Atlas Biotechnologies has signed a long-term sales agreement worth at least €38.5 million ($43.7 million) with German cannabis wholesaler Avaleaf.

The Canadian firm plans to start supplying the German market with cannabis flower, oils,and pills in the second quarter of 2019. It said the news bolsters its emerging position as a marijuana industry leader and revealed plans to ramp up its focus on Europe.

Atlas is based in Edmonton, where it owns a 38,000 sq. ft. greenhouse and research lab that produces 5,000 kilos of dried cannabis flower per year. It also owns a 60-acre site that could allow it to expand its capacity in Alberta, with a development permit in place for 1 million sq. ft. of extra construction. Atlas also owns 50% of Coastline Canada Inc., which is expected to start cultivating cannabis on Vancouver Island in 2019.

It has a thriving domestic set up, but it’s keen to boost its presence in export markets and it sees Germany as the perfect springboard for Europe. As one of the world’s largest economies, it’s a pioneer in medicinal cannabis, having been among the first countries to legalize it.

Ruelzheim-based Avaleaf is in the process of obtaining all necessary licenses for importing and distributing medical cannabis into the EU, with a particular focus on Germany. It has agreed to a five-year deal that will see it pay Atlas a minimum of €38.5 million for medicinal cannabis products to allow Europeans to treat a wide range of complaints.

“Our goal is to diversify our sales channels outside of Canada, and we look forward to further expanding our international customer base for delivery of products from our Alberta production laboratory, and from Atlas’ future production locations in Canada, the EU, and Central America,” said Sheldon Croome, president and chief executive at Atlas.

Last week Atlas spent $500,000 to purchase a 20% stake in Maryland-based research firm Flavocure Biotech, which is busy exploring different ways that cannabis can be used to treat patients. It now plans to implement a breeding program dedicated to isolating additional molecules in the flavonoid spectrum and identifying new cannabinoids for potential research.

Atlas has raised more than $25.6 million in equity to date and its board continues to expand.

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