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Demecan Eyeing €40m Investment As It Aims To Become Germany’s Largest Adult-Use Cannabis Cultivator

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GERMAN cultivator Demecan has welcomed proposals which will see all cannabis for its forthcoming adult-use market grown domestically.

The Traffic-Light Coalition’s policy pathway for a regulated market was unveiled by Health Minister Karl-Lauterbach (SPD) last week, as reported in BusinessCann.

One of the key points is its intention to ensure the market is solely supplied by German-domiciled cultivators, and as the sole, licensed, domestic, medical cannabis grower in the country Demecan is naturally pleased with this pathway.

Speaking to BusinessCann Dr Constantin von der Groeben, a Co-founder and Managing Director, said it is currently in talks with potential investors as it looks to expand its cultivation footprint.

‘We Can Start Investing’

“Last week’s news is very interesting and exciting for Demecan and the industry as a whole. The big news is that there will be no imports. 

“That has immediately helped us, it means we can start investing, raising more money, and others are doing the same. 

“It is important to know there will be no imports into Germany so that money can now be invested in cultivation capacity, rather than relying on an international supply network.

“The key element is that if imports had been left open we would not have invested into German cultivation landscape and, what would have happened if, say, next year the EU or international bodies would not allow imports? We would be in a position where, come 2024 and a legalised cannabis market, we would have no products.

“With this clarity German companies can establish new facilities and we will be ready to deliver when the market becomes legal. 

“People are looking for investment opportunities – the markets are not to shiny anywhere at the moment – and recreational cannabis cultivation in Germany is now a stellar opportunity.”

Demecan is currently limited to supplying the German medical market with one tonne of cannabis a year and it believes it is capable, with its current facilities, to boost that to 10 tonnes a year.

Demecan cultivated cannabis

He said: “For the entire market to start from day one the country will need an annual production capacity of between 50 to 100 tonnes so we should really get going and open these facilities.”

It would like to treble its capacity to up to 30 tonnes a year at is 100,000sq m base, near Dresden, by the end of 2023 and is talking to ‘numerous’ potential investors as it seeks a significant investment to support that.
EU-GMP but no more narcotic regulations

It would like to treble its capacity to up to 30 tonnes a year at is 100,000sq m base, near Dresden, by the end of 2023 and is talking to ‘numerous’ potential investors as it seeks a significant investment to support that.

EU-GMP But No More Narcotic Regulations

Its current capabilities are four harvests a year in 30,000sq ms facility, and in order to achieve the most cost-effective production path it will push for keeping the high EU-GMP quality standards while applying less strict regulations regarding the security measures for the adult-use market

The medical market sees cultivation aligned with EU-GMP practices and controlled by narcotic security guidelines such as stipulating cultivation is undertaken in ‘bunkers’ with 24 cm thick walls and the installation of noise detection equipment.

He believes the recreational market should have the same standards as medical cannabis which align with GACP rules, allowing for greenhouse cultivation and EU-GMP when it comes to the manufacturing.

Lower security standards once cannabis is not classified as a narcotic drug anymore will include such things as fenced cultivation with security cameras and associated technology rather than building a bunker for cannabis cultivation.

He said: “GACP is not rocket science, its protocols run to a couple of pages and will allow for the emergence of craft cultivators. We also have to apply EU-GMP regulations so all producers know what to expect. However, if the security requirements are not amended, then this will massively slow down the ability to scale-up German cultivation.”

Demecan says it is currently holding talks with herbal plant farmers and professionals from the agricultural industry looking to enter the cannabis market.

It says it welcomes the prospective arrival of competitors as it aims to secure one-third of the domestic market, and, as Europe’s prohibition walls crumble its believes this expertise will give it a lead across the continent.

“We want this industry to grow, we know we cannot cultivate all of Germany’s cannabis so we need partners who can help us kick start this industry,” he added.

