Tag Archives: Wayland

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How Germany Gets Its Cannabis

By Marguerite Arnold
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The German cannabis cultivation bid may be mostly done and dusted (although the last four lots are now up for legal challenge) but the drama is only intensifying on the ground in Germany. Namely, where is the cannabis being consumed on the ground now actually coming from?

For the past several years (in fact since 2016 when a Frankfurt-based start-up called Medcann imported the first Canadian medical cannabis into the German market in partnership with Canopy Growth), the conventional wisdom has been that Holland and Canada were the only two countries allowed to import medical cannabis into the country.

Canopy_Growth_Corporation_logoAs is usually the case in the cannabis industry, when it comes to such things, there were also multiple and highly creative explanations about this strange state of affairs that sounded oddly exotic enough to be plausible. This is after all, the international cannabis business.

These explanations also usually referenced conventional industry “lore” including such tall tales as these two countries were not signatories to an international drug treaty (not true), to being European (nope) or even a member of the EU (also completely false).

Yet there was always something strange with such urban legends – perpetuated by insiders across the German industry. Starting with a deliberate vagueness about details. Especially as in the summer of 2017 when Tilray announced grow facilities in Portugal, and by the end of it, Canopy was moving into Spain, and later by early 2018 Denmark and more. Italybegan to appear on the radar of multiple big Canadian companies. Clearly all these big companies seemed to know something that those outside did not. See Greece. Not to mention the teeth-gnashing of the Israelis– repeatedly shut out of the German market by not being allowed to export by their own government until Christmas Day, 2018.

The mystery deepened in March in fact, as a furore rocked the German-based cannabis industry over the last weeks. Farmako, a new, Frankfurt-based distributor, not only announced that it was importing 50 tonnes of cannabis into the country– and from Poland (where production of such bulk has not even been seeded) – but then gave additional details on a Bloomberg appearance that appeared to indicate that in fact the medical cannabis they were already selling (sourced from other places) had come from Macedonia. 

Certification, and most certainly paperwork are the name of the gameIn fact, no such transfer of cannabis had occurred from the Macedonian side (yet), although the firm in question at the other end of the deal was subjected to considerable harassment in the German canna-specialty press in the meantime.

The news, that occurred right at a time when Tilray is clearly training pharmacists for the German market, the first bid is concluding, Greece issues even more cultivation licenses, Canadian companies are clearing still stepping up their production game, and South Africa is also getting into the formal licensing act, with all sorts of interesting things afoot in Uruguay, also set off what appears to be an official investigation of the firms involved at the governmental level.

Insiders are tight lipped and nobody is willing to talk on record. However, the distribution firm, Farmako, has subsequently reported that in the month of March, they became the top selling cannabis specialty distributor in Germany. And since they are not out of business, it is also clear that while their PR may have been a little premature if not easily misunderstood, the broader message is very obvious.

What is also very clear at this point, in other words, is that the German door for cannabis and the international industry appears to be opening to product sourced from many places. Further by extension, the German government is in the process of recognizing foreign GMP certification processes from multiple countries all over the world as being equal to its own – at least on the cannabis front.

In fact, this has been going on relatively quietly for the past six months or so.

What Are The Standards, Certifications, and Qualifications?

A press release from January of this year, issued from an Australian firm called MCA, announced they had accepted the first letter of intent to ship to a German firm (in 2020). The company is currently accepting pre-orders as it finishes construction and achieves EU GMP certification. The same (female founded) firm was also present at the ICBC in Berlin this year in March, reporting that German demand from a universe of local distributors was already greater than they could fill. The news that their first sale went to German firm Lexamed, the controversial German wheelchair distributor who helped bring down the first German bid, was also largely unremarked upon at the time by most of the industry press and in fact, ever since.

GMPIn truth, it appears that the countries and companies that have the right to import to Germany must first have their own national GMP certification recognized as being equal to German standards – or a so-called Mutual Recognition Agreement (or MRA) must exist between the importer and exporter nations. It still means that to be really EU-GMP compliant, inspectors have to walk your cultivation floors. But first your country has to have the MRA. And that is a matter for lawyers and regulators to decide.

