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Kanabo and Materia: innovating the cannabis supply chain in Europe

Kanabo and Materia say the acquisition will utilise Materia’s supply chain innovation to bring products into European markets. 

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Kanabo and Materia Ventures: innovating the European cannabis supply chain

The first medical cannabis company to IPO on the London Stock Exchange, Kanabo Group, has signed a letter of intent to acquire a leading processor and distributor of medical cannabis in Europe, Materia.

The Kanabo acquisition of Materia, which operates a state-of-the-art EU GMP certified facility and has subsidiaries in Malta, Germany and the UK, will see the import and selling of medical cannabis products to German pharmacies through Materia Deutschland and a focus on bringing new products to patients.

Speaking to Cannabis Wealth, Kanabo and Materia say the acquisition will utilise Materia’s innovation in the supply chain to bring products into European markets. 

Synergies

Kanabo says it believes that Materia’s complementary infrastructure will be crucial to expanding and strengthening its existing supply value chain of medical cannabis and CBD products. Materia Deutschland has agreements in place with numerous suppliers and already distributes its medical cannabis portfolio to pharmacy customers.

Kanabo CEO, Avihu Tamir, said: “When we met Materia for the first time there was immediately a few points that pop; that it is the entering the most interesting market in Europe right now, Germany, and have not just a licence, but a sales team in Germany, that is already selling products and having a relationship with physicians and pharmacies. 

“The second thing, which I think is one of the biggest assets that Materia has, is having an EU GMP facility in Malta, so it is inside the EU. Above all, I would say is management, which has a clear plan. 

“On the one hand is product development and commercialisation, where the assets that we are bringing into the R&D centre in Israel gives us the capability to bring them to the market and to commercialise them under the Kanabo brand, and Materia is bringing the processing and production capabilities, their relationship with suppliers around the world and access into the most interesting market the CBD markets in the UK and the medical cannabis market in Germany. So, there is minimum overlap and maximum synergy.

Materia’s managing director for Europe, Nick Pateras, commented: “Most of us who are on the Materia side, like our founding management team, come from the Canadian cannabis industry. I spent five years in cannabis, and Deepak, who is our co-founder and CEO, spent eight years in cannabis, and we both come from a pharma background prior to that. So, we can bring that experience to cannabis. What we have seen in the Canadian space was a lot of emphasis on effectively trying to do everything across the value chain. When we were starting to think about how to architect the Materia business, we thought cultivation is a very expertise-driven capability, so, how do we build a company that really zones in on the value-adding activities. We perceived them and we saw in other markets that they stay at processing and distribution.

“By leveraging the cultivation expertise of a global supplier network without doing cultivation ourselves, we landed very quickly at doing an EU GMP processing capability, building our facility. In a place like Malta, it is very interesting because it allows us to work with suppliers all over the world who may not have had their EU GMP certificates yet, and we represent the doorway for them, wherever they are based, into the European market. We can tap into low-cost, high-quality supply, as well products that have genetics and have the stability that no one else has seen in Europe, yet. The next step is extracts and producing what we know the market will move towards now.”

New products to market

Kanabo is to commercialise its research through Materia Malta’s facility, including formulas developed for its VapePod device, and those targeted to treat medical conditions such as insomnia, post-traumatic stress disorder (PTSD), neuropathic pain and anxiety. Tamir highlights the focus of the market currently remains with flower, but in the next few years it will move to more innovative products.

“What was amazing about this particular marriage is on one side of the aisle, Avihu and his team have developed medical grade extracts targeted to specific medical conditions with medical and clinical trial data behind it, so that we can actually produce in Malta, and we don’t have to go through the R&D process ourselves,” said Pateras. 

“So, the coming together of these two companies I think is just a really nice complementary infrastructure which is really exciting.”

Tamir added: “A big part is our flagship product idea is the number one problem in the industry and that is the delivery method. It is huge problem. There are only two delivery methods in the market that have significant market share and that is smoking and tinctures. 

“Sadly smoking is the number one delivery method right now. So, we are solving this issue by having a product that is easy for patients to jump from smoking into something else that mimics the same benefits of inhalation, but at the same time gives the comfort for physicians to be able to prescribe a product that has a specific dose, and which has medical validation behind it. Pain management is obviously the biggest challenge that the market has. In the last five years, physicians have been starting to feel uncomfortable prescribing opiates. This is the focus of the first product we’re launching now in the UK.

