Toronto-based asset management firm Purpose Investments has partnered with the European exchange-traded white Label ETF platform Hanetf (hereinafter referred to as Hanetf) to create the first medical cannabis Fund in Europe, the Ucits ETF. And it is not the only company registered in Canada that works with medical cannabis.
If you have followed the industry of this substance, then you should know that Canada has legalized the cultivation and commercialization of medical and recreational cannabis since October 2018 through the passage of a special cannabis Law.
Experts estimate that by 2021, the volume of cannabis production in Canada will be approximately 5 billion US dollars, but this figure is not in any way comparable to the assets of the largest Canadian companies working in this industry internationally.
Together, the top ten players in the Canadian cannabis industry value the market they control at $ 43 billion, which is eight times more than the entire Canadian industry.
Why is the Canadian cannabis business booming in Europe?
In the past few years, Canadian companies have invested heavily in the European cannabis industry. Despite the fact that the European cannabis market in 2018 was estimated at only 318 million USD, experts predict that by 2023 it will grow to almost 1.7 billion USD. As a result, the Canadian giants are seeking to gain a foothold in the flourishing European cannabis market.
One of the main reasons why European entrepreneurs do not invest in the cannabis industry is the apparent lack of unity in European legislation. Each member state of the European Union (hereinafter referred to as the European Union or EU) sets its own laws when it comes to cannabis, and because of this, sometimes entrepreneurs are forced to operate in a semi-legal gray legal zone.
According to the estimates of Canopy Growth itself, as of September 2019, it is estimated at 8.65 billion USD. In December 2017, Canopy Growth partnered with a Danish company (one of the largest cannabis producers in Europe) to form Spectrum Cannabis Denmark. Spectrum Cannabis has been licensed to set up a 40,000 sq m cannabis plant in Odense, Denmark.
This investment should already yield some results, as Spectrum Cannabis produced its first commercial crop in September 2019.
The canopy also acquired cannabis producer Carina, which is a Spanish company authorized to grow and distribute cannabis containing more than 0.2 percent tetrahydrocannabinol (THC), for medical purposes.
Another Canadian company, Aurora Cannabis, has also made significant efforts to expand in the European Union. Aurora has set up a joint venture with Denmark-based Alfred Pedersen & Søn called Aurora Nordic Cannabis, already licensed to create a fully automated 92,000 sq m cannabis production facility. Like the Danish Canopy Growth plant, Aurora was due to receive its first profitable crop at the end of 2019.
In addition, Aurora also bought Portuguese marijuana producer Gaia Pharm and obtained permission from the Portuguese Ministry of health to build a cannabis plant. The first stage of this expansion should be completed in 2020 when the plant’s capacity will reach almost 2000 kg of cannabis a year. After the second stage of expansion, the company should increase its capacity to 4000 kg per year.
The company, registered in Canada, has already protected its European assets by gaining the right to sell its cannabis-derived oils in German and British pharmacies.