Canopy Growth Corp is once again proving why it’s a global cannabis leader by purchasing German pharmaceutical distributor MedCann GmbH Pharma and Nutraceuticals. The acquisition gives Canopy a foothold in the burgeoning German market for cannabis. The best part in our opinion is that Canopy is buying MedCann by issuing just a little over 1.1 million shares. Canopy is using its strong share price as currency to make acquisitions. This is a signal to us that more deals are coming. Canopy is once again proving that it not only looks to dominate the Canadian cannabis market, but also globally. It’s little wonder then that Canopy has become Canada’s first billion dollar cannabis unicorn.
MedCann already purchases Tweed-branded cannabis strains for German pharmacies. The acquisition allows Canopy to boost its gross margins on sales into Germany and gives Canopy an established distribution network. Germany is Europe’s largest economy and relies on cannabis to be imported since there’s no domestic production. This will eventually change and will give Canopy a front row seat as the German cannabis market opens up and expands. Canopy was the first legal supply source from North America into the German market. Canopy will benefit as MedCann has already proven its ability to navigate the complex regulatory environment for cannabis importation and distribution in Germany.
The acquisition is structured against certain licensing milestones that will move the Company towards domestic production opportunities. 674,631 common shares in the Company will be issued to MedCann upon the closing of the transaction. A further 367,981 common shares in the Company will be issued on the 18-month anniversary of obtaining an Import and Distribution License from the German Health Minister. A further 122,660 common shares in the Company will be issued to MedCann principal upon achieving certain other milestones within two years of closing the transaction.
MedCann GmbH was founded in June 2015 by stem cell biologist Dr. Pierre Debs and businessman Rainer Hofmann. MedCann GmbH is an importer, manufacturer and distributor of medical cannabis products and is federally licensed by the German Heath Ministry. MedCann GmbH operates under strict GMP and GDP guidelines for all aspects of sourcing, transporting and releasing medical cannabis products.
In South America, Canopy Growth’s wholly-owned subsidiary Bedrocan Canada Inc, has successfully exported 10 kg of dried cannabis to Brazil for research purposes. Securing a supply of standardized research grade cannabis is a major milestone in the Entourage Phytolab clinical development plan and marks the first time to the Company’s knowledge that medicinal cannabis from a Canadian Licensed Producer has been exported to South America. Entourage will now begin clinical study drug preparation and stable pharmaceutical formulations needed for the development of a whole plant drug candidate targeting epilepsy and pain management for registration before the Brazilian health authority ANVISA anticipated in 2018.
Canopy Growth, Entourage and Bedrocan Brasil have also completed an initial funding round of $3 million USD in exchange for common shares in Entourage and Bedrocan Brasil. These funds will be used both for the continuing development of Bedrocan Brasil and the launch of the Entourage clinical research plan. Canopy Chairman and CEO Bruce Linton said:
“Brazil is an exciting international market for us. Research will form the basis of a broader medicinal cannabis regime in the country and we are proud to be driving this innovation forward.”
With all the excitement surrounding Canopy’s big moves and the recreational market opening up in Canada next year, Canopy and other cannabis names were plagued with trading halts on November 16. These halts knocked some of the wind out of Canopy’s sails, but have since rebounded. With any hot momentum stock in a fast-growing industry, investors should expect this type of volatility. For nimble traders, pullbacks like we saw this month are to be viewed as buying opportunities.
Overall, Canopy remains one of the must-own stocks in the cannabis space. Canopy’s goal is to become a cannabis multinational and a player on the global stage wherever cannabis is legal. With the Canadian recreational market expected to open sometime in the spring of next year and Canopy’s push into Germany and Brazil, there will be plenty of catalysts to keep Canopy on its bull run. We will be updating our subscribers as soon as we know more. For the latest updates on Canopy Growth Corp, sign up below!
Disclosure: We have no position in Canopy Growth Corp and have not been compensated for this article.