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New major European cannabis player set to emerge as Lyphe Group announces new M&A deal

A new European cannabis powerhouse is set to be created in the coming months as the UK’s largest medical cannabis player announces plans for a major acquisition. 

London-based Lyphe Group has signed an ‘agreement in principle’ to acquire international cannabis production and distribution company Materia for an undisclosed sum. 

The tie-up will not only strengthen Lyphe’s dominant position in the UK medical cannabis and CBD market, but open the door to Europe’s largest market, Germany, two markets Curaleaf CEO Boris Jordan recently said he was ‘super excited about’. 

It marks the latest evolution in the rapidly developing European cannabis space, with the spread of cannabis liberalisation across the continent seeing it has become ‘potentially an even bigger opportunity’ than North America. 

Major European Player

Lyphe Group was founded by Rob Reid and Stephen Murphy in 2018, shortly before the UK government legalised access to medical cannabis. The serial entrepreneurs will remain the largest shareholders after the acquisition of Materia closes. 

Lyphe is currently the UK’s leading operator, understood to represent approximately 40% of the medical cannabis market, which according to Prohibition Partners will see patient numbers climb to 30,000 by the end of 2022.

The company has expanded rapidly across its domestic market over the last two years with reported revenue growth of 250% in 2021. This was largely driven by the popularity of its telemedicine division The Medical Cannabis Clinics (TMCC), which is supported by Dispensary Green, a digital dispensary that allows both doctors and patients to track prescriptions. Alongside this, the group  also operates The Academy of Medical Cannabis, an e-learning platform that provides information and educational resources that doctors need to prescribe medical cannabis in Europe. 

In May this year, Lyphe secured £5m in a funding round which the company said would be used to finance its ambitious ‘scale-up plans’. 

The integration of Materia’s similarly fast-growing operations will significantly expedite this international expansion and strengthen current operations while importantly bolstering the enlarged group’s 2023 revenue forecast to £23m with underlying gross margin in excess of 50%.

Jonathan Nadler, CEO of Lyphe, said: “I am thrilled to announce Lyphe’s agreement to acquire Materia. I’m looking forward to continuing to better the medical cannabis industry across Europe. 

“Having a vertically integrated supply chain will have a massively positive effect on the industry, demonstrating our continued commitment to improving the patient experience and standards of the market.”

New Opportunities

Lyphe’s operational priority will be Materia’s Maltese facility, which achieved EU GMP approval in May 2021, and became the first company in history to export medical cannabis for sale in another country from Malta in June this year. 

Through this facility, Lyphe will be able to import GACP flower from an extensive global supply chain, process it into EU GMP certified medical cannabis and export it throughout Europe. 

It is understood the ‘state-of-the-art’ facility has the capacity to process 6,000kg of cannabis every year, representing potential sales of over €30m. 

Materia has distribution operations in Denmark and the UK but Lyphe will be most interested in its EU GDP (Good Distribution Practice) and EU GMP certified pharmaceutical wholesale operation in Germany which will enable the company to rapidly expand its operations in Europe’s largest cannabis market. 

While Materia has been distributing medical cannabis to German pharmacies for nearly two years, the first export to Germany from its Maltese facility just took place in June. 

Lyphe’s acquisition of Materia will become a significant milestone for the European cannabis industry.

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