“The second product is for mental health. We see a lot of success with cannabis, and, there are medicines that are problematic. If you are looking in the market right now, all of the products are almost the same oils with different brands, but exactly the same flowers. The options that you have now in Germany are probably the same amount of options you will find in one dispensary in California, so, that is very limiting for patients. Materia is going to bring products into the market, dealing with the supply chain challenge.

“The last challenge is patient access challenge, and that is something that both companies are going to work together on. We will be investing more in patient access, to have safe access for patients and for them to be able to get a prescription, especially in the UK.”

Co-founder and CEO of Materia, Deepak Anand, added: “Kanabo have already been researching products to put onto the market on the vape side. I think the combination that we provide is that we have been doing the same thing but on the medical cannabis side, where we have been thinking ahead to novel product formulations, keeping in mind that flower and oils are currently where the European markets are. Looking at the rearview mirror, as we have seen in Canada, that moved on very quickly. Canada was predominantly a flower market for a very long time and that has shifted quickly into other kinds of products form. So, R&D and growth are pivotal to both our companies.”

Europe’s largest public cannabis company

The acquisition will create Europe’s largest public cannabis company, a move which Tamir says is a step towards both company’s visions of being leaders in the industry.

“We want to be recognised as the authority to physicians, because there is a trust deficit by virtue of cannabis just being new. There needs to be a body of evidence put in front of physicians and for that, we need to be working with patients,” says Tamir.

“The company’s ambition is to be coming forward with products that provide new ways of speaking to patients and physicians, and that are accessible, relatable and trustworthy, and really demonstrate to people that cannabis is a new medicine. We are adhering to the strictest pharmaceutical standards, and it should actually be considered, just like any other medicine.

“We are talking about patients all over the US, all over Europe and all over the world, who have had to suffer through a quality of life, because they have not had access to cannabis – let’s change that. Let’s allow people to understand that cannabis is a new product. We want to be the flag bearers of that story.”

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UK CBD company Kaya raises £1.7m for European expansion

Kaya co-founder Ludovic Rachou discusses the company’s journey and plans for European expansion.

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UK CBD company Kaya raises £1.7m for European expansion

UK-based CBD brand Kaya has successfully raised £1.7m of funding which will help fuel its expansion into European markets.

Founded in 2019 in France, CBD and adaptogenic brand Kaya had a vision to be a European leader in the CBD sector. The company was one of the first in the UK to receive approval under the new Novel Foods certification, verified by the Food Standards Agency for their CBD-based products, and today, its products are sold in over 1000 stores across Europe.

Kaya’s recent £1.7m fundraise came from both new and existing investors including VC fund, Senseii Ventures, and US cannabis fund, Artemis Growth. The funding will go towards fuelling the company’s brand mission as they expand into European markets following its recent launches in Italy, Germany and Poland.

“We’re currently the biggest player in France when it comes to finished products with CBD and we have about 40 people in the company in France. We have a few people in the UK as well,” said Ludovic Rachou, Kaya co-founder and founding member of the Association for the Cannabinoid Industry (ACI), a cannabis trade association in the UK.

Kaya’s range spans ten bespoke adaptogenic and CBD-based, vegan-friendly products for a number of uses from restful sleep to everyday stress relief.

“It was the first market because of the regulation in the UK with Novel Foods so, it has been hard to grow in the UK recently. We launched Germany with an edibles brand, and launched a cosmetics brand called Skin back in November 2020. So, we mostly sell in France in pharmacies and general retails, and also small independent shops and online. So, we don’t have the same kind of health retail that we have in the UK or in the US. 

“About half of our revenue is our own revenues online, and we are going to finish our first year with somewhere between €5 to to 6m in revenue.”

Rachou highlights that, whilst other brands are relying on ingredient suppliers or manufacturers to achieve compliance, Kaya is one of the few brands to have submitted its application in its own name, processed through the EIHA Projects Consortium. 

“It is a process where we have to prove that the CBD we use – we currently only use isolates in our products – is actually safe for human consumption, and it is something that we had to do in the UK, but we also have to do for French markets for instance. There are quite a few brands that claim the same thing, but the main difference with us is that we actually formulate all our products in-house. 

“We have five different founders and my co-founder Allison is a pharmacist who is actually the one doing all the formulations. So, we don’t buy, because on the market you mostly see brands which products are from on-the-shelf labs – however, we usually outsource production, but we work on the formulations and the recipes ourselves. 