In the Australian case, the GMP equivalence for cannabis production apparently became reality within the last six months although no one is giving exact dates. In the case of Macedonia, this is pending, with German inspectors now apparently scheduled to begin inspecting domestic cultivation facilities within the next month to six weeks.

The biggest news, of course, which makes even more sense on the heels of Canopy’s latest “record breaking” U.S. acquisition, is that the EU and the U.S. will enter into an MRA in July that was finally agreed to in February of this year. This will also mean that cannabis “medicines” potentially even beyond CBD, produced via U.S. GMP processes, will be allowed to enter Europe if not Germany in the near future – and from the U.S. for the first time. Ahead of federal legalization in the U.S.

It also means that Israeli and American firms will be allowed to enter the European and thus German market for the first time (on the ground with product) by at latest, the third quarter of this year.

Caused By The Bid….and Likely Shorter Term Outcomes

What the events of the last several weeks make clear is that the bid is not only insufficient for demand, but the authorities are officially, if quietly recognizing the same. There are already rumours about the next cultivation tenders in Germany, and there is a high likelihood that other countries (see Poland in particular) may also follow suit shortly.

Further, the difficulties in making sure that not only countries but the companies based in the same remain compliant with EU and further German sanctified EU- GMP processes (for one) is likely to be an issue that continues to bubble. Why? It is a problem already in the broader pharmaceutical market here.

The Plusses and Minuses of The News

The first thing that is also obvious is that even Wayland cannot source the entire German market with the product it has begun to grow here no matter who ends up with the last four cultivation licenses this time around. Further, that the other winning bid firms (Aphria and Aurora as known at this point) without cultivation on the ground, are sourcing from somewhere that is also probably at this point, not even Canada. No matter how much expansion is going on in Canada, in other words, what is now entering the German market may bear a Canadian brand but could just have easily been sourced from almost anywhere in the world.

That also means that enterprising firms (see Australian MCA) can skip the Canadian introduction to the German market and sell directly to local producers before they even have crops on the ground, as well as the burgeoning German cannabis distributors across the country.

For such firms now wanting to enter the market, however, it is not all clear sailing. The events of the last few weeks clearly show that the government is watching, including reading English language industry press, and willing to pursue any firms it deems are breaking the rules on both sides of national borders.

Certification, and most certainly paperwork are the name of the game, as well as greater accuracy in company intentions (even if in the near term).


Disclaimer: Nysk, the Macedonian firm referred to in this story, is a sponsor of the MedPayRx pilot to market program

Federal Funding Is Flowing To Canada’s Cannabis Production

By Marguerite Arnold
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The Canadian federal government is going where the U.S. (for now) is not: namely allowing provinces to channel federal agricultural funds into commercial cannabis production on the provincial level. The program is called the Canadian Agricultural Partnership (or CAP), which is a $2.2 billion annual initiative designed to support agricultural businesses across the country.

So far, not every province has opened this funding to cannabis production, although British Columbia already has, and Alberta is currently considering it.

Even more intriguing of course, are other programs that tie into such agricultural subsidies (including government support for exporting product). See Europe for one.

These programs are of course nothing new, including in the United States.

What is new, different and intriguing, is that unlike the United States, for the first time such government funds are being used to support not only the domestic cultivation of cannabis, but its global export. If there ever was the beginning of a “green new deal” then this might be it.

Canadian companies are certainly seeming to benefit from this federal largesse at the production point. For example, in the first weeks of April, CannTrust Holdings Inc. announced that its entire 450,000 square foot, perpetual harvest facility in Pelham, Ontario is fully licensed and will be online by summer 2019. THC BioMed just announced that it received Health Canada’s permission to begin additional production at its flagship location in Kelowna, B.C. And Beleave has just commenced sales of cannabis oil products at licensed facilities in Hamilton, Ontario.

The Rise of Government Funding In a “Publicly Owned” Company Environment

One of the more intriguing impacts of the rise of government funding for the industry comes at a time when the industry itself, certainly coming out of Canada, is facing a bit of a zeitgeist moment.

Sure, the industry has gained legitimacy, and there might be nascent cannabis funds in the UK, Switzerland and Germany, but the entire “public cannabis company” discussion is hitting a bit of a reset at the moment.

