As recently as last month, Italian cancer patients have been met with a supply shortage in the domestic medical marijuana market. As of mid-June, Italy only had a single medical marijuana facility, which is controlled by the military. The limited supply problem resulted in patients seeking their products from the black market, which highlighted the critical need for Italy expanded legal supply.
Italy’s supply problem is a microcosm of the European market as a whole. According to a report from Arcview Market Research and its partner, BDS Analytics, government-subsidized healthcare spending (worldwide market at $1.3-trillion) is expected to push Europe to be among the fastest growing and largest medical cannabis markets in the world. Arcview expects Italy to be the second largest cannabis market in Europe by 2027 with $1.2 billion in sales.
With the significant potential of Europe’s cannabis market being on the precipice of widespread legalization, many Canadian-based companies, large and small are beginning to enter the fray, including Aphria Inc. (TSX: APH) (OTC: APHQF), Aurora Cannabis Inc. (TSX: ACB) (OTC: ACBFF), Canopy Growth Inc. (TSX: WEED) (NYSE: CGC), Maricann Group: (OTC: MRRCF) (CSE: MARI), and the continent’s newest entrant, CROP Infrastructure Corp. (OTC: CRXPF) (CSE: CROP).
Significant additional capacity is starting to come online, as CROP Infrastructure Corp. and its joint-venture partners recently announced that they planted 1,089,000 sq ft (25 acres) of high-CBD ‘Cannabis Light’ at their new project in Northeastern Italy. Known as a facilitator with extensive cannabis expertise, CROP has now positioned itself to be the first vertically integrated play in Italy, with products and flower for retail distribution.
The sector’s majors aren’t being left out in terms of European expansions either. In late June, both Aurora and Canopy were making their own EU moves. Canopy is focused on Northern Europe, as it successfully transferred cannabis plant clones from Spain to Denmark. Aurora is focused more on the South, as it announced its first product shipment into Malta’s (an island near Italy) medical cannabis market.
Much of the recent developments have centered around the Mediterranean region—particularly Italy and Malta. In Malta, along with Aurora’s recent shipments, Aphria is also moving to make Malta a hub for processing, manufacturing, and distribution. Maricann also recently announced an update on its letter of intent to acquire a license in Malta, that would lead to sales of products including its patented VesiSorb CBD and THC softgels.
The European market is indeed opening up. Majors, mid-caps, and juniors are positioning themselves accordingly to capitalize on the massive potential for the region.
EUROPE’S LEADING CANNABIS ACTIVITIES
Aphria Inc. (TSX: APH) (OTC: APHQF)
Aphria recently made an important step towards further testing, research, and development of medical cannabis in Europe. The Malta Medicines Authority recently granted Aphria’s subsidiary ASG Pharma Malta’s first import license for medical cannabis, after a rigorous regulatory process. ASG Pharma is currently undergoing an upgrade of its processing and manufacturing capabilities that will result in its ability to extract and process plant matter, and to produce pharmaceutical-grade medical cannabis and cannabis derivative products. Aphria hopes for AGS to be a leading European center for R&D and testing, but will also provide a gateway to medical cannabis markets across Europe.
Canopy Growth Inc. (NYSE: CGC) (TSX: WEED)
Late last month, Canopy announced multiple major operational milestones for its European subsidiary Spectrum. Through an agreement between its Madrid-based partner, Alcaliber SA, to its subsidiary, Spectrum Cannabis Denmark, Canopy successfully transferred live cannabis clones from Spain to Denmark. Targeting markets across Europe, Canopy sees a near-term future in which the company will replace its exports from Canada to Europe with European GMP production. Canopy also successfully transferred through Spectrum high-quality cannabis from Germany to another fully-owned subsidiary, in the Czech Republic. Among the European markets Canopy is targeting are the Czech Republic, Denmark, Germany, and Italy.
Aurora Cannabis Inc. (TSX: ACB) (OTC: ACBFF)
At the end of June, Aurora Cannabis announced its first shipment of products to the Maltese medical cannabis market from its German subsidiary. When the company assumed the assets of CanniMed, Aurora solidified its entry into the markets of Denmark, Italy, and Germany. Through the CanniMed connections, Aurora is pursuing a broad international reach with relationships in South Africa, the Cayman Islands, and Australia. CanniMed continues to ship oils to both latter jurisdictions, with shipments expected to show continued growth in line with demand in these markets.
