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.
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.”
CBD sales and marketing gets creative for 2022
One brand even offers the chance to purchase real CBD products in a virtual world
As Covid continues and CBD marketing remains tough, we examine the different ways companies are reaching out to consumers
CBD advertising and marketing can be exceptionally tricky for brands. As consumer awareness of CBD is growing, the changing landscape of Covid restrictions has increased the demand for contact-free sale solutions.
So how do you reach new consumers if social media isn’t on your side and mailouts may bounce into spam folders?
Brands have been embracing new, creative ideas for consumer shopping experiences. This has included entering digital spaces, making shopping into a game and delivering CBD via food apps.
Here are some of the ideas shaking up the high street for 2022
Deliveroo and Love Hemp
The CBD industry and delivery services have experienced a massive boom since the start of the pandemic in 2020. CBD sales rose while Deliveroo reported transaction volumes had increased on its app to £1.7bn in the second quarter of 2021.
It’s not the first time Deliveroo has sold products outside of food such as alcohol, vaping products and tobacco that are already available through the app. Although it is still advertised as a predominately food based service. This is the first time the app will sell CBD products.
The trial will only be available in the Croydon area of South London but if it proves successful then it may be extended across the UK. Love Hemp’s production facility is located there so products will be available within a six-kilometre radius.
Tony Calamita, the chief executive officer of Love Hemp Group said: “Not only does Deliveroo provide us with greater visibility with consumers, but it also provides us with a new dimension to our consumer access – on-demand delivery.”
“Deliveroo has over seven million pre-registered consumers across the UK who are increasingly looking to the app to fulfil their day-to-day needs, of which high-quality CBD products are now one. Our ambition is to launch nationwide and utilise Deliveroo as a major distribution channel for Love Hemp.”
Cannabis deliveries in the metaverse
The creation of NFTs (Non-fungible tokens) and the popularity of cryptocurrency have led to an interest in alternative worlds or metaverse experiences. Metaverse refers to a network of 3D virtual worlds that are focused on social connection. Brands have been slowly adapting to the idea of entering virtual worlds as a way to reach customers through gaming. Facebook has also announced plans to release its own metaverse this year.
US company Higher Life has launched a real-life CBD dispensary in the metaverse that offers a gamified shopping experience. Customers can guide a 3D model around the virtual shop, ask for information and explore. In the end, the experience culminates in a real CBD product being sent to your home.
US cannabis start-up, Kandy Girl has also opted to join a virtual world to sell their Delta-9 edibles. It had been in negotiations to advertise on over 100 locations in NFTPlazas but this did not go ahead. However, the brand opted to join Decentra Metaverse instead. The company plans to build a full dispensary as well as an art gallery where they can sell NFTs.
Cannabis airport sales
The rules and regulations around flying with CBD or medical cannabis can be really tricky. It often depends on the law of the country you are flying from, to or stopping over in. While this isn’t set to change any time soon, for those travelling through Canada, it could be slightly easier to purchase CBD.
Prince George’s airport reported that they have received an application for a business license from cannabis company Copilot. If this is approved then it would be the first cannabis shop based in an airport. Although, it may be a while before we see dispensaries in airports across the globe.
Copilot is a project aimed at making travel a less stressful experience by reducing anxiety or fear of flying.
The Prince George’s Airport (PGAA) authorities reported that they have received a business license application from the company Copilot to open a store later this year. If completed, it would be the first cannabis retail shop at an airport in the world.
PGAA CEO Gordon Duke said: “We are very pleased to welcome Copilot if they receive a business license and provincial approval. City Council is expected to give their business license application the first reading on January 10. Copilot has satisfied regulatory requirements from both Transport Canada and the Province of BC in advance of their meeting with the Council.
CBD vending machines
Covid has accelerated the need for contact-less sales for brands. However, when it comes to buying CBD, customers still need a lot of education or information around what they are purchasing.
A vending machine may not seem like the best place to go for canna-education or products but they have been growing in popularity. A number of brands have installed vending machines for CBD in shopping centres or stores towards the end of 2021.
Cannaboxx is just one example of how brands have been encouraged to embrace alternative ways of reaching new consumers. The boxes can be placed in many different locations but the brand highlights that it can be another option for stores with a lot of footfall.
