñamo y Fibras Naturales, S.L. through its subsidiary, Spectrum Cannabis, to complement the Company’s existing production site in Denmark, (Spectrum Cannabis Denmark), as well as its ISO 13485 certified Storz and Bickel facility in Germany (Spektrum Cannabis Germany).
  • partnered with Alcaliber SA to cultivate marijuana and extract its oil at its Spanish facilities for worldwide sale,
  • bought C3 Cannabinoid Compound, a German company that specializes in cannabinoid-based medical therapies used by European physicians,
  • bought British skincare and wellness outfit This Works this past May and
  • acquired Annabis Medical which will operate as Spectrum Cannabis Czech.

For a detailed financial analysis please go here.

As impressive as Canopy’s efforts in Europe may be it is not reflected in its share price which, as of the close of business on September 27th was:

  • unchanged from its price at the end of August,
  • down 55% from its peak price on April 29th and
  • down 13.8% from its December 31st, 2018 price.

10. Cronos Group Inc. (NASDAQ: CRON) engages in the production and sale of cannabis in Canada, Poland and Germany and has:

  • entered into a 5-year exclusive distribution agreement with G.Pohl-Boskamp in Germany for the distribution of its products to over 12,000 pharmacies in the country and
  • entered into a 5-year exclusive distribution agreement with Delfarma Sp. Zo.o in Poland for the distribution of its products to over 5,000 pharmacies and more than 200 hospitals representing approximately 40% of the Polish domestic market.

For a detailed financial analysis please go here.

As of the close of business on September 27th Cronos’ stock was:

  • down 17.7% from its price at the end of August,
  • down 62% from its peak price on March 5th and
  • down 16% from its December 31st, 2018 price.

11. Aphria Inc. (NYSE:APHA) has been very active in Europe and over the past few months has:

  • been given permission to grow all three strains of medical cannabis approved by German Federal Institute for Drugs and Medical Devices – affirming it’s leading position in the German medical cannabis market.
  • begun building an 8,000 square meter indoor growing facility in Neumünster and expects to be in a position to supply Germany’s first domestically-grown medical cannabis in early calendar 2020,
  • almost completed work on a state-of-the-art GMP-certified cannabis vault in Bad Bramstedt, Germany, for the import of cannabis flowers and oil,
  • entered into a 15% strategic partnership (with the possibility of increasing ownership to 50% under certain conditions) with Denmark-based Schroll Medical (a subsidiary of a prominent European flower producer), to pursue the cultivation and worldwide distribution of organic, EU GMP-certified medical cannabis,
  • acquired a 25.1% interest in Berlin-based Schöneberg Hospital which provides it access to both doctors and patients for education on the benefits of medical cannabinoids,
  • introduced a CBD-based nutraceutical and cosmetics product line for the German market, produced in the EU and distributed by its subsidiary, CC Pharma, which has access to more than 13,000 pharmacies throughout Germany, and
  • received the first import license for medical cannabis from the Malta Medicines Authority that will enable its Malta-based subsidiary, ASG Pharma, a high-capacity EU GMP-certified lab, to become a cornerstone in testing, research and development of medical cannabis in Europe.

For a detailed financial analysis please go here.

As of the close of business on September 27th Aphria’s stock was:

  • down 17.7% from its price at the end of August,
  • down 49% from its peak price on February 5th and
  • down 7.9% from its December 31st, 2018 price.

Conclusion

The above 11 Europe-bound pot stocks are down 6.5% on average from the end of August which was better than the 12.5% decline in the cannabis market as a whole during the same period. That represents a marked improvement over the 24.9% decline in July (when the overall market declined 12.7%) so perhaps this segment of the market will improve even more given their early positioning in the burgeoning European market.

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