Maricann Group: (OTC: MRRCF) (CSE: MARI)
Maricann recently completed the retrofit of its 49,000 sq ft Ebersbach facility in Germany for narcotics and wholesale. Site inspections by the European Medicines Agency authorities is now complete. Also, as anticipated, Maricann received confirmation from Malta Enterprise (the country’s official economic development agency) in the form of a Letter of Intent, to move ahead with licensing of finished goods production facilities for medical cannabis. Malta comprises an integral part of Maricann’s long-term development strategy, with finished goods manufacturing, including its patented VesiSorb CBD and THC softgels to take place in Malta.
CROP Infrastructure Corp. (OTC: CRXPF) (CSE: CROP)
Spanning 25 acres or 1,089,000 sq feet, CROP’s 30% owned Italian Joint Venture partner XHemplar Italia recently planted high-CBD ‘Cannabis Light’ plants. This was an over 100% increase on its previously announced capacity for the facility. CROP’s entry into the European market through Italy was strategic, and adds another market to the company’s expanding regional portfolio, which now includes California, Nevada, and Washington State as well.
THE ITALIAN JOB
Through its 30%-owned JV partner XHemplar Italia, CROP Infrastructure Corp. (OTC: CRXPF) (CSE: CROP) planted 25 acres or 1,089,000 sq ft of high-CBD ‘Cannabis Light’ in North Eastern Italy. The resulting product will be processed and sold into international CBD markets under a white label—through the brand names XHemplar and Crop’s brands Tiffany CBD and Hempire Italia.
CROP plans to also use the production of the high-CBD ‘Cannabis Light’ product to infuse its recently announced therapeutic and cosmetic product lines, licensed from its partner The Yield Growth Corp.—a transaction that was recently completed, and gave CROP exclusive rights in Italy to over 55 wellness products.
Originally Crop’s Northeastern Italian project was permitted as a cannabis light farm that would span 522,000 square feet. That projection was nearly doubled with the latest announcement, bringing over 1 million square feet in planted production.
"The company is extremely encouraged by the fast pace with which the team at XHemplar has commenced production in Italy. CROP’s portfolio of cannabis infrastructure assets now includes cultivation properties in California, Washington State, Nevada, Italy and joint ventures on West Hollywood and San Bernardino dispensary applications,” said CROP Infrastructure Director & CEO Michael Yorke in the company’s accompanying press release. “CROP has developed a portfolio of 15 Cannabis brands and also has US and Italian distribution rights to a successful line of over 55 cannabis topical products, through an exclusive deal with The Yield Growth Corp. Management will continue to aggressively pursue new world-wide opportunities and expand its portfolio of tenant growers and infrastructure assets in strategic licensed jurisdictions."
The company is expanding its footprint across multiple continents. Earlier in the month, CROP announced it had completed its required security upgrades on the Humboldt County Property in California, where its tenant operator has planted 20,000 square feet of recreational cannabis. The Humboldt County Property consists of an operational 10,000 square foot medicinal cannabis greenhouse facility, and has now obtained and planted an additional 20,000 square feet of recreational licensed canopy.
The tenant operator’s first crop will be harvested by the end of August. The 10,000 square feet of canopy is divided into five separate greenhouses, expecting to yield approximately 150lbs per greenhouse.
According to another report from BDS Analytics, sales of cannabis in California are expected to hit $3.7 Billion in 2018 alone, with that number expected to grow to $5.1 Billion in 2019 as more dispensaries come online.
CROP’s business strategy is to bolster investment in new cannabis projects, through facilitating infrastructure, aiding in the growing process, branding, and all other aspects of the sector. By expanding into Italy, the company’s footprint has now become truly international. By entering Europe at this stage, CROP has put itself in good company with the majors such as Aphria, Aurora, and Canopy. Moving forward, the company has plenty of growth opportunity left to play out in 2018.
Legal Disclaimer/Disclosure: This article is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. No information in this article should be construed as individualized investment advice. A licensed financial advisor should be consulted prior to making any investment decision. We make no guarantee, representation or warranty and accept no responsibility or liability as to its accuracy or completeness. Baystreet.ca assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this article and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Baystreet.ca has been compensated forty thousand dollars from the company for CROP Infrastructure advertising. The owner/operator of Baystreet.ca own shares of CROP Infrastructure Corp. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this article. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.
