LONDON-based Lyphe Group has signed an agreement to acquire Materia for an undisclosed sum, with the new combination expected to have a ‘massively positive effect’ on the industry.
The transaction will see the creation of a new European cannabis powerhouse with an established footprint in the largest markets and capabilities spanning the supply chain vertical for medical cannabis.
It marks the latest major development from Lyphe, which has been pushing to replicate its successful direct-to-consumer business model across international markets.
With Materia’s EU GMP (Good Manufacturing Practice) certified manufacturing facility in Malta, and an established distribution channel in Germany, Lyphe will not only be able to accelerate its expansion plans but also significantly reduce costs for patients.
Jonathan Nadler, CEO of Lyphe, said: “I am thrilled to announce Lyphe’s agreement to acquire Materia. I’m looking forward to continuing to better the medical cannabis industry across Europe.
“Having a vertically integrated supply chain will have a massively positive effect on the industry, demonstrating our continued commitment to improving the patient experience and standards of the market.”
Major European Player
Lyphe Group was founded by Rob Reid, Stephen Murphy and Ben Langley in 2018, shortly before the UK government legalised access to medical cannabis. Serial entrepreneurs, Mr Reid and Mr Murphy will remain the largest shareholders after the acquisition of Materia closes.
Lyphe is currently the UK’s leading operator, understood to represent approximately 40% of the medical cannabis market, which according to Prohibition Partners will see patient numbers climb to 30,000 by the end of 2022.
The company has expanded rapidly across its domestic market over the last two years with reported revenue growth of 250% in 2021. This was largely driven by the popularity of its telemedicine division The Medical Cannabis Clinics (TMCC), which is supported by Dispensary Green, a digital dispensary that allows both doctors and patients to track prescriptions. Alongside this, the group also operates The Academy of Medical Cannabis, an e-learning platform that provides information and educational resources that doctors need to prescribe medical cannabis in Europe.
In May this year, Lyphe secured £5m in a funding round which the company said would be used to finance its ambitious ‘scale-up plans’.
The integration of Materia’s similarly fast-growing operations will significantly expedite this international expansion and strengthen current operations while importantly bolstering the enlarged group’s 2023 revenue forecast to £23m with underlying gross margin in excess of 50%.
Lyphe’s operational priority will be Materia’s Maltese facility, which achieved EU GMP approval in May 2021, and became the first company in history to export medical cannabis for sale in another country from Malta in June this year.
Through this facility, Lyphe will be able to import GACP flower from an extensive global supply chain, process it into EU GMP certified medical cannabis and export it throughout Europe.
It is understood the ‘state-of-the-art’ facility has the capacity to process 6,000kg of cannabis every year, representing potential sales of over €30m.
Materia has distribution operations in Denmark and the UK but Lyphe will be most interested in its EU GDP (Good Distribution Practice) and EU GMP certified pharmaceutical wholesale operation in Germany which will enable the company to rapidly expand its operations in Europe’s largest cannabis market.
While Materia has been distributing medical cannabis to German pharmacies for nearly two years, the first export to Germany from its Maltese facility just took place in June.
Lyphe’s acquisition of Materia will become a significant milestone for the European cannabis industry.