It was after all, ostensibly “public” Wayland that just dusted much higher fliers from the stock price perspective on winning the German cultivation bid. In fact, some insiders on the ground have commented that it is precisely because Wayland is not a stock market favorite, rather focused on fundamentals that they got chosen in the first place. Starting with the old-fashioned idea of committing resources and elbow grease to create production on the ground, locally.

There are also firms who are benefitting from the first tax funds that have flowed to promote the hemp industry (those are available from state governments here).

However, it is not just Germany where this discussion is going on in Europe right now. In Spain, there is political discussion about ensuring that the nascent and valuable cannabis industry does not end up in the control of “outsiders.” Namely international firms who have more of an eye on profit than community building. The idea of the cannabis industry as an economic development tool has certainly caught on in Europe (see Greece and Macedonia). And core in that idea is that the euros generated by this still remarkably price-resilient plant, and the products produced from it, should stay local.

Cannabis Socialism?

For now, and certainly in Canada, federal public funding looks pretty much like a fancy agricultural grant. But in the future as prices drop and the wars over strains and “medical” vs. “recreational” really begin to rage in Europe, the idea of government-funded cannabis cultivation may be an idea whose time has come.

The German automobile industry, for example, did not come from nowhere – and even today receives massive government funding. For now, certainly in Deutschland, that is not the case with cannabis, but things may be changing with the resolution of the first tender bid.

In the future, in other words, as countries across Europe begin to think about posting their own production bids and Germany contemplates additional ones, government funding of the industry and certainly incentives to help its growth will become much more widespread.

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German Cultivation Bid Appears To Have Three Finalists

By Marguerite Arnold
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The Frankfurt-based newspaper Handelsblatt Zeitung is reporting that three Canadian firms (actually two Canadians and a German start-up cofounded by another Canadian company) have now been selected as the first cannabis cultivation bid finalists, however insiders on the ground say that this is not necessarily a final decision.

A Berlin-based subsidiary of Wayland in Germany called Demecan, along with Aphria and Aurora have all been named as bid finalists pending a normal review period.

However, there are other complications still looming. This is far from over.

The first issuance of the bid in 2017 went down in court over a technical fault on the part of the issuing agency. The current iteration was posted last summer and saw its application moved several times because of further legal challenges.

As Peter Homburg, partner and head of the European Cannabis Group at Dentons said when contacted by Cannabis Industry Journal, “This is of course not an official announcement. I have a tendency to believe that others involved in the tender process historically may well challenge this decision.”

BfArM, the federal German agency in charge of the cannabis cultivation tender process, did not respond to a request for a comment as of press time.

The Decision Is Far From Over

Here are the basic challenges still ahead:

There is a lawsuit pending against the bid itself from applicants that has yet to be decided. The Klage (formal hearing in court) is due next week. If that does not derail the process, here are the next considerations.

While all three firms named in the bid have international reputations, there are some pending questions.

Wayland is far ahead of the other two firms in terms of production capability in the country. Their facility in eastern Germany has just been certified GMP standard – which means they are qualified to produce the quality of flower required for medical consumption. This news is also far from a surprise.

As Ben Ward, CEO of Wayland Group, commented when contacted by CIJ for a response via email: “At Wayland, we believe in meaningful partnerships, investing in Germany from day one, demonstrating a long-term commitment to the market,” says Ward. “Wayland GmbH is a German company, operated by Germans, existing in Dresden and Munich and is committed to this market. The companies awarded lots received the allocation based on a rigorous application process, not media sensation.”

Of all the Canadian firms, in fact, despite its lack of high-flying stock price, Wayland has made the most concerted effort to show its commitment to producing in Germany by a large investment of capital and expertise. Further, the firm has shown itself to be the most culturally sensitive to German culture, including hiring a female member to the board (a hot topic far from the cannabis industry). However, there are other issues looming. On the same day that Wayland issued a press release announcing its position in the bid, it also issued one announcing the merger talks with ICC had failed.

The second is that Aphria’s main cultivation center in Canada is not EU-GMP certified although they have applied for the same and now also own one of Germany’s largest distributors (with approximately a 6% market share).

Other firms not only kicked off the entire cannabis discussion in Germany, but have established GMP-compliant facilities both in Canada and across Europe, namely Canopy Growth, which was widely believed to have also applied to the second tender. However prevailing rumours about a Canadian “crop failure” in British Columbia (described by the company as a deliberate destruction of plants created by delays in the licensing process) last fall may have also played a role in the German decision.

