Domestic cannabis cultivation can finally get underway in Germany after Canadian heavyweights Aurora (NYSE: ACB; TSE: ACB) and Aphria (NYSE: APHA; TSE: APH) were officially awarded licenses today.
Earlier this month the German government announced the winners of 13 licenses to cultivate and distribute medicinal marijuana. It came two years after cannabis was legalized for medical purposes and followed increasing pressure from the public to begin a domestic cultivation scheme.
The Federal Institute for Drugs and Medical Devices (BfArM) awarded five lots to Aphria, five to Aurora and three to Demecan, a joint venture between Wayland Group and local partners. That was subject to a 10-day standstill period in which any of the 76 unsuccessful bidders could challenge the decision.
Today BfArM announced that nine of the lots can officially be awarded – four to Aphria and five to Aurora – but four are delayed due to a challenge from one of those losing bidders. That means Aphria is still awaiting one lot and Demecan is waiting for all three of its licenses.
Dr. Karl Broich, BfArM president, expressed his frustration at the delay on the remaining four lots, but said he was pleased that cannabis cultivation is now underway in Germany. Each lot is for 200 kg per year over a four-year period, meaning Germany will produce 10,400 kg in total. The growers should have the first crop ready for patient consumption by the end of 2020.
That will not be enough to meet spiralling domestic demand, as Germany is fast emerging as the largest market for medicinal cannabis use in Europe. It is the fourth largest economy in the world, with a large and affluent population, and the government underwrites medicinal marijuana prescriptions for many citizens, so there is plenty of opportunity for the industry.
It has relied totally on imports from the Netherlands and Canada up until now, and it will continue to import going forward. Yet it is easy to imagine the domestic cultivation trade ramping up once Aurora and co build up their German operations.
The bidders were encouraged to go low on price in the competitive tender process, and that means domestic cannabis production could end up vastly cheaper than imports, particularly when you cut out shipping costs.
Aurora is now planning to build a production facility in the German city of Leuna next month. “Construction of this new facility in Leuna is the next logical step in expanding our Europe-wide production network to ensure medical patients have safe access to consistent, high-quality medicinal cannabis flowers and full extracts,” said Dr. Axel Gille, managing director of Aurora Europe.
About Author
The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.