Owner Andre Addison refers to the kiosks as a “dispensary in a box.”
CBD on a mountain
CBD company, Charlotte’s Web went one step further by placing a CBD vending machine on the top of a mountain in Utah. It dispenses the companies balms for athletes who may be hiking with sore muscles. It sits on top of a sandstone slab that rises 400 feet above Moab, Utah.
The high court: the battle continues for the CBD industry in Ireland
Following a series of raids, product seizures and court battles, what exactly is going on with the Irish CBD market?
As several high-profile cases over THC content are set to take place in Ireland this year, we speak to three store owners about their experiences.
It’s been a difficult time for CBD stores in Ireland. While there have been issues with stock shortages, Brexit regulations and COVID restrictions, CBD sellers have had the added problem of raids by the Irish gardaí.
Several stores across the country have reported gardaí entering their premises or homes to search for cannabis before seizing CBD products instead. The products are sent for testing and often not seen again. But as Ireland is in Europe, and these products are therefore under the European THC limits, so why is this happening?
Cannabis Wealth speaks to three CBD stores across Ireland to ask, what’s going on.
Little Collins is one of the most well known CBD stores in Ireland. Originally located in Galway, the store can now be found in Dublin and Kilkenny too. The store sells a variety of CBD flower, balms, pet products and topicals.
The store, owned by JP O’Brien and his wife, Ide Clancy was one of the first to draw attention to the raids in 2020 with a series of social media posts. They received a huge amount of support following the raids that saw several gardaí enter their premises in Kilkenny before seizing products.
* Raid your shop 3 times
* Family home once
* Customers twice
* Seize over 65kg of incoming product
* Not respond in time to your Judicial Review
* Then adjourn it
* Then when asked for comment – “No comment”
These are the crooks in charge of our plant#democracy
— Little Collins CBD Dispensary (@little_cbd) February 17, 2021
The Kilkenny store was then raided in 2021 by the Gardaí who seized over €10,000 of raw hemp, infused oils, butter and tea products.
Speaking with Cannabis Wealth, Ferdia Mooney from Little Collins said: “It started about a year after we opened when we just had the Galway cafe and office. There was a lot of CBD flower coming in. Sometimes things aren’t packaged properly because the suppliers can be used to sending them to parts of Europe where this is fine. So the documentation will be in the box, customs will open it and pass it through. However, that doesn’t happen here.”
He added: “We have a problem where we really have to stress to suppliers that things need to be triple-wrapped and packaged properly. We had one supplier who didn’t wrap properly and it was caught by customs immediately. That triggered the first raid.”
Although the raids have slowed down, Ferdia highlighted that the effect of the raids has been problems with stock.
“The last raid we had was around this year. The frequency came in waves where we had a few months of being okay then there would be a raid, seizures than the same at a different premise. The knock-on effect is that we don’t have the products to sell so business is tougher. Between that and the rising price of fuel, it’s having an effect on our business. It seems they want to disrupt us as much as possible.
He explained: “We got lucky in the sense that we built up this strong infrastructure already. So once the raids hit, we were ready. If my shop is raided in one location then I can send stock to another ready for the next day. It’s been difficult, but they chose the wrong company as we are very stubborn.”
Social media support has been vital for lifting staff morale and also, highlighting the issues the store owners are facing.
“Customers are still coming by and going to the cafes, especially after there has been a raid. Social media support has gone through the roof. I think most customers understand what’s happening. It’s just so unjust as big stores aren’t being raided. Customers understand that this will affect everybody as they will just keep doing it and we will be left with just pharmaceutical companies which no one wants.”
The uncertainty around selling CBD in Ireland makes it difficult to make long term business decisions. Especially as Little Collins is still waiting on a court case that has been delayed more than once.
Ferdia said: “It’s like a black cloud lingering over everything. We are pretty confident we are going to win but even if we don’t then it goes to the EU then it will be there. It’s just a matter of time. However, in the meantime, it affects simple things like tax. Do we pay tax for a year if we are going to be shut down in February? Do we sort phone plans for the year? It makes working life really difficult.”
Mark Jenkins is the owner of Releaf Cafe in Dungarvan and Clonmel in Tipperary. He moved into the CBD industry after studying business in college and identifying that CBD sales were on the increase in Ireland. He has experienced a high amount of raids on both his business and his home.
