In the wake of the Cannabis Act announcement many of Canada’s licensed producers are considering expansion into the domestic recreational market, but Vancouver-based Aurora Cannabis has set their sights on bigger game. In one of the first deals of its kind, a Canadian cannabis producer has announced the acquisition of German cannabis firm Pedanios GmbH, a federally licensed import/export wholesale distributorship with customers throughout the European Union.
Legal cannabis is new to Germany, having very recently come into effect in March of 2017 after receiving unanimous parliamentary approval the previous January. The new law establishes a medical-use framework with pharmacies as the sole outlets for legal distribution.
Pedanios reported their monthly sales volume doubled immediately upon implementation of the new law, with gross revenues of approximately $1.5 million (CAD) in the last 90 days.
"This is a transformational acquisition for Aurora,” said Neil Belot, Aurora's Chief Global Business Development Officer, ”and a key step in our aggressive international expansion strategy. The transaction will ensure ongoing and increasing high quality product is available to fuel Pedanios' rapid growth, while positioning Aurora and Pedanios to seize upon opportunities together in Germany and the EU's emerging cannabis industry."
Aurora is set to retain all of Pedanios’ existing supply contracts, though that might prove complicated, as one of these existing supply contracts is with Canadian LP—and Aurora competitor—Peace Naturals.
Peace Naturals completed their first export shipment of medical cannabis to Germany in October of 2016, under a co-branded supply agreement they had forged with Pedanios.
Peace Naturals is a wholly owned subsidiary of Cronos Group, who, in December of 2016, bolstered Peace Naturals’ existing relationship with Pedanios by entering into an exclusive European supply agreement, which stated that for the initial period of three years Cronos would be the exclusive North American supplier of cannabis products to Pedanios for distribution within the European Union.
With over two and a half years remaining on that exclusive supply agreement, Aurora may have to honour the remainder of the contract before the first gram of Aurora’s own products can be sold through their newly acquired distribution network. That would make establishing production facilities outside of North America a likely priority for Aurora.
In the meantime, Aurora is in the process of expanding its Canadian production output by increasing its current operational space fifteen-fold. In addition to their extant 55,200 sq ft facility in Cremona, AB, a second, 800,000 sq ft facility known as ‘Aurora Sky’ is being constructed at the Edmonton International Airport. A third facility, yet to be completed, has been acquired in Pointe-Claire, QC, establishing a 40,000 sq ft beachhead for Aurora in Quebec.
"Canada and Germany are among the world leaders in medical cannabis,” said Patrick Hoffmann, Pedanios' Co-Founder and Executive Partner. “As trailblazers in our respective countries, Pedanios and Aurora are well positioned to continue to drive innovation, expand our distribution network, and capture significant global market share."
Featured image by Plantlady223.