“I think that’s one of the biggest differences, and we buy for different regions from different suppliers. We never buy anything at the same place.

UK CBD company Kaya raises £1.7m for European expansion

“When we launched the company we raised €1m with mostly French and British private investors – high net worth individuals and mostly entrepreneurs. Then, for the second round, it was mostly the same people, and a new, interesting new player from the US, a fund called Artemis Growth, which is interesting because they are one of the biggest funds in the US space.”

Kaya is beginning to look towards the European CBD market for its future and will be launching a new Series A round aiming to raise between €5 to 10m.

“I think we have seen the market in the US maybe losing faith a bit because of all the regulation – it is not so clear with the FDA, so, many Americans are starting to look at what is happening in Europe. For us, when you see the investments that Artemis Growth has made in the US – so far they have made the right choices – so, we are quite proud to have them on board.

“We are funding our international expansion – so, we just launched in Germany and Italy, and we are also willing to expand all around in Europe. We want to trial all the markets and, if the figures are good, then we will launch specific teams on the ground. We think it is very important to have natives in each and every country – to understand the market and the consumer.”

One year ago Kaya had six people in the company, but has now evolved with a team made up of 40 people, and soon to be 55, and has plans to launch new product lines.

“We are going to launch a pet food brand, hopefully, by the end of the year or early 2022. Most of the CBD you get in Europe is either imported from the US, or sometimes from Eastern Europe, but we are about to launch in mid-2022 with French hemp and CBD. France is actually the biggest hemp farmer in Europe and there is a new regulation that is about to change next year. So, we’re going to be allowed to do French CBD which I think is pretty important to sell. Our goal, in the end, is to sell German CBD in Germany and French CBD in France, and so on.

“We are always looking for talent so we are currently recruiting a lot of people and we are always interested in talent everywhere in Europe. So if anyone wants to get in touch – feel free.”

Kaya, which also has headquarters in Paris, has seen more than 15,000 customers since September 2020, and Rachou says the latest round of funding puts Kaya one step closer to achieving the goal of delivering quality products with the potential to have a real impact on consumers’ day-to-day lives.

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Grow group: innovating cannabis medicines and improving access

Grow Group co-founder and CEO Ben Langley spoke about the company’s aims, cannabis innovation and its plans for expansion.

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Grow group: innovating cannabis medicines and improving access

Founded in 2017 by former JP Morgan banker, Ben Langley, and Dr Ian Atkinson, Grow Group is working to improve access to medical cannabis to patients across the UK and the globe.

London-based biopharmaceutical company Grow Group has patients at the heart of its strategy, having partnerships with some of the UK’s leading medical cannabis clinics to bring its broad portfolio of cannabis medicines to patients that need them at an affordable price, already helping over 1200 patients with access every month.

The company recently embarked on its first crowdfunding round, reaching its minimum target in just one hour, and acquired its first company, Sanoid Isolates, the Spanish cannabis producer, in a move that positions Grow to be one of the leading global producers of sustainable cannabis. 

Co-founder and CEO Ben Langley spoke to Cannabis Wealth about the company’s aims, cannabis innovation and plans for expansion into international markets.

Breaking down barriers to access

After quitting his position at investment bank JP Morgan in 2016 to become a socially conscious entrepreneur, Langley saw an opportunity to help cannabis patients that are facing stigma and barriers to accessing medicines that improve their quality of life.

“This rang a huge alarm in my head which was that this doesn’t make sense. The lack of access to these cannabis medicines is one of the most nonsensical things I’ve ever seen in my life, and as an economist and a logical person, if something doesn’t make sense to that magnitude then addressing the problem is a huge social opportunity. I decided that cannabis was the right mission for me and ultimately, it would be something I should dedicate my working career towards and hopefully make a bit of an impact in the world,” said Langley.

“We were founded in 2017 by myself and Dr Ian Atkinson who has a whole raft of patents and medical devices under his belt. We put our heads together and founded Grow Group, which exists to get quality cannabis medicines to the patients that need them. There are hundreds of millions of patients, globally, that ultimately could and should get cannabis medicines. But currently, the legal context, we see only a very small fraction of that number actually getting that medicine.

“So, everything we do points towards making sure to get more patients access to cannabis medicines that will ultimately improve their lives. We want to break down barriers and make sure that cannabis gets to where it needs to be and that the patients have access to it legally. We look at it quite holistically around what we need to do to achieve that goal.