Mark said: “We’ve had about ten raids now all together between the shops and our house. I’ve been getting blocked in on the roads too just so a Garda can say hello. It’s more intimidation. To tell someone to get out of the car to be searched because you own a CBD shop, to me is wrong.”
High Court starts today .
It’s taken me 2 years ,10 raids & over €100k to enforce my legal right as Irish citizen to earn a living & have privacy in my own home .
End it Near 🙏.
Why did it come to this @FrankFeighan @gardainfo @lukeming @DonnellyStephen pic.twitter.com/1MACaeMpCQ
— ReLeaf (@ReLeaf19) November 15, 2021
He added: “I go over to the UK to pick up stock a lot. I got pulled in by Irish customs the last time where they searched my van. They had no problem with it being CBD but it’s the local gardaí who do. It’s because they can’t differentiate between the two different products. It’s not easy as we have over €100,000 worth of products taken from us.”
“I’m actually suing the state to say what you are doing is illegal. I have experts coming from Sweden and the UK for the case where we have to prove that we are not guilty. We’ve done everything we can as a vendor but the court has to decide otherwise we are going to Europe. We know we are 100 per cent legal but is the Irish law that’s the problem.”
Mark highlighted that this could have a huge effect on the country in terms of upgrading facilities.
“We were in the district court trying to get our case held. They wouldn’t put the order in place so we are waiting for the high court. If the order had been put in place then a lot of cannabis cases in Ireland would have to be put on hold until mine is done as it shows the testing is inadequate. It could cost the state millions because they have to change the whole testing facilities.”
The effects of the raids are not just on stock or on time spent preparing for court cases. There has been a mental health cost.
Mark explained: “They came into the house then the last time, they took me down to the garda station just to hold me in a cell. They weren’t even doing any questions that night but it was just to rattle me another bit.”
D’Hemp shop in Cavan is also challenging the high court in Ireland about the raids. Denise Lynch was raided in September 2021 where several products were seized. As with Little Collins and ReLeaf, all products were legally sourced. Her home and car were also searched.
Denise decided to open her store after she experienced the benefits of CBD for her arthritis pain. Although she had heard about the controversy in Ireland surrounding the 0.2 per cent THC levels and the seizures, she didn’t expect to be raided. She was surprised to be handed a notice to say the premises was being searched under the misuse of drugs act 1977.
Denise said: “They raided my home and my car on the street. They were here for five hours and this is a small business. They were in my home for a long time while my husband was working, my kids were at school and I was here. So there was no one home at the time.”
“It was frustrating because we weren’t doing anything wrong yet we were treated like criminals. It was upsetting for that reason. It’s a small town so people are thinking, well if the gardaí are there then she must be doing something illegal. It brought a bad atmosphere to the place and that’s one of the main reasons I am fighting this. I want to clear my name because we are doing nothing illegal.”
Since news of her legal battle broke, Denise has received an overwhelming level of support from customers and other CBD sellers. She hadn’t properly realised the scale and potential of the case until she was contacted by so many people.
“I’ve been getting so many emails, messages and phone calls from people I don’t even know. They have been so supportive and want me to do well. Other stores have given me a message of support through social media. Some of the other companies have their own battles going on and they are really good people who genuinely want to help others. It’s been really tough on everyone including the farmers.”
When it comes to change, Denise highlighted that what is needed, is clarity.
“It was said to me that I could be prosecuted over this as the products were sent for analysis with under 0.2 per cent THC. I raised it to the garda that in the EU, I am allowed to sell that amount. His reply was that, well, you’re in Ireland.”
She added: “We are part of the EU. This needs to be sorted and we need to realise we have rights as EU citizens. What we need is clarity from the government. We need to know that they are going to stop coming into companies using the misuse of drugs act.”
Linneo Health explores trends in medical cannabis
Linneo Health CEO shares his thoughts on future trends in the cannabis industry.
CEO of Linneo Health, Don Bellamy, spoke to Cannabis Wealth about the company’s unique capabilities and future trends in the industry.
Spain-based Linneo Health, which is focused on the research, manufacture and supply of medical cannabis flowers and extracts, recently had its Good Manufacturing Practice (GMP) certification renewed.
