Canadian cannabis producer Organigram Global has announced plans to acquire Germany’s ‘second-largest’ medical cannabis company, Sanity Group, in a deal valuing it at up to €250m, in what is believed to be the largest acquisition of a German cannabis business by a North American operator to date.
The deal marks the latest and most significant consolidation event in the booming German market, as North America’s largest cannabis operators accelerate their expansion in the European medical cannabis market.
It also marks the culmination of a business relationship which has gradually expanded in scope since its inception in 2022, when British American Tobacco (BAT) led Sanity’s €37.6m Series B fundraise, having already taken a near-20 percent stake in Organigram the previous year.
The tobacco giant’s fingerprints are visible throughout the proposed acquisition, and BAT has opted to receive Organigram shares rather than cash for its stake in Sanity, while simultaneously injecting a further C$65.2m into Organigram to help fund the deal.
“The proposed acquisition of Sanity Group marks a pivotal step in Organigram’s global expansion strategy as a leader in the rapidly expanding cannabis industry,” said James Yamanaka, the newly appointed CEO of Organigram, who took the role in January having previously served as Global Head of Strategy at BAT.
“This transformational acquisition will bring together two market leaders, extend our commercial footprint into Europe, and strengthen our competitive edge in the world’s largest federally legal cannabis markets.”
The deal
Under the terms of the agreement, Organigram will pay Sanity’s shareholders upfront consideration of €113.4m, comprising €80m in cash and €33.4m in Organigram shares.
A further earnout of up to €113.8m, predominantly in shares, is tied to Sanity’s financial performance over the twelve months following the deal’s completion, bringing the total potential consideration to €250m.
Upfront consideration shares are priced at C$3.00 per share, representing a 71% premium to Organigram’s closing price on the Toronto Stock Exchange as of February 17.
The cash component is being funded through a combination of restricted Jupiter fund cash, a new C$60m senior secured credit facility with ATB Financial, and the C$65.2m BAT private placement.
BAT, which holds stakes in both companies, will receive Organigram shares in lieu of cash for its interest in Sanity, effectively seeing it exit one investment and deepen another.
Organigram first invested in Sanity in June 2024, deploying €14m from its Jupiter strategic investment pool, which was itself created using proceeds from a C$124.6mBAT investment in November 2023, in exchange for a minority stake and an expanded flower supply agreement. This deal would convert that foothold into full ownership.
To receive the full €250m valuation, Sanity is required to hit net revenues of €143m and positive EBITDA of €20m over the following year. As a condition of any earnout being paid at all, Sanity must generate sufficient EBITDA to be self-sustaining on a cashflow basis.
Completion is expected in the second quarter of 2026, subject to shareholder approval, foreign direct investment clearance from the German Federal Ministry for Economic Affairs, and TSX approval.
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Market valuations lifted
When High Tide acquired a 51% stake in Remexian Pharma in September 2025 for €27.2m, implying a full equity value of around €53m, the reaction across the German market was notable.
For a profitable wholesaler generating annualised revenue of €70m and adjusted EBITDA of €15m, the implied multiples of under 1x revenue and roughly 3.6x EBITDA were seen by some in the industry as a fire sale.
More significantly, they anchored expectations downward for German cannabis M&A at precisely the moment the market had been anticipating a consolidation wave, raising uncomfortable questions for companies that had commanded higher valuations on weaker fundamentals.
The Organigram-Sanity deal shifts that dynamic in the other direction. The €130m upfront valuation, around 2.2x Sanity’s 2025 revenue of €60m, is a much more generous valuation. Sanity’s recent financial performance makes a credible case for this premium, however.
Sanity grew annual net revenue from €9m in 2023 to €19m in 2024 and €60m in 2025, a near-sevenfold increase in two years. The final quarter of 2025 alone generated €19m, suggesting the run rate entering 2026 is considerably higher than the full-year figure implies.
Gross margins improved from 15% to 47% over the same period, and the company generated positive EBITDA in 2025. Organigram is projecting Sanity’s net revenue to average around €25m per quarter for the final three quarters of 2026.
The higher multiple also reflects what Sanity is, rather than simply what it earns. Unlike Remexian, which operated primarily as a wholesale distributor, Sanity is a vertically engaged platform business, with medical brands, a pharmacy distribution network, a logistics and production facility near Frankfurt, and, through its Grashaus Projects subsidiary, the operation of Europe’s first two legal cannabis speciality stores as part of a scientific adult-use pilot in Switzerland.
Canadian dominance grows
For Organigram, the acquisition forms part of its broader strategic focus on international expansion, largely bankrolled by BAT.
When BAT made its initial £126m investment in Organigram in March 2021, the two companies committed to a joint Product Development Collaboration focused on next-generation cannabis products, establishing a Centre of Excellence at Organigram’s Moncton campus.
The PDC has since generated a pipeline of emulsions, novel vapour formulations, and innovative dosage forms described as in late-stage development. This will put Organigram in a prime position to launch these products into the European market.
The November 2023 follow-on BAT investment of C$124.6m was more explicitly international in intent, with C$83m ringfenced in the Jupiter strategic investment pool for overseas expansion.
Jupiter’s first European move was the €14m minority stake in Sanity in June 2024, accompanied by an expanded flower supply agreement under which Sanity committed to sourcing significantly higher volumes of Canadian flower.
“Together we are poised to unlock significant growth opportunities, especially as new European markets open to both medical and recreational cannabis programmes,” said Finn Hänsel, CEO of Sanity Group, who will remain in post following completion.
