Grow Group and Sanoid Isolates will establish a pan-European logistics hub for medical cannabis, says Harry Wildschut, CEO and co-founder at Sanoid.
London-based biopharmaceutical company Grow Group recently acquired Spain-based premium medical cannabis producer Sanoid Isolates in a move that will help establish an entire supply chain for medical cannabis products.
Grow Group, which aims to bring medical cannabis products to patients at an affordable price, made the acquisition as part of its expansion strategy into international markets.
Sanoid Isolates is currently working on a high-tech greenhouse near Sevilla, Andalusia, with an ambition to grow and produce high-quality cannabinoid extracts and purified isolates, having received a production license by the Spanish authorities to grow a validation crop in 2019 to certify the extraction facility, which aims to be finished by 2022.
A budding relationship
With a background in marketing, sales and general management in manufacturing companies internationally, Wildschut joined Sanoid in 2018 – which was born out of sister company, Córdoba-based Phytoplant Research – one of the first companies to conduct research on medicinal cannabis in Spain.
“In 2018 I visited Córdoba for the first time to understand what was happening here and what kind of research they were doing – the year which was also a famous year for the cannabis industry when Canada legalised cannabis. Prior to that, in early 2018 I picked up on the idea of creating a commercial company, and so, presented the business plan to my shareholders.
“Together with the Phytoplant team we presented our licence application to the Spanish health authorities, and immediately – as confident as we were to get the licence – I started building the cultivation facilities near Seville. We got a licence in June and we did our first trial crop in the second half of 2019, and we were about to start building the extraction facility.
“Up until the point of time where we had cultivation facilities up and running, the total investment was around five million, but in order to build the extraction facility, we would need another 10 million to get operational.
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“We decided we needed investors or potentially even new owners who could take Sanoid forward in its next step into GMP manufacturing. Altogether, it took about nine months for Grow to close a final deal two months ago – so, I’m extremely pleased with Grow as my new shareholders, and with Grow being in a position to actually fund the build of our GMP facilities.”
A unique position for cannabis cultivation
Wildschut says that Sanoid is in a unique position for its cannabis cultivation activities thanks to the ideal growing climate in Andalusia, and with Sanoid being one of a handful of companies to receive a licence from the Spanish Drug and Healthcare Products Agency (AEMPS).
“We are in a very unique position because, in Spain, only three operational licences are in place. There are two or three runners up if you like, including Sanoid, which gives us a fairly unique position, given the fact that we have one of the most ideal growing climates here in Andalusia.
“Supporters of indoor growing will tell you it allows for four or five crops in a year and allows control of all the elements to a maximum because it is in a closed building using artificial lights. However, the single biggest downside of that, is that it is incredibly expensive and unsustainable, given the huge amount of electricity you need.
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“When I started Sanoid, my view was that, first of all, we are going to grow to extract, because, in my view, patients are not going to continue to consume plant material. Doctors are not going to be comfortable prescribing plant material as a medicine, given its inconsistency. So, sooner rather than later, there will be products available based on cannabis that will be drinks or pills or creams – which will be much more comfortable for doctors to prescribe – so that is how I started Sanoid.
“And, that’s why we grow with the natural sun, predominantly for extraction. If you grow for extraction, the size of the bud and the smell and flavour is not that important, and we already see that trend growing very quickly already in Germany, which is one of the biggest medical markets. The good thing about our setup in Andalusia, is that the typical cost of one gramme of indoor material is around one euro and, for that one gramme of material here in Seville, it is 10 cents.
“I’m a very strong believer that we are now in a position with Grow Group to reduce the end price for patients, make it a lot more affordable and reach a much larger audience of people who will benefit from cannabis medicines.”
Cost-effective medicines for European patients
Grow’s relationship with Sanoid gives the company the ability to control its own supply chain, and, Wildschut highlights, once further markets open up across Europe, the pair will be able to move into those markets at a fast pace, with the confidence of supplying high quality products at an affordable price point for patients.
“Hopefully, we will be one of those few, inspiring examples of cannabis companies serving patients European or globally,” says Wildschut.
“The reason why we have this unique licensing in Spain is because of, first of all, our Phytoplant legacy – the fact that we have European registered varieties – which is mandatory to get a licence in the first place. But secondly, a cultivation licence as such, is not being granted in Spain – there are allegedly over 100 applications here in Spain for people who want to grow, legitimately, but the Spanish government only allows cultivation for GMP processing. So you need to have GMP processing facilities in order to cultivate. But we have this tremendous ideal climate here in Andalusia where we can grow very cost efficiently.
“Our next step is to actually get those GMP facilities. We’re going to take a two-step approach. The first one is that we’re currently applying for a cultivation licence to grow validation material for a GMP flower facility – we are going to build our extraction factory, but also a dedicated GMP drying processing and packaging area for flower.
“Seeing how there is still an urgent need for good GMP flower, we do believe it’s worth the investment to be able to deliver that. That’s something we are looking to put in place in the first quarter next year, so that from next year onwards, we will be in a position to provide smaller quantities of GMP flower for the German and UK markets.
“At the same time, we will start a phase two, which is the build out of our extraction and purification facility, which involves heavy equipment and machinery. By the end of next year we will be in a position to certify our extraction facility and that means that in 2023 we should be in a position to grow our first commercial crop in our greenhouses and start producing our first products from our factory to go to markets, whether it be GMP flower or extracts for products with the famous entourage effect, or whether it be isolates as API’s to be used in producing pills or lotions, for example.
“There are two further steps we are now seriously looking into. The first step, is to actually produce those pills and creams ourselves, and the other part is that Grow is now considering putting all of their logistic manufacturing facilities here in the south of Spain where we will turn out to be the pan-European logistics hub to supply all the future Grow companies – in Germany, the UK, and France, for example.
“So, that is already where our strategic model is emerging on how we could serve the whole of Europe, with sales offices all around Europe by Grow with our logistic manufacturing down here in Spain, in a very very cost effective manner.
“What we are of course hoping for is a continuous momentum, or perhaps even acceleration of legislation around Europe. What we see now is the inconsistency of legislation – in the UK for instance they allow to some extent sales to patients, but they don’t allow manufacturing or cultivation. In Spain it’s the other way around – we don’t have legislation to consume cannabis in Spain legally, medicinally or recreationally, but, there are a few companies who are allowed to produce an export only.
“I believe that Grow now is in a very privileged position, because I don’t believe cultivation in Germany or in Holland, or in Denmark or in Canada, is not sustainable. So I believe that, apart from politics, economics will drive to the model Grow actually incorporated today, with cultivation production in cost efficient locations and patient access locally.
“The whole regulatory environment is very important to further increase the acceptance and the availability of cannabis medicines.
“I have a hard time finding insurance for my cultivation facilities because cannabis is not recognised as an official crop yet. So insurance companies are reluctant to step into this, but also banks – although luckily we see some movement with banks that are willing to give credit lines to cannabis companies. The UK has now allowed cannabis companies to be listed as is the case in Canada, so, legislation, once that opens up, there will be much more ancillary businesses supporting our industry and ultimately with surprises coming down that really open the market to the many hundreds of thousands or even millions of patients will benefit from using medicinal cannabis.”
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