Canopy_Growth_Corporation_logoAurora is also in interesting waters. Having distinguished itself as Canopy’s closest rival across Europe, winning significant kudos in Denmark, Italy, Poland and Luxembourg last year, the company is also clearly not “just” a medical cannabis company and apparently was refused an opportunity to go public on the Deutsche Börse last fall. The selection of the firm by BfArm for the bid in a situation where the company is on a watch list created by the stock market regulatory agency in Frankfurt is also an intriguing one. Especially given the company’s announcement of its Polish success on the same day as the decision to import was announced, and the fact that so far it is the only Canadian cannabis company to successfully import to Luxembourg.

And The Import Game Is Just Getting Hot…

The unsurprising news that the bid appears to be moving forward is actually not the hottest news in Europe right now. The reality on the ground is already shifting. Several weeks ago, a Frankfurt-based distribution start-up announced that they had successfully imported cannabis into the country from Macedonian-based Nysk Holdings via Poland.

At the International Cannabis Business Conference (ICBC) in Berlin last weekend, Australian producers (for one) were also reporting a German demand for their product that was greater than they could fill. And there were many Israelis present for what is expected to be an official opening of their import ability by the third quarter of this year.

Price Wars Are Looming

The bid itself is going to have a powerful impact on pricing in both the German and European market beyond that. It represents the first time in any country that a government has attempted to pre-negotiate prices for the drug as a narcotic beyond Israel and in this case, it will have at least regional implications.

aurora logoAt the same time, it is also clear that producers like Nysk and beyond them, Israeli and Australian firms (in particular) are actively finding ways to have their product enter the country- and further at prices that are catching the Canadians on the hop. Indeed Aurora is reporting that it actually lowered its “usual” prices to win European contracts which have been reported as being 3.2 euros a gram in Italy and 2.5 euros a gram in Luxembourg.

To put this in perspective, this is a range of about CA$3-5 a gram of flower which is also well below what Canopy (for one) has reported selling its product even to recreational users in Canada and significantly below medical export prices as reported by recent company corporate reports.

Wayland in contrast, is reporting that its production price in Germany will be at least a euro-per-gram cheaper than this. Or in other words, more in line with prices expected to be generated from both the bid itself and the cannabis now entering the country from other sources.

And of course, this is only the first of what is expected to be a series of new tenders. The original amount, itself increased in the two years the issue has been pending, is clearly not enough to even begin to meet demand as proved by the levels of competitively priced imports now entering the country.

Beyond questions about whether this time the tender will actually stand, are those now pending about new ones potentially in the offing – and not just in Germany but across Europe as cannabis continues to see a very green spring.

Marguerite Arnold

Farmako Inks Deal To Import 50 Tonnes of Polish Cannabis Into Germany

By Marguerite Arnold
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Marguerite Arnold

The ex-im cannabis map of Europe has been promising to get interesting for some time. And in March, it’s long promised potential just bloomed a little more as Frankfurt-based Farmako announced a first-of-its kind import deal of 50 tonnes of medical cannabis (and from Poland no less) over the next four years.

Farmako was just founded in September 2018. They began distribution to German pharmacies this month. They also have an office in London and cross-European aspirations.

While Farmako is the first to announce such a unique cross-border production and distribution agreement, however, they are far from the only ones planning the same. In fact at least Tilray is expected to announce that their newly-minted Portuguese crop is being processed into oil bound for German pharmacies any day now. It is also not unrealistic to expect that (at least) Canopy Growth, of the big Canadian producers at least, will soon announce the same situation for their crops in countries across the continent, starting with Spain.

Outside Germany of course, this kind of entrepreneurial endeavour is already underway. In the UK, a new import group just announced the first bulk shipment of Dutch medical cannabis into the country, distributed directly to over 1,000 pharmacies nationwide.

There still are a couple of jaw-dropping things to consider about this new German development. Namely, that the amount of just this deal over the next four years between two (relatively new, non-Canadian) companies is approximately five times the amount currently called for in the still pending domestic cultivation bid in Germany.

