AUSTRALIAN company Little Green Pharma has purchased the former Canopy Growth medicinal cannabis cultivation and manufacturing facility in Denmark for C$20m (£11.6m).
In addition, LGP has confirmed it has received commitments to raise A$27.2m from existing investors, including a A$15m promise from Hancock Prospecting, owned by Australian mining magnate and heiress, Gina Rinehart.
The purchase of the 21,500sq m cultivation (230,000sq ft) and 4,000sq m (43,000sq ft) EU-GMP manufacturing facility in North Odense from the Canadian firm, brings forward by two years LGP’s expansion plans into the European market.
It will see the Perth-based firm’s annual cultivation capacity go up from three tonnes of biomass to 23 tonnes, of which 12 tonnes will be finished cannabis flower.
Positioning For the Global Market
The news comes just days after LGP announced it had signed a five-year deal with Pelion SA subsidiary Medezin to distribute its cannabis medicines into Poland.
LGP’s managing director Fleta Solomon made no secret of her desire to gain a bigger foothold in the European market when she spoke to BusinessCann earlier this month.
The move to buy what is one of Europe’s largest cannabis production assets is another key-plank in positioning LGP as a global player, she said.
“The acquisition significantly accelerates our planned capacity expansion by about two years, enabling faster market penetration bringing growth forward.
“Based on the demand from Germany and Australia in particular, we had a build or buy decision to make. The cost to expand our Western Australian facility out was going to be around $2.7m per tonne for three tonne of biomass per annum, plus two years.
“The Denmark facility cost was about $1m per tonne for 20 tonnes of biomass available immediately. The decision was an easy one.
“We have a moment in the market now to capitalise on the brand equity LGP has built with our existing patients in Germany, the UK, and France as well as Australia.”
She added: “We have always mentioned the importance of commercial sales volumes in international markets as a priority growth strategy for LGP.
“Now, with scalable capacity, the Denmark facility provides us with top quality EU-GMP cannabis medicines at volume to cater for the demand we have experienced over the past few months that we otherwise couldn’t deliver into longer term.
“In addition to LGP branded medicines, we will also be launching white-label sales and bulk flower offerings from LGP Denmark.”
The Danish site will service the Northern hemisphere whilst the Western Australian facility will continue to cater for the southern half of the globe.
Mining Magnate’s Cannabis Debut
This is the first time that Hancock Prospecting, which now has a 10% stake in LGP, has backed a cannabis company.
Its Business Development General Manager Dan Wade said: “We believe medicinal cannabis has a vital role in helping to treat a range of chronic conditions, and we’re pleased to support an Australian medicinal cannabis company in Little Green Pharma that continues to put patients first and contribute to the development of this helpful and emerging industry.”
LGP – which is one of six companies whose products have been selected for use in the ongoing French medical cannabis trial – says it will increase production in line with market demand, and anticipates producing LGP-branded and white-label medicines as well as bulk cannabis flower products.
Some 47 cannabis companies are currently licensed in Denmark and around 15 have moved on to building facilities and growing crops.
Denmark’s credentials were bolstered in May this year with the news that the country’s politicians had agreed to extend a four-year nationwide pilot beyond December 2021, giving patients access to medicinal cannabis until at least the end of 2025.
At the same time, companies in Denmark cultivating and producing cannabis for medical purposes were told they would be allowed to operate permanently, to safeguard investments already made in the burgeoning industry.
Canopy’s Cultivation Woes
It was back in 2017 when Canopy announced plans to develop the facility at Odense, about two hours west of Copenhagen, in a joint venture with its subsidiary Spectrum Cannabis Denmark.
But Canopy has had a bumpy ride in recent years having closed a number of cultivation facilities including two British Columbia greenhouses.
In February this year it announced it had sold these facilities in Aldergrove and Delta for $40.7m, recording an asset impairment charge of $400m.
The Danish facility was previously operating as a production site until Canopy closed it in March, this year.
Canopy reported a 37% revenue growth for the full year ending in March 2021. It posted sales of $379m for the full year and reported a loss of $1.7bn.