The renewal development will allow Linneo to continue with its research into medical cannabis along with the cultivation and supply of flowers and extracts to pharmaceutical partners.
Linneo’s has a heritage of pharmaceutical expertise, with 90 years of experience operating in the narcotics industry. Its pivot into the medical cannabis industry means it is able to create premium, medical-grade cannabis extracts from its state-of-the-art manufacturing facility based in Murcia, Southern Spain – removing the need for outsourcing.
“We consider ourselves to be the leading, vertically integrated supplier of primary materials to the cannabis industry. We do everything from cultivation to processing to extraction, and we supply to the specifications of customers strictly for the medical sector in regulated countries,” said Bellamy.
“We have EU GMP certified manufacturing, and we supply cannabis flowers, extracts and products to our partners. We have four hectares – 40,000 square metres – of greenhouse GMP processing capabilities, as well as extraction facilities, and feel that we are the ideal partner for the medical cannabis business.
“There are all sorts of different licenses and we pretty much have them all, including GACP certification for cultivation, GMP processing certification for the finished flower product that we make and we have now we have been certified for good laboratory practices.
“Inside our facilities, we have a state-of-the-art laboratory where we are able to do, in-house, all of the analysis verifications that are required to certify our product as EU GMP compliant, and compliant for many other geographies around the world. EU regulations are strict, but actually, some countries around the world ask you to test for certain things that the EU doesn’t ask us for – like certain pesticides.”
Advanced flower capabilities
Linneo has its own database of genetic material which it uses and makes available to its clients around the world.
Through this capability, clients have the option to purchase one of Linneo’s varieties of cannabis which is already available on the market, or, to work with the company to create varieties that are not on the market.
“We have the capability to cultivate and look after our client’s own genetic material as well. So, if they choose to do so, we are fully equipped to be able to receive the genetics and produce for them.
“I think that the ability to be able to do both of these things I think makes us unique.
“We are not aware of anybody who is a supplier of primary material. Our expertise is in production, processing and primary product packaging at this moment.”
Trends in the medical industry
Bellamy highlighted the increase in popularity of cannabis extracts, and that the company’s heritage means it can leverage chemical infrastructure to apply in the production of cannabis extracts.
Bellamy said: “Our extraction capabilities with our partner will allow us to be able to move forward from dried flowers into oils, which the market is moving to now. There is a lot of interest in extracts with a lot of different companies trying to set themselves up in extracts.
“You can see, for customers, the obvious appeal of ingesting a medicine in a form which is much more normal and appears more like a controlled medical substance. In the UK market, for example, there is a bit of an issue at the moment with doctors not prescribing and I think that is a lot to do with not being comfortable prescribing cannabis flower and people smoking or vaping them.
“I feel most people trying to get into this business are discovering the high barriers of entry which exist to be able to set up to be able to do this properly. We speak to lots of people who say that they are into extracts or they can produce extracts, but in reality, are not able to produce.
“The majority of these people at the moment are starting up their operations. We are able to leverage the chemical industrial heritage we have, using a lot of the expertise which has been accumulated over the past to produce a soon-to-be, we hope, GMP-certified extraction.
“I think it’s up to us to find ways to make medical cannabis treatment more normalised for patients and one of the ways to do it is through industrial extracts.”
Looking to Europe and the globe
Linneo supplies medical cannabis products to customers who act in geographies where regulation allows them to. It currently has a European base and a lot of its business is still European-focused, says Bellamy.
“The fact that we are based in Europe provides us with a really powerful platform to be able to serve European markets. For example, Germany, the UK and beyond. But we don’t limit ourselves only to that. We have customers in Israel and we are looking to expand to the other markets which are in a position to take up.
“We don’t sell at all in our home market, as the market that we happen to operate in doesn’t have a medical cannabis law. So, as a result of that, we don’t supply to Spain – all of our product is exported.
“Spain is one of those markets around the world that is reviewing what it is thinking on medical cannabis right now, and we would love to support not only the Spanish government but governments around the world to find a way to make these treatments available to patients.
“At the moment, it’s a question of regulation. There is active debate in Spain, as there is in many other European markets.
“We hope that they will reach the right decision for patients as it is about giving them a way to access quality medicine as patients in the UK, in Germany, in the Netherlands and Denmark, for example, are able to.”