AgraFlora Organics International (AGRA.C) closed its deal to acquire the Good Company GmbH, the parent of the German EU medical cannabis distributor, Farmako GmbH.
Farmako represents AgraFlora’s entrance into the revenue-loaded European medical cannabis market, with headquarters in Frankfurt, Germany and affiliated companies in the United Kingdom, Luxembourg and Denmark.
“The combined AgraFlora-Farmako entity will be equipped with world-class upstream cultivation assets, as well as highly efficient European downstream capabilities that will act as a beachhead into the 700-million-person European marketplace, as well as crystallize a defendable advantage within the edibles, cannabinoid-infused beverage and product formulation market verticals. Farmako’s first-mover advantage, coupled with their surgical execution and best-in-class operations within the German cannabis market, are further validated by this recent announcement,” said Brandon Boddy, chairman and CEO of Agraflora.
Germany revised their medical cannabis legislation in March 2017 to allow the country’s population access to alternative forms of therapy. This change ushered in exponential growth, and now ranks over 100,000 active patients, increasing from 800 in 2017. Cannabis market consultants, Prohibition Partners, has said that Germany will surpass one million eligible medical cannabis patients by 2024.
The medical cannabis market in Germany was estimated to be worth €73.7 million in 2018, a figure which is expected to rise dramatically over the coming years.
According to data gathered for The Germany Cannabis Report, Prohibition Partners predicts that by 2024, over a million German patients will have access to medical cannabis, and by 2028 the medical market alone will be worth €7.7 billion.
Throughout the 2019 fiscal year, Farmako drew in revenues in excess of $2,750,000 and succeeded in capturing an 8% share of Germany’s medical cannabis market. That’s not nothing. Their German distribution network also extends to over 20,000 pharmacies, meeting the demands of a patient population of over 100,000 people.
Here’s a list of the certification and distribution licences Farmako boasts:
- Medical wholesale distribution licence under German Medicines Act (“AMG”);
- Permit for narcotic drug handling as per German Betaubungsmittelgesetz (“BtMG”); and,
- Certificate of EU-GDP.
“Farmako’s prestigious good distribution practice certification marks the highest standards of medical cannabis distribution in the world, permitting the bulk warehousing of medical cannabis on German soil, allowing for direct sales into an underserved marketplace. This acquisition solidifies AgraFlora as a global cannabis leader and further reinforces our vertically integrated mandate,” said Boddy.
German patients are prescribed an average of 30 grams of medical cannabis per month, according to Insight Health. That averages out to around 36 tons of medical cannabis per year.
Germany represents one of the ultimate global potentials for medical cannabis, due to:
- Estimated 420 billion euros in annual health care expenditures;
- 8.8 million grams of total medicinal cannabis allowance in 2019;
- Median retail prices of between 20 euros and 25 euros per gram of medical cannabis flower;
- Largest consumer base for cannabis among all EU nations;
- Forecasted cannabis market size of 7.7 billion euros by 20282; and,
- Full reimbursement of 60 per cent of all medical/pharmaceutical cannabis prescriptions.
German public health insurers, which provide coverage for 90% of the population, are mandated to provide coverage for up to 140 grams of cannabis medications per month. This makes Germany one of the most potentially valuable markets in Europe. At present, cannabis can only be sold through registered pharmacies, and there are approximately 20,000 of those in Germany.