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Cannovum Cannabis AG Sees Cultivation Alliance Expand Rapidly Following Operational Split

Cannovum Cannabis AG has today announced the further expansion of its Anbau-Allianz (Cultivation Alliance) for recreational cannabis, as it prepares itself to capitalise on the recently announced German draft bill.

The German cannabis operator has welcomed biodegradable plant pot producer Pottburri GMBH as a new partner to its Cultivation Alliance, which will focus on providing professional products and services for Germany’s upcoming cannabis cultivation clubs.

It comes just weeks after Cannovum announced significant changes to its operating structure, effectively splitting its medical and adult-use focused business arms.

While many industry stakeholders have criticised the recent draft bill amid accusations of ‘overregulation’, Cannovum Cannabis’ CEO Klaus Madzia tells Business of Cannabis that ‘for us, it’s amazing’.

Cannabis Alliance

Cannovum announced in February this year that it was set to become a founding member of a cultivation alliance for adult-use cannabis in Germany.

Amid the expected regulatory landscape of the time, which stipulated that all German adult use cannabis must be domestically grown, the alliance was initially established to create a network of companies that could ‘meet the demand for high-quality legal cannabis’ grown in Germany.

However, following the announcement from the German Health Minister in April which rolled back on plans for a commercial adult-use market in favour of launching Malta-style cannabis cultivation clubs, Cannovum’s alliance pivoted.

“The goal is to actively shape the future of cannabis legalisation in a sustainable and ecologically valuable way and to provide high-quality and controlled cannabis products with the upcoming legalisation,” it said at the time.

Pottburri, the latest addition to the organisation, has reportedly sold over 10m of its biodegradable pots to consumers across 10 countries.

It marked the latest in a string of additions to the organisation in recent weeks, after partnering with Osnabrück University of Applied Sciences on July 07.

The partnership is set to focus on ‘research and development in the field of cannabis plant production systems in Germany’, utilising the University’s existing research projects.

Days earlier, the company announced that Benedikt Baum, whose family business is one of the most important horticultural companies in Germany, and Dominik Baum, currently active in modern fruit vegetable cultivation with LED lighting, had also joined its association’s ranks.

Company Split 

As Business of Cannabis reported last month, as part of its efforts to be ‘fully focused on the upcoming legalisation of cannabis in Germany’, Cannovum announced a separation of its operations.

Founder Pia Marten will now lead the ‘outsourced’ medical cannabis offshoot ‘Cannovum Health eG’.

As part of a ‘management buy-out’ Ms Marten will leave the board of Cannovum Cannabis AG, handing the reins over to the former CMO, and new CEO Mr Madzia.

He told Business of Cannabis that while he ‘loved working with’ and ‘respected’ Ms Marten, ‘at some point she decided she wanted to really focus on the medicinal side of things’, a choice he says was prudent given the upcoming potential growth in the market as cannabis is removed from the list of narcotics. 

Cannovum Cannabis AG now owns a 25% stake in Cannovum Health eG, and still owns most of the trademarks and brands.

“It makes sense to have an entity professionally on a managerial level to completely focus on the medicinal market because the medicinal market might be in for some growth. The flip side of that is that now we have a dedicated team that wakes up in the morning and thinks about legal.”

Following the split, and the fall in share price endured after the new German strategy was announced in April, Cannovum is also planning a 5:1 reverse stock split, putting the company ‘in a position to raise new equity by issuing new shares above the calculated par value’.

Draft Bill

Contrary to a number of German peers, who have repeatedly suggested that the first pillar is ‘disappointing for business’, Mr Madzia said he was ‘super happy’ with the developments.

“Any step forward towards legalisation is a good step. A lot of people don’t understand how difficult this is in this political environment in this market.

“I’m happy because this is a chance for family owned and traditional growers here in Germany to explore the market, to make it safe and reliable without being outgunned overnight by huge companies with deep pockets.”

He added that he believed it would be years before importation for adult-use cannabis would be allowed in Germany, but until then ‘it’s important to cooperate and strengthen local growers and communities to provide safe, secure, high quality premium product.’

“That’s what we’ve always been for. The one thing that I would love to change is to help the clubs to work more closely with professional growers.”

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