The second, of course, is that the Polish company on the other side of the border and this ex-im deal, PharmaCann Polska, is a uniquely positioned conglomeration of individuals with apparently Canadian and Israeli market experience. This means that they are already positioned to access the biggest two production markets in the world and are certain to be looking to exploit other Eastern European connections (at minimum). If not ones further afield than that.

One thing is absolutely certain far beyond the particulars of this one deal. The current import limitations from Canada and the Netherlands into the German market appear to be a thing of the past. And the cross-border trade for medical cannabis is now clearly entering a new phase.

Implications

Farmako clearly intends to go after the existing Canadians in the market on price, which means both Canopy Growth and Tilray. But it also means Wayland, at this point is the largest domestic certified producer (albeit with Canadian roots and partners) and an entire licensed facility in eastern Germany ready to go. That is not an insignificant threat and sets up another looming question: Which will actually be cheaper in the long run? Domestically grown German cannabis, or that imported from adjacent countries with lower paying labor markets?

This announcement also means that the “cannabis shortage” in the country is officially over as of this spring. And that won’t just come from Farmako but others already in the market and those angling now to get in via other creative means.

Regardless, what that will do to overall sales, patient numbers and overall speed is another matter.

Other Looming Problems

There are two big issues that this development does not solve of course. The first is the ability of patients to find doctors willing to prescribe the drug, and further to make sure they spend the time filling out the paperwork and negotiating with the patient’s insurer, to make sure that patients can actually get it. Starting with affording medical cannabis in the first place. Most patients on what is known as “statutory” health insurance (90% of the country) cannot afford the out of pocket cost at pharmacies without insurance approvals. Once they get them, they pay up to $12 for a month’s supply (in the case of flower, about an ounce).

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Photo: Ian McWilliams, Flickr

The second issue is that it is currently unclear, mostly due to the lack of granularity provided by the country’s statutory health insurers, what is actually being prescribed for which kind of condition and to whom. Earlier this month, new information was made available about the overall growth of coverage of medical cannabis in Germany. While the total spending, and rough breakdown of flowers vs. product was provided, it is unclear beyond that, where this is going. There were also apparently just over 46,000 patients in Germany as of December 2018. And this is a growth trend that while clearly on an upward trajectory for the last three quarters is slow and steady as she goes. The sudden uptick in the market seen in the second quarter of last year appears to be an anomaly.

Further, understanding market price points is also hard. Flos and prepared pharmaceuticals such as Sativex are highly expensive right now. In the case of the Canadian firms, their medical exports are being sold at about twice the price of their domestic recreational sales points. Look for this to change dramatically as real competition heats up across Europe (and from more distributors than just this Frankfurt upstart).

What the news in other words about Farmako really signifies is that the price barriers in the medical market are about to come down at the point of sale- and hopefully in the short term, patients will not have to rely on the approval of their insurance companies to be able to access the drug because they will be able to afford it themselves. No matter what happens with the bid. Although this too will also serve to lower prices.

The great medical normalization race for medical cannabis in Europe is now officially “on.” And that is good news not only for patients, but of course, the industry.

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British Cannabis Firms Facilitate First Bulk Shipment of Cannabis Into UK

By Marguerite Arnold
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Move over Canopy Growth! Along with Aurora, Tilray, Wayland, Namaste and everyone else trying to break into the British cannabis market with authority. Ahead of all of them, a group of innovative start-ups just imported the first legal bulk medical shipment of cannabis into the country via a new entity designed to facilitate market access for such imports called Astral Health.

Jolly good show, as those on the ground due to benefit are no doubt thinking right now even if larger competitors are left in the proverbial cannadust for at least a few months.

That said, this is a larger gulf than it might otherwise be. Let’s not forget, Brexit, or etc. is due next month as Parliament disintegrates and Prime Minister Theresa May heads to Brussels for another fruitless round of “negotiations” that everyone except the occupants of Number 10 (Downing Street, the residence and office of the British government) seem to understand have gone nowhere for two years. What that does to firms entering the market, including in the cannabis space has yet to be understood.

On the Dutch side, the export was handled by the Office of Medical Cannabis. On the British side, the medicine will be sent to directly to pharmacies.

The cannabis will go to patients who have multiple sclerosis and chronic pain.UKflag

About The Companies Involved

Astral Health is a holding company and subsidiary of European Cannabis Holdings (ECH), which also worked alongside specialist pharmaceutical importer IPS Specials and another new start-up Grow Biotech, to bring the cannabis into the country legally.

