Kanabo Group, the first medical cannabis company to IPO on London Stock Exchange, has signed a letter of intent to acquire Materia, a processor and distributor of medical cannabis and CBD wellness products across Europe.
Kanabo has been actively exploring new partnerships and opportunities to accelerate Kanabo’s growth and market penetration.
The company says Materia’s “complementary infrastructure will be crucial to expanding and strengthening” its existing supply value chain of medical cannabis and CBD products.
Materia has an established position in the European market, with subsidiaries in Malta, Germany and the UK.
Following the acquisition, Kanabo will control production, from the initial sourcing of raw materials and in-house manufacturing, all the way to distribution to pharmacies and the end consumer.
This includes direct entry into Germany, whose market size was over €200M last year, and is anticipated to remain the dominant market as the European market grows to a forecasted total size of €3.2BN by 2025.
Materia’s Maltese subsidiary, Materia Malta Operating, operates an EU GMP certified facility, well positioned for the processing of medical cannabis flower and oils.
EU GMP is considered the global gold standard for manufacturing pharmaceuticals and is a requirement for medical cannabis in most European jurisdictions.
Through this facility, Materia Malta is able to import cannabis flower from its global supply network of cultivators and process it into EU GMP certified medical cannabis for subsequent export to distributors across Europe.
Materia Malta also intends to utilise its facility and know-how to produce medical cannabis extracts. The facility’s current flower throughput capacity sits at a potential 6,000kg per annum, representing a possible sale value of €36M based on a blended average sales price across several key European markets.
Research conducted by Kanabo will be commercialised through Materia Malta’s facility, including formulas developed for Kanabo’s VapePod device and targeted to treat specific medical conditions such as insomnia, PTSD, neuropathic pain and anxiety.
In Germany, Materia Deutschland GmbH is a fully operational pharmaceutical wholesaler that has its EU GDP and EU GMP certificates, enabling it to import and sell medical cannabis products to German pharmacies.
Materia’s UK subsidiary operates in the wellness sector as a distribution platform, selling several leading brands through Handpicked CBD, one of the UK’s largest CBD e-commerce marketplaces.
Kanabo will leverage Handpicked CBD to acquire customers for its own line of CBD products and inform its future innovation pipeline.
Avihu Tamir, founder and CEO of Kanabo, said: “Materia’s unique innovative supply chain will provide strong distribution channels in the German market and offer new strategic partnerships with premium cultivators around the world.
“Together with Kanabo’s R&D and commercialisation capabilities, we will be able to develop new innovative delivery methods opening up an even bigger market potential. The enlarged group will become the biggest public cannabis company in Europe and will put us in a unique position as the multi-billion pound medical cannabis market starts to accelerate.”
Deepak Anand, CEO of Materia, said: “We are excited at the prospect of joining forces with Kanabo’s team. As the first medical cannabis company approved to list on the London Stock Exchange, Kanabo’s ambition to be a market leader matches our own and we believe that our combined infrastructure will generate significant value for our shareholders, partners, customers and patients.”
The acquisition will enable Kanabo to build upon the significant progress made this year.
This includes a supply agreement with Greek cultivation facility Hellenic Dynamic, a new EU GMP production line in partnership with Pure Origin and a first-of-its-kind production line deal with PharmaCann for VapePod cartridges.
The company also recently announced an expansion of its partnership with The LYPHE Group, facilitating the delivery of Kanabo’s medicinal cannabis formula to the UK this month.