Its current capabilities are four harvests a year in 30,000sq metre facility, and in order to achieve the most cost-effective production path it will push for keeping the high EU-GMP quality standards while applying less strict regulations regarding the security measures for the adult-use market

The medical market sees cultivation aligned with EU-GMP practices and controlled by narcotic security guidelines such as stipulating cultivation is undertaken in ‘bunkers’ with 24 cm thick walls and the installation of noise detection equipment.

He believes the recreational market should have the same standards as medical cannabis which align with GACP rules, allowing for greenhouse cultivation and EU-GMP when it comes to the manufacturing.

Lower security standards once cannabis is not classified as a narcotic drug anymore will include such things as fenced cultivation with security cameras and associated technology rather than building a bunker for cannabis cultivation.

He said: “GACP is not rocket science, its protocols run to a couple of pages and will allow for the emergence of craft cultivators. We also have to apply EU-GMP regulations so all producers know what to expect. However, if the security requirements are not amended, then this will massively slow down the ability to scale-up German cultivation.”

Demecan says it is currently holding talks with herbal plant farmers and professionals from the agricultural industry looking to enter the cannabis market.

It says it welcomes the prospective arrival of competitors as it aims to secure one-third of the domestic market, and, as Europe’s prohibition walls crumble it believes this expertise will give it a lead across the continent.
“We want this industry to grow, we know we cannot cultivate all of Germany’s cannabis so we need partners who can help us kick start this industry,” he added.

Price Point Possibilities

One of the primary thrusts of adult-use legislation is to drain the black market where cannabis is sold for eight to €10 a gram

Dr von der Groeben believes it will be to support the Government’s efforts to achieve this as it looks to bring cultivation costs down to somewhere between below two euros a gramme.

This is still way above the cost from countries such as Colombia – at 50 cents a gram – nevertheless he highlights how Canadian consumers have switched to higher cost cannabis from craft producers in recent years.

While there is much talk about the expense of indoor cultivation, given the European energy crisis, he is confident that deploying renewable technologies in particular solar power will help level the playing field.

 “At some point, even if imports are allowed, it is usually the higher quality products, the ones from the craft cultivators, that are in demand.

“There will be a market for everyone; there will be cheap wine and very expensive wine. It is going to be very exciting and we have to focus on particular market segments.

“We always hear about cheap imports, but right now the cheapest medical cannabis in Germany is domestically produced and is sold for €4.30 to pharmacies,” he said.

The Medical Market

He believes Germany’s medical cannabis market, with over 200,000 patients, will continue to grow with it maintaining a pharmaceutical profile featuring tinctures and extracts.

Dr von der Groeben is hopeful German’s moves will encourage developments elsewhere on the continent: “This is an opportunity to work together across Europe for a change in legislation and drug policy.

“It is now quite clear that prohibition policies surrounding cannabis have failed and we now see a global trend towards a more liberal, legalised direction and it should be a European movement – and it is great that Germany is the first mover.

About Demecan

L-R: Dr Adrian Fischer, Dr Cornelius Maurer and Dr Constantin von der Groeben.

Based in Berlin Demecan was founded in 2019 by Dr Adrian Fischer, Dr Cornelius Maurer and Dr von der Groeben.

It initially secured seven million euros in a Series A financing round, with half of the investment from the private investor network of the European venture capitalist btov Partners and the other half from a German entrepreneurial family. 

In April 2021 its closed a second ‘upper single-digit’ million Euro funding round with the Futury Fund as well as existing shareholders, including btov.

Earlier this year the company secured Government support worth ‘several million Euros’ to help develop its Dresden cultivation facility.

The company currently employs around 100 people and this is expected to rise significantly over the coming years.

Main Image: Demecan’s 100,000 sq ms facility, near Dresden

Peter
Peter
Peter McCusker is an experienced news and business editor, who believes it’s time to fully embrace the multiple, proven, medical benefits of the cannabis plant.

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