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Tilray Gets First New German Domestic Cultivation Licence, Dalgety Seeks £6m Investment, & More from Celadon

Tilray

 

US cannabis giant Tilray has become the first company in half a decade to recieve a new domestic cannabis cultivation licence in Germany.

On July 22, Tilray’s European subsidiary Aphria RX GmbH, which it acquired in 2021, confirmed that it has received the first new domestic cultivation licence since the passage of CanG in April, which removed tight restrictions on who is able to cultivate in the country.

Aphria RX was already one of just three companies, alongside Germany’s Demecan and Canada’s Aurora Cannabis, to have been granted a licence in May 2019 after winning a highly competitive tender process.

These licences covered a specific production quota, meaning there were strict limits on the strains and quantities that could be produced.

With the passage of CanG, these restrictions, alongside limits on the number of companies allowed to cultivate in the country, have been lifted.

While the German market is still overhwhelingly dominated by imports from other countries, the Federal Council called for the removal of these limits ‘in order to appropriately curb the sharp rise in imports of medicinal cannabis in favour of domestic production of the appropriate quality.’

The German government itself expects this will see 100 medical cannabis cultivation facilities set up in the country.

Aphria RX’s initial licence was already the most comprehensive, allowing it to cultivate all three strains of medical cannabis approved by BfArM.

Now, with the issuing of its new licence, Aphria RX will be able to cultivate 31 approved strains, and is expecting to increase its production by 5x.

Tilray’s Chief Strategy Officer and Head of International, Denise Faltischek, commented: “We are thrilled to receive this licence as it will provide greater access to some of the highest quality medical cannabis produced in Germany and enable us to expand the range of treatment options available to patients.

“We appreciate the trust that the German Government has placed in Tilray, and we are proud of our team for their groundbreaking work in medical cannabis cultivation and patient care.”

Tilray is just one of the large North American cannabis operators sureing up its foothold in Germany.

With domestic cultivation in Germany remaining limited, and a saturated market continuing to push down profit margins, US and Canadian cannabis companies are increasingly providing capital and exporting their products to capture market share.

Speaking to Reuters earlier this week, Frederico Gomes of ATB Capital Markets suggested that companies are now looking to Germany as a major opportunity.

German firms like Demecan and Bloomwell Group are reportedly in discussions with North American companies for potential investments. Bloomwell CEO Niklas Kouparanis noted the global shift towards Germany, reflecting its growing importance in the cannabis market.

Canada’s OrganiGram recently invested €14 million in Berlin-based Sanity Group. With cannabis sales in Germany projected to reach $1.5 billion in 2024 and $3.7 billion by 2027, investment interest is likely to increase. Additionally, Germany’s lower taxes on medical cannabis help keep prices competitive with the illicit market, unlike in Canada.

Celadon Pharmaceuticals

 

Last week, UK-based medical cannabis producer Celadon Pharmaceuticals announced the successful completion of its eighth harvest of 2024.

According to the company, its indoor cultivation facility comprises three sets of flowering rooms in each phase, meaning that it expects to produce a total of 15 harvests a year, a target it says it is on track to achieving.

It added that the yields obtained from these harvests were also increasing in line with expectations, with additional yield enhancements already in the pipeline.

The produce from these harvests is being supplied to the two UK-based pharmaceutical companies Celadon signed supply deals with last year, expected to generate revenues of £1.4m every year.

In October 2023, Grow signed a supplier contract with Dalgety (see below) providing the latter with access to Grow’s medical cannabis distribution network throughout Europe.

With harvests now expected to occur roughly every three weeks, Celadon says it is aiming to provide a stable and continued supply of product to the UK market, helping resolve the current availability issues.

Another supply deal signed with an unnamed European pharmaceutical distributor in November last year is expected to generate annual revenues of £8.7m, with sales expected to begin in the next few months.

Should these targets be met, Celadon would stand to break into profitable territory.

According to its most recent financial figures, published in June this year, Celadon reported total revenues of £75k in 2023, comprising of £64k from the sale of cannabis, and £11k from its Harley Street limited feasibility study.

While gross profits were £75k, operating costs for the year came to £5.5m, seeing Celadon post an operating loss of £5.9m.

As of the end of 2023, Celadon also reported total current assets of £2.5m, and total current liabilities of £955k. At the time of reporting, Celadon’s market capitalisation stood at £43m.

James Short, Chief Executive Officer of Celadon, commented: “This milestone underscores the merit of our modular facility design, which enables regular harvests and allows us to manage our production costs effectively, even in the unlikely event of lower-than-anticipated demand. This achievement not only highlights our capabilities as a trusted provider of pharmaceutical-grade cannabis but also positions us as a key UK player in resolving the well-documented supply challenges faced by the UK market.”

Dalgety

Elsewhere in the UK, Midlands-based medical cannabis producer Dalgety has announced plans to launch a new £6m investment round.

Dalgety, which received a Home Office license 18 months ago and began cultivation a year ago, aims to use the funds to enhance its facilities.

This will include increasing the number of cultivation rooms at its existing facility, which has the capacity to expand by 40 times in line with demand. The improvements are expected to increase ‘product and subsequent revenue’ fivefold.

The company, which currently employs a team of 15 including six highly trained growers, has completed around 12 harvests since April 2023, with yields reportedly expected to be in the top 1% worldwide.

Dalgety’s CEO, James Leavesley, commented: “Once this round of investment is secured, Dalgety will look to drive forward with the construction of the expanded facility throughout 2024.

“The increased revenue from the expanded facility is expected to be generated 12 months after construction begins. Over the next three years, we expect to see year-on-year growth as we scale up operations, achieve new licensing milestones, diversify our products, and commence more research and development.”

Similarly to Celadon, Dalgety is targeting the domestic market in the UK, and hopes to develop a ‘completely UK-based supply chain’.

Mr Leavesley added: “We are keen to speak to anyone who is looking for a unique and interesting investment opportunity to join us on this journey to becoming a market leader and improving the lives of patients who currently lack access to medical cannabis.

“This is a fast-moving industry that has already grown substantially, and we would need someone who is confident and comfortable in those conditions. If you are interested in setting up a call, we would be happy to go through more of our plans and the potential for growth.”

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