As Canada’s emergent medical cannabis industry develops at home, several of the country’s leading companies are seizing opportunities abroad to sell their products, collaborate on research, and establish their nation as the industry’s global leader.
A Global Leader in Cannabis
For once, I see an opportunity for Canada to decisively step out of the shadow the US
Neil Closner, MedReleaf
Despite the fact that its pharmaceutical market is dwarfed by that of the US to the south, medical cannabis stands as an opportunity for Canada to leapfrog its noisy neighbour and establish a global leadership position. As Neil Closner, CEO of MedReleaf states, “For once, I see an opportunity for Canada to decisively step out of the shadow the US.
In medical cannabis, on an industry level, we are much further ahead. We have a responsibility to seize this opportunity on a global stage. No other country has grown cannabis at an industrial level before and we are well positioned to both develop and export best practices globally. We have learned to scale production and have found new and innovative ways to render production more efficient. We have made our fair share of mistakes but have gained considerable knowledge and expertise in the process.”
Michael Gorenstein, CEO of the Cronos Group – the first cannabis company to be listed on the NASDAQ in the US – agrees, noting that “Canada already has positioned itself as a leader [in medical cannabis]. The US has taken itself out of the competition by making it federally illegal. The US will always be an important distribution market, but the intellectual property is, and will continue to be, developed in Canada.”
The Hotspots: Germany, Australia and Israel
Capitalising on this global leadership position, many of Canada’s cannabis companies are targeting international markets for their products. The majority seem to be aiming their internationalization efforts at Germany – on track to become one of the world’s largest medical cannabis markets this year as insured patient numbers soar, and the country prepares for domestic cultivation; Australia – which legalized medical cannabis in 2016; and Israel – which in 2007 became the first country to allow medical research into cannabis and cannabis cultivation.
Barry Fishman, CEO of ABcann Global Corporation, explains his rationale for targeting these three markets thusly: “we are focusing our international efforts on Australia, where we hope to sell products to within this year and in Germany, where we are looking at a one-year timeline for product sales. In Israel, we focus on strategic partnerships, as the country is very advanced in cannabis research and product development.”
The Cronos Group has also targeted these three countries and has foregrounded establishing partnerships as a key element in its growth strategy. As Michael Gorenstein explains, “Globally, we have a footprint in Australia, Israel and Germany. We are scaling but it is a mountainous task to vertically integrate all aspects of a company. Therefore, we operate in partnerships in order to be able to expand geographically and create operating leverage.
In Germany for example, we partner with Pohl Boskamp, a company with nearly 200 years of experience. They have a distribution network in place, and we can leverage their knowledge and expertise: we co-develop and share resources. Instead of building up a German sales force, our focus remains product innovation, quality and always making sure that we are advancing. In Israel on the other hand, we partner with a large kibbutz with 1,000 on-site members, who already have the skill set we seek, and Cronos brings the IP. It is fantastic because we aspire to have a family-like culture in our company and a kibbutz is essentially like a family.”
Casting a Wider Net
For other firms, Portugal – which has decriminalized all drugs, yet lags behind other EU markets such as Italy and Germany in terms of legalizing medical cannabis – has emerged as a key investment destination. In September 2017, Canadian firm Tilray received the necessary licences to set up a cannabis growing and processing facility near Coimbra, Portugal, in a EUR 30 million investment.
Staff at the facility will grow, process and package medical cannabis products for distribution across Europe. Brendan Kennedy, Tilray’s CEO, outlines how this Portuguese investment is a key element of the company’s ambitious growth strategy: “through capacity expansion, we will increase our capabilities by roughly 800 percent in 2018, not only in Canada but also in other countries such as Portugal.”
Greg Engel, CEO of Organigram – New Brunswick’s biggest cannabis producer – feels that the cost-effectiveness of the lesser-heralded European markets make them prime investment destinations. While he concedes that “A number of Canadian cannabis producers have targeted markets such as Germany and Denmark as a priority for EU production,” Engel reveals that “we are currently very actively investigating some lower-cost markets in Europe to establish a durable presence in.
On the list are Croatia, Greece and Portugal, and we expect to start setting up operations on the other side of the Atlantic very soon.” Organigram’s global horizons can also be seen in the fact that New Brunswick will be hosting – with the company’s support – the first-ever World Cannabis Conference in June 2018.
Partnering for Research
We are truly just starting the global phase of our operations and are very excited about what is yet to come
Warren Bravo, Green Relief
Canadian cannabis companies are also leveraging research partnerships abroad to complement their distribution and sales agreements and scale the value chain. ABcann’s Fishman proclaims that “We foster relationships with innovative companies all around the world, with whom we collaborate on the development of novel delivery devices such as patches, inhalers or combination products.” Fishman continues, “We believe in the potential that these efforts hold and are allocating the required resources to take the company to the next level.”
Warren Bravo, CEO of Green Relief, outlines the research partnerships that his firm is undertaking thusly: “This past year we have been partnering with a Swiss firm, AIFAME, which has extensive experience with cannabidiol (CBD) and tetrahydrocannabinol (THC) extractions. We have been focused intensively on R&D, working with companies in California, Germany and Australia in this regard. We have also been expanding within Canada, such as British Columbia, Alberta and Calgary. We are truly just starting the global phase of our operations and are very excited about what is yet to come.”