News'Exciting Times' in Germany As Leading Medical Cannabis Player...

‘Exciting Times’ in Germany As Leading Medical Cannabis Player Looks To Post-Election Adult-Use Market

-

Cansativa won the sole contract to distribute homegrown medical cannabis to the domestic market but will the move towards adult-use in Germany impact its business? Jane Hall reports

ADULT-USE cannabis could be legalised in Germany in as little as 24 months with the country seemingly heading for a ‘traffic-light’ coalition government following September’s Bundestag election. 

That’s the view of brothers Jakob and Benedikt Sons, co-founders of Germany’s leading GMP-certified medical cannabis products distribution company, Cansativa.

The pair believe the political and public will for recreational cannabis policy change has never been greater with four out of the six major parties contesting Germany’s federal election promising reform, ranging from decriminalisation to full legal regulation.

Jakob says: “We assume that something will happen to cannabis because it is obvious that with the Liberals (FDP), the SDP and the Greens, two parties will be part of the government that have an agenda for cannabis. Both parties (Liberals and Greens) have a plan to liberalise, decriminalise and further push cannabis into a legal framework.

Cannabis Backers In New German Government

“And as those parties will now be part of the government, which is very likely, even if it might be the CDU or SDP that enter into a coalition with the Greens and the Liberals, it is clear that the Greens and the Liberals are in.

“If you look at the Greens and the Liberals in general, they are quite different but they are united in cannabis. It is one of the few points that they will easily have an agreement on. 

“That is why we assume there will be this development. It is not the most important topic we have in Germany, but it is a topic that is on the political agenda of those parties. If you ask me I would say in 24 months we will see something happen.”

Benedikt describes it as an “exciting time” and says he “truly believes there will be further liberalisation and legalisation of cannabis throughout Germany. 

“And we also believe that we, as Cansativa, who understood and cracked the system for medical cannabis, are at the forefront for anything that will happen in the future when it comes to further liberalisation and legalisation.”

New German Government Expected To Further Liberalise Cannabis Use

Medical Cannabis Since 2017

Cansativa has built its reputation on medical cannabis since Germany amended its national narcotic laws in 2017 legalising the growth, distribution and consumption of the drug for therapeutic purposes.

Currently, an estimated 120,000 patients are accessing medical cannabis through their health insurer with another 80,000 thought to be pating for it themselves. 

Up to 500,000 medical cannabis prescriptions were issued via pharmacies in the past year – 73% for pain relief with the remainder covering everything from anorexia to tumours, spasticity and multiple sclerosis.

The German medical cannabis market is currently worth more than €200m a year with over nine tonnes of flower distributed in 2020. The market is expected to grow significantly to between 12-14 tonnes in 2021 and over 20 tonnes in the coming years.

Cansativa – which since last year has been the only wholesaler licensed to distribute German cultivated medical cannabis flowers on behalf of the country’s cannabis agency (BfArM) – is directly connected to 20,000 pharmacies. It sells into between 2,000 and 3,000, the number Benedikt says regularly deal in medical cannabis. 

Opportunity And Risk

Jakob admits that full legalisation could potentially pose an issue for the company he and his brother have built up from nothing just four years ago into a multi-million Euro concern that is expected to exceed €10m in net revenue this year.

“I think it means two things: opportunity and risk. Risk to the medical part of our business because there might be some patients, especially the self-payers, that would rather go to self-medication because getting the products would be easier and less expensive. So we see a risk to the medical part and additional threat because the focus from investors and politicians might shift to a more recreational part of the business.

“But we see opportunity too because if we talk about liberalisation in Germany, it will follow the model we observed in the US and Canada, and won’t be a free market like any other substance and will still be regulated.

“We, as Cansativa, are well prepared to engage with a new and upcoming market, as we were back in 2017 when the same happened to the medical system.” 

A Lawyer And An Engineer

Neither Jakob or Benedikt comes from a cannabis or medical background. Benedikt, who is managing director and CEO of Cansativa, studied industrial engineering and management and worked for several years as a strategy consultant within the pharma and automotive industries.

Meanwhile Jakob, who is also a managing director and leads Cansativa’s legal and regulatory team, was forging a career in law as a corporate and commercial litigation lawyer with international firms based in Frankfurt am Main. 

He is currently a PhD candidate at the University of Marburg focusing on pharmaceutical law and the national and international regulation of cannabis as a pharmaceutical product.

It was Jakob’s idea to move into cannabis when the medical market opened up in Germany and initially Cansativa included the brothers’ father, Hermann, a heart surgeon. 

The enterprise – which has developed into what Benedikt calls a ‘one-stop-shop’ offering the most comprehensive multi-brand portfolio in the German market – made its first sales in May 2018 to pharmacies.

Jakob says: “I was very much obsessed with the idea that we as brothers could pave the road for a new upcoming industry, so we took what I had in terms of my legal background to get all the legal licences and Benedikt, with his industrial engineering and strategy background, did all the number crunching and elaborating the business case from a commercial perspective.” 

Childhood Dream To Work Together

Benedikt adds: “Both of us decided to take some risk and have some fun together as it was a dream of the two of us from our childhood to work together at some point, and this was the opportunity that we saw and wanted to take.