“Having a quality basket of medicines is really key. There is almost an infinite combination of molecules so we know that cannabis is a personalised medicine – different combinations of cannabinoids and terpenes will appeal to different people. We know that people have different stigmas – some might like to smoke and somebody else might never think about smoking and instead use an inhalation device for a measured dosage, without smoke. Some might want to take oils. So, you’ve got this really interesting subset of medicine where, even though cannabis medicine is one category, within that you have got, potentially, thousands of medicines.

“What we try and do first and foremost is make sure we have got the best medicine, and help as many people as possible, then over time we can improve that with data and products.”

Improving medicines through innovation

Grow Group currently has over 50 cannabis medicines and continues to work towards improving this portfolio with extensive R&D, exploration of new technologies and the development of technology patents that will innovate the cannabis industry.

“Product innovation will ultimately lead to better patient outcomes. We start with the best basket of medicines. Then, we have been doing research and development since 2017 when there were very few legal markets, so, we started doing the research. Our research and development work focuses on improving the technologies that will ultimately move this industry forward,” said Langley.

“We have got, for instance, a very interesting technology around distillation and purifying cannabinoids that will go into our production facility. I will make sure that we can ultimately produce some of these medicines more cheaply and with higher quality than anywhere else.

“We have lots of Ph.D. scientists in our lab in Rothamsted in the UK and what they are trying to do is not accept the process of how cannabis ends up being a medicine. There have been 100 years at least of essentially zero innovation in cannabis because it has been illegal to do anything. There is a massive shortfall in technological innovation that would have happened had cannabis been a legal substance. So, what we are trying to do is look at the whole way cannabis is processed currently and how it ends up as a medicine, seeing where we have been and where we can improve things. 

“Some of the improvements could be relatively subtle but a lot of things we are working on seem to have fairly substantial effects on the end product. So, the first technology that we have got patented and that we came up with ourselves is a way of processing cannabis that is completely different from any other process currently – it completely rewrites the rule book of purification of cannabinoids. Interestingly, it also seems that we can use this in formulations because the actual substance we use to process the cannabinoids is also non-toxic and therefore usable in formulations. So, it is about looking at processes, seeing where we can improve them, and driving at it as hard as possible with our team of really smart scientists.”

Expansion into international markets

Grow Group recently made its first acquisition of premium medical cannabis producer, Sanoid, as part of its expansion strategy to reach more international markets. The acquisition gives Grow the ability to control its own supply chain and ensure access to low-cost products for patients.

Langley commented: “We have become vertically integrated as we do most things along the supply chain. A lot of people will say they are vertically integrated and that is almost a goal of theirs. We look at it the other way round, where we have become vertically integrated because we have seen that in order to achieve our goal of making sure we are getting cannabis to as many places as possible, actually, being vertically integrated makes sense strategically.

“The acquisition of Sanoid Isolates gives us the ability to control our own supply chain slightly more, grow our own cannabis, process that cannabis extract, and make sure that those cannabinoids are high quality and low price.

“Spain has got a long history of controlled drugs exports, so, they have got a history of some agricultural controlled drugs. The regulatory infrastructure makes sense and Spain for us is a great location, great sunshine for growing the cannabis – everything that we grow in Spain will be fully sold into Europe. So, at the moment work is big in terms of distribution in the UK and Ireland, but we will also be sending to third parties to make sure that the others can also benefit from the high quality and affordable products we can grow.

“I have been doing acquisitions since I was 21 years old in some shape or form. We haven’t set out to be an acquisition company, but equally, I see a lot of opportunity for us to bolt on companies throughout the world. With global expansion, we know there are companies in different jurisdictions that have made good starts, who we could potentially partner with or acquire and essentially fast forward our own development in those jurisdictions. We have a company of dealmakers by nature, and the acquisition of Sanoid definitely won’t be our last.”

Grow Group was the first British medical cannabis startup ever to crowdfund, the funds from which will support the company’s expansion plans and R&D projects.

“The first goal of the crowdfund, rather than just raising money, is to build the community, because we know that achieving our mission requires regulatory change, requires political change and it requires public support. The big goal here is to build our community and make sure that people really buy into that mission. 

“The funds raised will go towards expanding the facilities at Sanoid, as well as into doubling down on what we’re doing in the UK and helping as many patients as we can in the country. It will also go towards geographic expansion – both into continental Europe and other jurisdictions that are very close to going live. We are also having initial conversations around wholesaling into South America, Africa, and Australasia. So there is a lot happening in terms of geographic expansion and really our goal is to help as many patients as possible – we’ve done a great job with that in the UK. 

