Cronos Group Inc., which owns or has interest in several Canadian medical cannabis producers including Ontario’s Peace Naturals, announced today that it has entered into a strategic distribution partnership for cannabis with an international pharmaceutical manufacturer and supplier for distribution in Germany.
The supplier, Pohl-Boskamp, distributes products to over 12,000 pharmacies in Germany. Under a five-year exclusive distribution agreement, Cronos’ global subsidiaries will supply Peace Naturals branded cannabis products to Pohl-Boskamp for distribution within Germany’s expanding medical cannabis program.
Germany’s medical cannabis market has been growing as laws there have changed to allow for easier access. That, combined with a population of over 82 million and a medical cannabis program that is covered by insurance, makes Germany an attractive market for Canadian cannabis producers. Peace Naturals had a previous supply agreement with Pedanios, a licensed medical cannabis wholesaler, and other Canadian cannabis companies like Canopy Growth and Aurora have been securing deals in the country, as well.
Cronos plans to begin shipping product to Pohl this quarter and will terminate all other existing German supply agreements following this announcement.
The deal will initially only include sending dried cannabis flower to Germany, but there are plans to send other products in the future, says Cronos CEO and Chairman Mike Gorenstein. Shipments will initially be coming from Peace Naturals here in Canada, he explains, but long term, the company plans on building out a facility in Israel to supply foreign markets.
This ability to supply foreign markets with products grown outside Canada helps ensure that Canadian patients’ supply is not compromised by the company’s expansion, explains the CEO.
“If you look at any given time at our product menu, we always have pretty decent availability. When we do our forecasting in our supply, we always make sure that we have enough supply for our current patient base, and we usually add a growth percentage to that to make sure the supply will be there for them,” says Gorenstein.
“But long term, we’ve started building in Israel already and that product is meant to go to these international distribution channels. It’s easier to scale up, and cheaper and more affordable to scale up in some of these other countries because of the climate. So we’re basically starting and building the relationships with the supply now, but that supply is ultimately meant for Canada.
“We focus on medical patients. We’re building this model to always be medical so that patients come first. Canadian patients come first.”
As for how that dedication to patients can be managed as the Canadian domestic market expands to allow non-medical access, Gorenstein says Cronos is focusing on developing distinct recreational and medical brands via their two main companies, Peace Naturals in Ontario and OGBC (licensed for production in 2014, formerly In The Zone) in British Columbia, with the latter being a recreational brand and the former remaining a medical brand.
“Peace Naturals is and always will be a medical company,” says Gorenstein. “That’s full stop. What we’re looking to do is build long term relationships with patients so that when things transition to rec, these are still medical patients and we’re treating them like it.
“Part of why you don’t hear so much about [OGBC] is whatever’s grown there, we sell to Peace Naturals and Peace Naturals sends to patients. But long term, recreational supply, recreational branding, positioning, people we hire or that are interested in recreational or are passionate about it, they are based out of OGBC, and people who are passionate and focused on the medical industry are at Peace Naturals. So there’s no crossover where something is suddenly turning into a recreational brand or becoming a recreational brand. That will all happen at OGBC.”
Gorenstein says deals like this one with Pohl-Boskamp that will expand the Canadian market and are a big step for Canada, for medical cannabis, and for cannabis access in general.
“I think this is a big step to getting big pharma to recognize cannabis is a real, legitimate medicine, and putting their name behind it is huge. This is what we’re most excited about.
“There’s obviously people who can complain about nuances of the regulations, but it is by far the most comprehensive, advanced standard for legalizing cannabis, and it allows companies to develop as producers, as innovators here in Canada and then, whether you’re exporting flower itself, or your knowledge, or your methods to other countries, these are ultimately Canadian companies that are spreading.”
Pohl-Boskamp is a privately owned business that has been active in the international pharmaceutical market for 182 years with commercialized products in more than 45 countries. Through close collaboration with its partners abroad, Pohl-Boskamp focuses on developing and marketing products that positively impact patients’ quality of life. It operates in numerous healthcare sectors including pneumology, urology, parasitology, cardiology, gastroenterology, sleep disorders and dermatology.
"Pohl has been a reliable partner for pharmacies for many years. Now we are excited to have Cronos as a partner and supplier of cannabis for the German market. With our new partner we are confident that we will provide reliable distribution of cannabis for German patients," adds Gorenstein.
Featured image by