Stenocare CEO Thomas Skovlund Schnegelsberg reflects on 2021 and looks ahead to the challenges and opportunities that lie ahead in 2022
BC: What are the main opportunities and challenges for the European cannabis industry in 2022?
The German position to legalize recreational cannabis could very likely stimulate more European countries to accelerate their legalization and/or evolve their current medical cannabis regulation.
This may be trigger towards the hyper-growth in medical cannabis that expert’s predcit in the coming years.
Stenocare expects that the industry will continue its journey towards pharma standards. Health authorities are likely to increase their regulatory control of quality of imported bulk materials into Europe, and address shortcuts with GMP ‘green washing’, which is a term for cannabis that was not cultivated with Good Agricultural Collecting Practices and using for example pesticides. Higher quality standards will be enforced to secure patient safety.
The previous era of cannabis hype will be replaced with a healthy focus on profitable business models. The European industry is maturing to meet requirements from both the authorities and from investors.
We should expect more IPOs in the industry, and there is also room for merger and acquisitions that follow the example of the EMMAC/Curaleaf transaction. This will enable European medical cannabis companies to invest and accelerate execution of their strategy towards generating revenue.
Stenocare expects to deliver several important milestones during 2022 across its four strategic asset categories:
Regulatory: winning licenses that open up for new markets and products
Supply chain: securing product supply and scalable capacity from high-quality partners and own pharma- grade cultivation
Commercial: building market access and logistical infrastructure for sales in more markets
Partnerships: develop next generation, pharma-grade medical cannabis products with strong partners
We expect to have licences in place to re-enter the Danish market and two more new countries. Together with our local partners, Stenocare will sell prescription-based products via licensed pharmacies in each market. Several additional new countries are in our pipeline and the goal is to enter one or two of these countries during 2022.
We will commence the approval process for our indoor cultivation facility with the Danish Medicines Agency and seek export approvale for our own medical cannabis.
The Danish facility is able to cover Stenocare’s capacity needs for the next four to five years, which corresponds to annual commercial value of about €20m. In parallel, Stenocare will maintain and continue its pro-active work with a strong pipeline of high-calibre suppliers.
Stenocare also hopes to see the first clinical results from its product development investment into a proprietary Lymphatic Targeting Technology, that has the potential to significantly improve patient’s bioavailability by overcoming a high, first-pass metabolism and removing food effect.
Overall, Stenocare expects that 2022 will be an exciting year with an interesting lineup of potential break-through news events. This will be a strong foundation for our ambition to be in 8 to 10 countries by 2025, and becoming a leading European brand in medical cannabis.
BC: How did you view industry developments in 2021?
During the year we have seen a growing positive perception around medical cannabis across Europe, both in general and from patients.
We also saw countries evolving their regulation and this month we even had the first to legalize for recreational use. However, it seems that the Covid-19 pandemic has kept the medical authorities busy and often in a state of ‘emergency’, at a fair cost of progress when it comes to converting the legalization into licences.
During the past year, the number of potential patients remained very high and growing. Still for the regulatory reasons already mentioned along with doctors lacking experience and a continued stigma related to cannabis in general, the European market is still far from its potential to become the world’s biggest market for medical cannabis.
However, we saw growth in many markets, and Europe is getting closer to an inflection point.
During the year, many European producers have adopted a leaner model, designed to match the regulatory requirements and size of the individual markets. We have seen that high capacity is not necessarily the key to profitable success. Several Canadian cannabis companies scaled down or even exited their European investments at painful losses.
2021 once again showed that prescription-based medical cannabis comes with very strict regulatory requirements for control, documentation and quality compliance. It can be summarized into three letters GMP – Good Manufacturing Practice. If anything, 2021 made it even clearer, that producers with a pharma-grade medical mindset will be most likely to succeed in Europe.
Outside Germany, not very many vendors sold much in 2021. Despite this fact, Stenocare expanded the number of medical cannabis oil products sold and delivered to patients by entering the Swedish market in 2021 as the first and only supplier of oil products.
In addition, Stenocare worked relentlessly (and made good progress behind the scenes) to prepare for launch in several more countries and – needless to say – to re-enter the Danish market with new, licensed products.
Stenocare completed construction of its indoor over-pressurized cultivation facility and have put it into operation. This facility is uniquely designed with fully automated sensors and equipment, that manage everything from water treatment, fertilizing, lightning, CO2, heat and humidity. The facility can scale with our capacity needs over the next four to five years. It can produce high strength THC and CBD, that complies with the regulatory requirements in Europe.
Towards the end of 2021 the Danish Parliament extended the patient’s pilot access program with four years, and also made Danish cultivation and production permanently legal. This is good news for the investment that Stenocare has made in the Danish facility.