AnalysisEuropean Cannabis Stocks Review: SynBiotic Jumps On German Progress,...

European Cannabis Stocks Review: SynBiotic Jumps On German Progress, DanCann Pharma Recovers & More From Cannabis Poland

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SynBiotic


Earlier this week the German Health Minister Karl Lauterbach officially unveiled his plans for the legalisation of adult-use cannabis, a week after some details were leaked to the press. 

The ‘intermediate step’ towards legalisation, like last week, helped spark fresh interest in German cannabis operators. 

SynBiotic, which also saw its shares spike 10% last week, enjoyed a further 15% jump in stock price this week, helping rescue its share price from historic lows. 

While the reaction to the proposals has been mixed amongst the international community, SynBiotic’s CEO Lars Müller said that the ‘outstanding regulations presented are like winning the lottery’. 

He added that SynBiotic saw ‘enormous potential’ for various companies within its ever-expanding group, and that its ‘decades of pioneering work’ had allowed the company to ‘anticipate developments very well’. 

Most notably Mr Müller said that SynBiotic was ‘optimally prepared’ to deal with the controversial ban on importing adult-use cannabis thanks to its Hanf Farm subsidiary, which it acquired last December. 

Despite acknowledging that the policy ‘will cause a significant supply bottleneck, which cannot be compensated with domestic cultivation for the time being’, he believed Hanf Farm’s 20 years of experience in growing industrial hemp, alongside a cultivation capacity of up to 1,000 hectares, would enable it to capitalise on the opportunity. 

However, he added: “The group would like to emphasize the clear need to expand the existing infrastructure. Most importantly, as the domestic production of inexpensive, high-quality cannabis is only economically viable on open fields, due to the enormous rise in energy costs.”

It also said that its ‘cooperation with the Enchilada Group’, one of Germany’s largest food franchise operators, meant it was ‘positioned excellently’ for the planned controlled sale via licensed dealers. 

In April, SynBiotic announced surprise plans to embark on a joint venture with the food operator, with a view to ‘lay the foundation for the first cannabis store franchise in Germany’. 

DanCann Pharma

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Danish medical cannabis operator DanCann Pharma also experienced a 25% share price increase this week, though its increase is not so closely linked to the news from Germany. 

In early September, DanCann’s stock value fell off a cliff, dropping from 2.20kr to around 0.70kr in a matter of days, where it has stayed ever since. 

On August 31, the same day as the release of its Q2 results, the company revealed plans to ‘resolve on a partially guaranteed rights issue’, understood to be only 77% subscribed, netting DKK 28.5m in the process. 

Not only were its shares issued at the equivalent of DKK 0.6 per share, a significant discount on its share price even after Wednesday’s sell-off, but DanCann says it has also taken out a DKK 3m loan to ‘secure the company’s liquidity until the conclusion of the right issue’, leading many to question its apparently desperate need for funding and sell-off of its shares. 

Last week (October 21), DanCann announced that it had now ‘formally resolved’ on this rights issue following authorisation from an Extraordinary General Meeting on September 20. 

It also unveiled a timeline for its rights issue, stating that October 25 would be the last day of trading including rights, and from October 26 shares will be traded ‘excluding rights’. 

The subscription period for the rights issue will run from October 31 and November 11 and the estimated date for publishing the outcome of the rights issue will be November 16. 

Rights issues such as this see companies invite shareholders to participate in rights offerings, which typically allow them to purchase more shares of stock at a discounted price. 

In this case, anyone who is entered into the share register by October 27 will be able to subscribe for new shares in the rights issue. 

For every six existing shares, investors will receive the equivalent of 10 new shares and six warrants. 

Cannabis Poland

In another double-digit share price increase this week, Cannabis Poland saw its shares jump 10% following news of a potential new deal. 

The CBD oil supplier announced this week that it had signed a letter of intent with an unnamed company to acquire a minority stake. 

According to the release, Cannabis Poland will acquire the right to commercial, exclusive or non-exclusive use or disposal of a trademark from the cannabis oil industry, alongside between a 5% and 50% of said company’s shares, for a price of no more than PLN 750k (£136k). 

The unnamed company reportedly produces its own oils based on hemp extraction, carries out wholesale orders under a client’s own brands, and runs an online store with products under its own brand.

Negotiations are understood to have now commenced, though no timeline for a potential decision was given. 

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