Indiva (TSX:NDVA) (US:NDVAF) is expanding into Denmark after agreeing to a deal worth approximately $1.7 million to buy a cultivation license from Silicon Valley firm AEssense.
The company has a subsidiary, AEssense Europe, which gained a cultivation and handling license from the Danish Medicines Agency on Jan. 12, 2018.
Indiva will pay $1.1 million in cash and 1.6 million common shares over the next three years to buy the license. Its current share price is C$0.50, so that would add C$800,000 ($605,000) to the deal, bringing it just north of US$1.7 million.
Indiva, based in London, Ontario, will now create a subsidiary of its own called Indiva Europe. It referenced a BMO Capital Markets study to value the European medicinal cannabis industry at $80 billion to $100 billion at maturity, and it is keen to be a major player on the continent.
In an ongoing partnership with AEssense, it will create an indoor grow facility using AEssense’s proprietary AEtrium aeroponic grow platform. This should allow it to produce “consistent, ultra-clean, premium pharmaceutical quality cannabis” that complies with EU regulations, according to Indiva.
“This acquisition of a Danish license and collaboration with AEssense provides a gateway to the EU and the tremendous growth expected in the European cannabis market,” said Niel Marotta, chief executive at Indiva.
Denmark was one of the first European countries to permit medicinal marijuana and it is a pioneer in the field. But it’s also known for having strict quality controls, although Indiva thinks that will eventually be an advantage as it will produce high-quality and clean strains to take to multiple markets.
AEssense is already working with Indiva in Canada and is excited about extending that partnership into Europe. It feels that both companies can grow and benefit many patients by working together in Denmark, which borders the lucrative German market.
Indiva produces derivatives like Ruby Cannabis Sugar, Sapphire Salt, and Bhang Chocolate and these could soon be flooding the European market as laws liberalize and its footprint expands. The deal with AEssense is subject to customary conditions, due diligence, and regulatory approvals, but it’s expected to go through before the end of the year.