Of all of them, ECH is perhaps the best known. It is a growingly influential investment company and one of the first (and few) “local” dedicated medical cannabis funds exclusively focused on the European space. ECH shares an office with Prohibition Partners, a cannabis consultancy and the organizer of Cannabis Europa, which just held a sell-out, standing room only conference in Paris. Both groups were also founded by Rob Reid, a Director of SOL Global, a Canadian listed cannabis company which has also made strategic investments of late – notably Greenlight Cannabis in Dublin, with a reach to 1,000 pharmacies across the UK and Ireland.

Most of the companies involved on the ground on this one, in other words, are start-ups. No matter the predominance of the larger Canadian companies in the news, the European cannabis space is starting not only to flourish, but do so in a way that is local, entrepreneurial, and in this case, ahead of the much larger, deeper-pocketed companies.

Niche Providers For Tense Times

In case anyone has forgotten, the deadline for Brexit is now in everyone’s immediate gunsights if not, before March, marked on the kitchen calendar. Even if it looks now like there might be a delay until 2021 or even another “people’s vote.”

Regardless of the outcome, the interim is going to be sticky going for some time.

And of course, imported cannabis, even from Holland, and even if fitting into “regular” unique medical ex-im categories, absolutely also faces this enormity of uncertainty as well. No matter how well the new trade pact with the United States (cunningly crafted to include pharmaceuticals) goes if and when Euro trade (including pharma and cannabis) falls off the cliff. There are also indications that the “emergency Brexit” medical stockpiles and emergency import routes now underway could conveniently aid the cannabis industry from the Euro side, as drugs and other essential medical supplies will be sourced from Belgium and sent into the UK through alternate routes to avoid Brexit delays and backlogs.

Just remember as the mess continues to devolve, no matter what happens, current British PM May is in a remarkably good position to benefit. Her husband, Philip May has been highlighted before for his financial involvement in both tech and cannabis pharmaceutical firms (see both Amazon and GW Pharmaceuticals which obtained the first medical cannabis import rights into the US for its CBD-based Epidiolex last year).

That is also why niche provision is such an interesting space in general in Europe, if not even more specifically the UK at present. No matter how unfair it also is to those who do not have the money to pay for their medication out of pocket (which is also in the cards as the NHS dithers if not disintegrates a little bit more). And in Europe that discussion is very pricey. Cannabis, without either public or private health insurance coverage to offset the cost, is unbelievably expensive. In the realm, right now, of as much as $3,000 a month at point of retail (pharmacies.) Those lucky enough to obtain pre-claim coverage however, pay as little as $12 for their monthly supplies.

In the UK right now, patients can obtain medical cannabis with a Schedule II prescription. However, just as in other legalizing countries in Europe, beyond price and approval issues, doctors have been reluctant to prescribe at all, and insurance approvals are complicated. Even before Brexit, supplies were scarce.

What happens come the end of March if the proverbial sheisehits the fan? That is a very good question. It is very likely that a patchwork of care networks will develop, driven by imports and the companies, if not families and patients behind them.

Regardless of what occurs in the daily particulars of politics, in other words, supply chain issues, particularly at the last mile, promise to be problems for some time to come. Even if all the hullaballoo over Brexit disappears in a wand waive of some Parliamentary fairy who magically appears in the nick of time and sprinkles dust over every MP making everyone come to their senses before Cliff Date arrives.

The Brexit Referendum
Image: Mick Baker, Flickr

Even in Germany, the struggle between patients and pharmacies in terms of supply, and further, supply matching prescription, are far from over two years into “legalization by insurance approval.”

It is very likely, in other words, that the specialized care required for timely import of cannabis in the UK in particular – no matter where it is sourced after Brexit – will require the unique kinds of knowledge that only British- or EU-based, highly focused start-ups can bring, at least in the immediate interim. For this reason, look for a lot of innovative “service focused” start-ups to come out of the next phase of both European and post Brexit cannabis industry developments.

And, as a result, more than a few surprise market entrant hybrids increasingly founded and sourced with both European and UK partners.


Disclaimer: ECH is a sponsor of MedPayRx’s go to market pilot program.