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Thursday, September 21, 2023

US Cannabis Leader Backs German Operator

As Germany inches closer to a new age of cannabis policy, a company that has the backing of a prominent US-based executive shared its vision of a leading nation opening the doors to this drug market.

Niklas Kouparanis, CEO and co-founder of Bloomwell Group, told the Investing News Network (INN) that he felt incredibly validated when Boris Jordan, founder and executive chairman of Curaleaf Holdings (CSE:CURA,OTCQX:CURLF), signed on as a new board member with his company. The move was part of a US$10 million investment agreement led by Measure 8 Venture Partners, Jordan’s venture capital investment company.

“Having somebody like Boris on our board is absolutely, absolutely great,” Kouparanis said.

Kouparanis told INN he hopes to lean on the experience Jordan has had with evolving cannabis markets, as he pointed to the example of jurisdictions in the US transitioning from medical only to adult-use rules.

When asked about his intentions in relation to the public market and whether investors could expect to see a public listing for Bloomwell any time soon, Kouparanis told INN he is monitoring the situation but at this moment the company is not planning to go public just yet.

“If you look at the cannabis market in general right now… everybody’s on the downturn,” Kouparanis said. “We don’t think that it’s time right now to do that.”

Bloomwell is a holding company overseeing the operations of Algea Care, a telemedicine platform provider for medical cannabis patients in Germany. The company also holds cannabis distributor Ilios Sante.

Germany’s roadmap to adult-use legalization remains hazy

Germany legalized medical cannabis use back in 2017. Currently there is belief recreational use could be next as support from political parties across the board continues to mount.

“All three parties have also concluded that the current policy of prohibiting cannabis use is not working and have called for a new approach, namely legalization, decriminalization and regulation,” a report from DW indicated.

However, the German roadmap to legalization may not follow as straightforward a path as some stakeholders wished it would be.

“The parties that support legalization have big differences among each other,” Alfredo Pascual, vice president of investment analysis at Seed Innovations, told MJBizDaily in an interview.

Kouparanis said he expects Germany to eventually arrive at legalization, but it won’t happen overnight. When it comes to recreational sales, the executive said he sees it taking between two and three years for it to open up.

In its report, MJBizDaily noted that Germany is set to become the biggest medical market in the world by 2022.

Bloomberg News reported that despite the steadfast growth of the German medical cannabis market, approximately 0.1 percent of the country’s population have registered as cannabis patients.

Global cannabis investment landscape gains support

According to Kouparanis, the perspective surrounding the European cannabis investment opportunity is quickly shifting, and investor interest is rising due to the value projections for Germany and Europe at-large.

Curaleaf itself has not declared intentions about a European strategy, but it is clear Jordan has gained significant interest in what lies ahead in the continent.

For that matter, the rest of the US multi-state operators (MSOs) have not publicly stated what their own ideations or plans in regards to Europe are.

That may have something to do with the overwhelming interest and business strategy for the US cannabis sales landscape and the US’ potential to bring forth meaningful policy changes that could allow companies to operate more in line with other established industries.

Although US cannabis companies have been slow to set their sights globally, Canadian cannabis companies set up divisions across the world in order to show their support and interest for a global cannabis market opportunity. However, the companies failed to properly take into account the differences between global markets and Canada’s own, and this initial wave of expansion was not a success.

While a global conglomerate of cannabis may be a distant possibility, operators of different sizes are still targeting opportunities abroad.

In a recent interview with INN, the executive of a new Canadian entity spinning off from Halo Collective (NEO:HALO,OTCQX:HCANF), said it’s been a difficult process to see the Canadian market rebuild its global aspirations after the economic pressures seen in the cannabis investment landscape.

“We’ve now seen that retrenchment and now new players (are) coming in that definitely have more pharma expertise,” Tej Virk, CEO of Akanda, told INN. Virk previously served as an executive with Canopy Growth (NASDAQ:CGC,TSX:WEED) and Khiron Life Sciences (TSXV:KHRN,OTCQX:KHRNF) overseeing European operations.

Virk said that he sees a better future at hand thanks to a more honed approach from operators instead of a one size fits all mentality.

Europe in critical moment of increasing cannabis support

While the enthusiasm for cannabis legalization in Germany isn’t shared with everyone, the momentum seen in the country, as well as the rest of Europe, is undeniable.

At the end of October, Luxembourg went ahead and confirmed its plans for cannabis legalization, indicating it could become the first nation in Europe to do so. The decision must be confirmed in a parliament vote but may be heading the right way.

According to a CNN report, Luxembourg would make it so all adults over 18 could use and grow cannabis. Public consumption remains illegal despite the changes.

At the same time, Kouparanis told INN he wants to see more discussion of a framework beyond single nations legalizing the drug, but rather a roadmap to European Union law.

Investor takeaway

Europe could represent one of the most vital cannabis markets in the global landscape. It’s easy to see why so many stakeholders want to raise more attention to it.

As with other cannabis jurisdictions and investments, more policy wins may be needed to put the European investment story front and center in the eyes of cannabis investors.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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