MONCTON – Medical marijuana producer Organigram Holdings is making it first foray into the international cannabis market, buying a 25 per cent stake in the German company Alpha-Cannabis Germany (ACG).
The company will spend approximately $2.5-million in cash and $1.3-million in shares for the stake. Once the deal is finalized, Organigram will provide Alpha-Cannabis with dried cannabis flower and sweet leaf to be converted into extracts meant to supply the German medical cannabis market.
Larry Rogers, VP of International Business Development with Organigram, said all the products will initially come from Moncton and hence could create more jobs.
“I think initially the bulk of our sales will take place in Canada, but we feel that the market in Canada in the next two years will be oversupplied,” he told Huddle in a phone interview. “To be able to secure a proper future, we’ll have to have export sales.”
He said the deal with the Stadthagen-based firm is the first of many international agreements the company is targeting.
“Probably the biggest market for sales right now is Germany. There are other ones, but being a public company, I can’t reveal them just yet,” he said.
Rogers said the company is hopeful the investment “could make a big difference” for it in the future. But it’s too early to tell how much of an economic impact it could bring for New Brunswick.
Organigram also expects to sign a deal that allows its to buy pure synthetic CBD isolate from Alpha-Cannabis. CBD, or cannabidiol, is the medicinal compound in cannabis and can be processed into various medical products like oils, liquids and capsules.
Organigram is currently growing plants at its Moncton facility for the federal program to supply marijuana to approved patients in Canada.
“We’ll continue to do that. But this is an opportunity for us to potentially be able to import CBD isolate at relatively low cost,” Rogers said.
“We’ll need the proper import/export licenses from the Canadian and German governments. But theoretically, if we can make that happen and we should be able to make that happen, then we’ll be able to bring in products that are reasonably priced and cost competitive into the Canadian marketplace.”
The companies are also working to procure licenses to be able to supply the German medical cannabis market, a potential gateway to other European markets, Organigram said in a release.
“There is a shortage of supplies right now [in Germany],” Rogers said. “There are a number of countries that have a medical program in place – close to 25 or 30, but the one that’s the most robust at this point in time is Germany.”
Alpha-Cannabis was established in 2016. It focuses on cannabis-based Active Pharmaceutical Ingredients (APIs) and pharmaceuticals. Alpha-Cannabis recently launched a CBD kit that will be available in more than 20,000 pharmacies in Germany, Austria and Switzerland.
“We have been looking for a strategic partnership with an experienced group that is committed to world-class product quality and safety,” said Alpha-Cannabis CEO Alexander Klomsdorff in a release.
“Product excellence is a prerequisite for serving the German market with medical cannabis and cannabis-based drugs. Organigram’s total quality management and monitoring system gives us confidence in them as one of Canada’s most reliable producers performing far beyond regulatory requirements.”
The deal is set to close soon, as due diligence has been completed, Rogers said.
“It’s now in the hands of the lawyers. I have a target to get it done by the end of the month.”