CLEVER Leaves, a multinational global cannabis producer, has been granted a licence to more than double its cultivation facility in Portugal as it looks to Europe to help boost revenues after a difficult debut year as a listed company.
In December, the company announced that the Portuguese health authority Infarmed had greenlit the expansion of its cultivation facility by around 150,000sq ft, seeing its total footprint increase to nearly 260,000sq ft in the São Teotónio region.
Production on the expansion at its Portuguese facility, which currently exports to the UK, Israel, Australia and the US, has already begun and Clever Leaves expects a first commercial production to be market ready in the ‘second or third quarter of 2022’.
The major expansion comes less than a year after Clever Leaves secured its GACP certification and generated its first revenues from its Portuguese facility during the first four months of 2021.
Clever Leaves CEO Kyle Detwiler told BusinessCann that while its Portuguese facility is ‘a lot smaller’ than its facility in Columbia, which spans 1.8m sq ft and produces around 55% of the country’s cannabis exports, the ‘quality is a little different’.
The company hopes this expansion will allow it to secure a foothold in the burgeoning European market over the next year.
“With German legalisation and what’s going on with Switzerland, Luxembourg, and Holland, I think that low-cost, environmentally friendly, high-quality production in Portugal is going to start to become even more important.”
Mr Detwiler added he believed Clever Leaves was now ‘tied for spot two or three’ of the biggest cannabis operators in Portugal, alongside Canadian giant Tilray and EMMAC Life Sciences, which was recently rebranded as Curaleaf International.
First Year Trading On NASDAQ
The development of Clever Leaves production capabilities comes after a difficult first year for the multinational producer on the NASDAQ Stock Exchange, and marks the first of a number of initiatives it plans to roll out in 2020 in an effort to regain the enthusiasm of investors.
In late December 2020, Clever Leaves International completed a $205m merger with Schultze Special Purpose Acquisition Corp, creating the newly formed entity Clever Leaves Holdings, which launched onto the stock exchange under the ticker CLVR.
Clever Leaves issued just over 500k shares at a price of $13 each, allowing it to raise some $80m in cash to help the company expand its operations throughout 2021.
At the time, Mr Detwiler said in an interview with Cheddar he planned to ‘be very, very thrifty, very, very focused’ with the cash, adding that ‘if we can find interesting ways to augment the growth of our platform, we will strike when the iron gets hot.’
Not only did the company state it would use its cash sparingly, but it predicted breakneck growth throughout 2021, expecting revenues to hit $57m by the end of the year and EBITDA to cross the threshold into positive territory.
A year later Clever Leaves’ stock has plummeted by nearly 80% now sitting at just under $3 per share, while its financials have dramatically missed the ambitious predictions made during its IPO.
In its most recent quarterly results for the three months to September 30 2021, Clever Leaves says revenues increased just 3% year-on-year to $4m while its EBITDA losses nearly doubled from $3.7m to $6m.
Despite this, Mr Detwiler remained optimistic that ramped up operations in the cultivation capital of Europe should allow it to cash in on the growing opportunities outside of the South and North American markets.
“Europe is incredibly interesting because Germany is beginning to think about a recreational system that could create a huge wave, or it could be the first major domino to fall in Europe which could lead it to become as advanced as the United States cannabis market is.”
Mr Detwiler said one of the company’s ‘first priorities’ in 2022 was to ‘ramp up’ Clever Leaves’ new flower brand IQANNA which it launched in Germany ‘at the end of 2021’.
He added that the company was in ‘wait and see mode’ until there was ‘some sort of regulatory clarity’ on the German market, as issues like caps on THC levels would force it to ‘make some adjustments’ in order to establish a foothold in the recreational market.
Next Clever Leaves is hoping to put its stamp on another major cannabis market – Israel.
“I think the next area is we haven’t announced anything in Israel. I would like to have a partnership with an Israeli company publicly announced.”
During 2021, Clever Leaves also sold its first ‘products from Portugal to Australia’, a market Mr Detwiler believes will become another lucrative opportunity for its growing Portuguese facility.
“And probably the one other opportunity will be making sure we scale is Australia. I think Australia will probably be the country that’s the least talked about at the beginning of the year, but it’ll win the trophy for most improved throughout the year.”