“The key for us is helping patients globally, and we take the view that something that is going to be good for patients but also good for shareholders fosters an industry where shareholder outcomes and patient outcomes almost perfectly align, so, we think that having global ambitions is the right thing.”

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Dragonfly to be first UK CBD brand available on Australian prescription

The move is the latest international business expansion step for the innovative brand.

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Dragonfly to be first UK CBD brand available on Australian prescription

Dragonfly Biosciences is the first international and UK CBD brand available on prescription in Australia following its acceptance onto the country’s Special Access Scheme. Chief executive Regan Saveall discussed the impact of the approval on the company’s plans for global growth.

One of Europe’s largest seed-to-sale producer of CBD and cannabis-derived extracts, Dragonfly Biosciences, has been approved under Australia’s Special Access Scheme (SAS), making it one of the first brands available on prescription in the country.

When Australia’s Therapeutic Goods Administration (TGA) down scheduled CBD in February 2021 it theoretically enabled the prescription of CBD in Australian pharmacies. To meet the legal requirements for prescription, products need to be included on the Australian Register of Therapeutics Goods. Working with partners Health House International, headed by the first clinician to prescribe medical cannabis in Australia, Paul Mavor, Dragonfly Biosciences was accepted onto the SAS while it waits for full TGA approval. 

The move is the latest international business expansion step for the innovative brand, which Saveall says lays the groundwork for movement into international markets such as Asia. 

Australian approval

Dragonfly CBD, the first CBD oil to be stocked by Boots, is currently sold in thousands of pharmacies, health food stores and grocery retailers across the globe. 

The SAS approval for Dragonfly Biosciences will see greater prescription choice across the CBD sector in Australian pharmacies to help with stress, anxiety, sleep or pain in 1000mg 10ml and 3000mg 300ml CBD oil.

“The TGA approval requires a similar process that the Food Standards Agency (FSA) has whereby you submit a dossier to prove the products are safe. So, we felt that we could meet the compliance of the requirements because we have done so much for the FSA as part of our own novel certification. We worked with Health House International which is a well-respected company in Australia and has access to around 1500 pharmacies there,” said Saveall. 

“The SAS allows pharmacists to prescribe the products while we are processing our TGA application and waiting for the full approval. Once we receive that, we can start advertising and compete more widely. We have been approved for two of our products to start with. Settling for a SAS is not a long-term strategy. With a full TGA approval in theory, we could have access to retail and would be able to advertise more widely. So, those two things combined means you can make a real impact on the local market.

“As part of our expansion we are looking for countries that have a definitive way of getting to market that is legal and compliant and that is what we are following.

“We have always been a bit of a trailblazer in the UK. We always felt that the only way you can really demonstrate that you are organically grown is doing it yourself, that you have got organic accredited soil, for example. We felt as a company that it is always really important to have that, so we have been trailblazing about the importance of this from the start and it helped us to be the first brand in stores because of our approach to compliance and transparency. So, having the same kind of thing in Australia is really important and that is quite key for us as a company to be pushing the boundaries.”

Expanding into international markets

Saveall explained that the regulatory hurdles in Australia will give the brand authority in the Asian market as Dragonfly Biosciences looks to expand globally.

“Australia is a bit of a testbed for the Asian market. If you have got through the regulatory hurdles in Australia, Asia will then look at you seriously – as a serious product for their market. That’s where we see our topicals really coming into play because the Asian market is actually much more attuned to using CBD as a topical – so I think there is an opportunity to get Dragonfly branded topical products into that market. So, once you are established in one country, you get noticed by another country. We are having calls with Asian distributors about bringing our products to the market. So, we can really see how this expansion is helping us get our product out and more widely known and accepted in these territories.

“2020 was quite a tough year for us but we have got through it. We have restructured our company and we are in a better position now where we are looking to expand internationally as a stepping stone from Australia to other markets – we are a stronger, more focused company as a result and we are to capitalising on the seed to shelf infrastructure that’s been built over the last few years.

“Once we are a listed company in Australia, we will be taken more seriously, which should be in the next couple of weeks. We will then have a good pitch for those distributors in Asia which will I think will be one of the more transformative agreements that we would have as a company.

“We have a global ambition to bring CBD to the world, and hopefully one day we will be able to tell them about the benefits of it as well.”

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