“Engaging in the field of cannabis without a background in it was, I would say, more or less the case for many companies in this space.

“We looked at it from a regulatory and functional perspective as well as a commercial business standpoint, and understood that we actually combined two key elements that are important to starting and growing a successful company.

“We also had our father on board to start with who brought a medical perspective to the table, so I believe if there is a dream team to start a company, then it was us in this highly regulated market.”

Medical Cannabis Flower

Successful Funding Rounds

Cansativa was among the first five such companies that was founded and established itself in Germany’s medical cannabis field. There had been limited access before the German law change to cannabis flowers, extracts and cannabinoids for those patients who held a special licence, so the company found a ready market.

It prospered quickly. In late 2018 the brothers decided to raise capital from investors both in German and the broader cannabis ecosystem, and raised €1m in a seed funding round.

“This proved to us that there was an appetite to both fund such a business and demand for what we were offering,” Jakob explains.

Further loan and funding rounds have followed, including a recent Series A investment from Greenfield, the Canadian investment house known for its financing of cannabis producers. 

Cansativa plans to use the seven digit Series A funding to expand its import and wholesale platform, warehousing and buy a new clean room facility. 

Jakob and Benedikt won’t say how much has been raised in total since Cansativa came into being. Benedikt says the information is commercially sensitive in what is a highly competitive market.

All he will say is that the recently completed finance round “will allow us to continue our growth path and steadily develop the company,” which is spread over two sites in Frankfurt and its headquarters in Moerfelden-Walldorf.

This will include at some point in the future breaking into other markers where medical cannabis use has been legalised. The brothers are remaining silent on where they may have set their eyes and claim any such move is many months down the line.

Benedikt says: “For the time being we believe the German market is the most attractive one.”

Given Cansativa has an exclusive four year contract with the BfArM on the distribution to pharmacies of medical cannabis from domestic cultivation, there is perhaps not the urgency other firms may feel to break into new markets. 

The First of Seventy

Cansativa beat off competition from 70 other rivals to win the deal which sees the firm coordinating the central distribution of EU-GMP standard cannabis flowers grown in Germany by the subsidiaries of Canadian-based Aurora and Aphria and Berlin-headquartered Demecan. 

This will equate to 2.6 tonnes a year (with an inbuilt flexibility to increase this to 3.9 tonnes) or up to 10.4 tonnes (15.6 tonnes with the leeway) over the lifetime of the contract.

Aphria and Aurora have both been licensed by the BfArM to grow 1,000kg each per annum, and Demecan 600kg.

Aphria delivered the first homegrown harvest available to German patients this summer. It means Germany will for the first time no longer have to rely solely on cannabis flower imports to meet its domestic demands.

Jakob and Benedikt expect German grown cannabis flower to account for 8% of the domestic market this year, rising to 16% in 2022 based on the 2.6 tons a year limit.

Cansativa is also importing medical cannabis from across the globe from a network of around 20 suppliers, including Aurora Cannabis, Tilray and Canopy Growth. 

Neither was surprised they won the BfArM contract. Jakob says: “It was a European tender process, but in the initial stage you had to prove references and experience in handling cannabis flowers, so anyone who had only been in the industry a short time was excluded. For us this was quite easy given we have been operating in this area since 2017.

“The next roadblock was that you needed owners licences and certifications and to be audited by the Cannabis Agency, so they came to our facility and looked at all the processes to see that we could handle the German production.

“Another criteria was the price. We in the end offered a better price than our competitors. So it came down to experience, quality and price.”

How much that price is, however, is subject to a confidentiality agreement. 

Main image; L to R – Benedikt and Jakob Sons



LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest news

Thought Leaders Acquisition Of mellow Set To Accelerate Growth Across UK, Europe, And Asia Footprint

THE CBD world is set with a massive shake-up this week as Thought Leaders, the US cannabis & CBD investment company,...

Medical Cannabis Cost-Benefit Analysis Set To Be Launched By UK CIC At A Cost of £30,000

THE initial priorities of the UK Cannabis Industry Council have been identified following a special general meeting attended by...

CIC Research Group Looking To Overcome The ‘Scandalous’ Impasse On UK Medical Cannabis Prescribing

Chartered Psychologist and Head of Research at Drug Science, Dr Anne Katrin Schlag, heads up the newly formed Cannabis...

European Cannabis Market Leader Bloomwell Group Secures $10m Investment

The Bloomwell Group has successfully closed a seed funding round of over $10 million dollars—the highest publicly known seed investment...

German Hemp Farm Numbers Up 900% In Seven Years – As industry Calls For Post-Election Reform

THE number of German farms growing industrial hemp has hit 863 – the highest figure since the federal republic...

US Company Set To Launch UK Medical Cannabis Study In Partnership With Manchester University

A GROUND-BREAKING human pilot study centred on the University of Manchester could provide answers to using cannabis as a...

Must read

Medical Cannabis Cost-Benefit Analysis Set To Be Launched By UK CIC At A Cost of £30,000

THE initial priorities of the UK Cannabis Industry Council...

CIC Research Group Looking To Overcome The ‘Scandalous’ Impasse On UK Medical Cannabis Prescribing

Chartered Psychologist and Head of Research at Drug Science,...

You might also likeRELATED
Recommended to you