ONE of the UK’s newest medical cannabis companies is set to launch its own medicine in a move which will see it become the latest vertically-integrated market player.
Akanda has been spun out of US entity Halo Collective and incorporates UK import and distribution business Canmart and its Bophelo African cultivation operations.
Kent-based Canmart was founded by David Keith Dean and Darran William Quinn, shortly after the UK introduced its medical cannabis regulations in 2018.
It was bought by Canada New Stock Exchange-listed Halo Collective in November last year in a share-based deal as it looked to gain a European foothold.
200 Hectares In Africa
And, it has now been hived off into the new Akanda entity along with Halo’s African cultivation facility which produced its first harvest in 2019 and has approvals for 200 hectares of grow in Lesotho.
The new entity is preparing to introduce its first medical cannabis products into the UK and European markets.
Its CEO and Director Tej Virk is a former investment banker with BMO Capital Markets, who joined Canopy Growth Corp in 2019, as its Managing Director of Europe.
Mr Virk later joined Khiron Life Sciences as President of Europe establishing the company’s European medical and consumer packaged goods business.
He said: “While UK still nascent and regulatory complexities controlling market opportunities still exist, with 1.4m people accessing cannabis for medical cause Akanda believe it’s a case of tapping into that market.
“In the UK there is a cost for cannabis medicine and what we aim to do is to ensure that cost is in line with affordability. As a company with the ability to produce high-quality cannabis at a satisfactory price we can achieve that.”
He highlighted the benchmark for dry flower inhalation on the black market of around £10 a gram. Project 21 offers subsidised cannabis at £5 a gram – around £150 a month – and Akanda’s product will pan out in the middle – ‘a few hundred pounds a month’, he says.
More Studies Needed
Mr Virk was heavily involved in the initial stages of the Project 21 and believes it, and more studies are needed to convince clinicians of the validity of medical cannabis and improved access through the NHS.
He went on to say Halo’s acquisition of Canmart was part of the ‘global land race for cannabis and that vision entailed having a foothold in the UK’.
He added: “We are looking to scale in the UK with more partnerships with global LPs, with the medical cannabis clinics and when our product enters the supply chain – fantastic! There will be even more patient choice and access.”
In 2020 Bophelo started the certification process required to achieve European Good Agricultural and Collection Practices (EU-GACP).
This certification, expected in the coming months, will allow Akanda, through its EU-GMP partner in Malta, and then via Canmart, to distribute approved medicines to the UK.
It has 200 hectares (494 acres) of conditionally-approved canopy grow with a small portion of that currently under cultivation using Californian firm DNA Genetics’ seeds.
Its first harvest was in 2019 Europe and its first ‘significant harvest’ of between five to 10 tonnes is set for export in early 2022.
German Export Market Open
Mt Virk added: “With MG Health exporting from Lesotho to Germany this is a a massive de-risking and a seminal event – with Germany being one of the strictest markets in world.”
He said it has multiple buyers from all over the world for its high-quality inhalation flower with a cultivation cost of around 50 cents a dollar.
Akanda places a significant emphases on Environmental and Social Governance having set up a charitable trust which has built a school in Lesotho. It pays its workers three times the national average, and is looking to achieve the UN’s Sustainable Development Goals, he said.
With around 100 employees Akanda is a medium-sized company in the cannabis field with the ambition to develop along the pharmaceutical route; manufacturing in Africa and importing and distributing across the globe, as regulations allow.
Vertical Integration Or Specialist?
The Halo Collective is a leading player in the west coast American market and features one of Africa’s most successfully businesswomen Louisa Mojela as its Executive Chairman & Director of Halo Collective
In 2000, Ms Mojela was selected as one of 40 women from different continents and countries for the ‘Leading Women Entrepreneur of the World’.
Mr Virk believes there is still space in the cannabis markets for varying business types.
He said: “As someone who’s worked with a massively global vertically-integrated business and a complete asset-light company. I believe the industry’s development, for now, will be something in the middle.
“It really depends on how many markets you are after. The distinction between recreational and medical is a more important distinction – these are two end markets with different margin profiles and that’s difficult to reconcile.
“Over time, in the medical market, splitting-up the value chain will be the way forward, there will be specialisation and it will look more like the pharma business.
“But, in the US and Canadian recreational markets we are seeing specialist distributors which are already beginning to look a lot like CPG distributors. There are plenty of efficiencies to be gained with that model.”
