MJBizMag September 2020 - 59

Another major international spender
By the following April, Canopy
has been Ontario-based Aphria, which
announced a $670 million (CA$826
million) deal to acquire global cannabis
firm Nuuvera in early 2018, turning
it into an international division with
interests in Europe, Africa and Australia.
(The price of the Nuuvera deal was
subsequently lowered because of a drop
in cannabis stock value.)
Later that year, Aphria opened its war
chest to acquire assets in Jamaica and
South America. Short-seller Hindenburg
Research pegged the price at roughly
$212 million (CA$280 million) and
alleged the transaction was nothing more
than a " shell game " meant to enrich
company insiders, which Aphria denied.
(Hindenburg also lobbed accusations at
Aphria over the Nuuvera acquisition.)
Aphria's early 2019 acquisition of
German pharmaceutical distributor
CC Pharma GmbH boosted its
international portfolio further, giving
the company an international source of
non-cannabis revenue.
Other Canadian marijuana players
with international interests include
Auxly Cannabis, Cronos Group, Flowr,
Organigram, Supreme Cannabis and
Zenabis.
QUESTIONS ABOUT
STRATEGY
The retail investors who poured money
into cannabis stocks in the early days
were never likely to ask hard questions
about those international strategies, said
Bennett, the Jefferies analyst.
But institutional investors expect more.
" They're going to want serious
business models. They need to see these
guys actually delivering profitability in
the near term, " Bennett said.
" And as a result of that, (the
producers are) left with these huge cost
bases and infrastructure in a global
market where the demand is just not
there yet. If they weren't going back
to the international markets now and
getting rid of these cost bases, then you
would be asking questions. "
MEDICAL CANNABIS IN EUROPE:
The Markets & Opportunities
SECOND EDITION
announced its new leadership
had decided to exit a number of
international markets to lower costs
and conserve cash.
The company left South Africa and
In-depth look at the varied
cannabis market and sectors
in Europe, as well as an
overview of EU standards
and details about key and
developing markets.
Lesotho and stopped cultivation in
Colombia. Canopy later said it was
focusing on three markets with the best
near-term profit potential: Canada,
Germany and the United States.
Aurora Cannabis halted construction
© 2020 Anne Holland Ventures Inc. All Rights Reserved
on the second phase of its Danish
cultivation facility in late 2019 to save
cash in the wake of a large quarterly loss.
In July 2020, Aurora said it was
The entire European market for
regulated cannabis was worth roughly
$260 million in 2019, according to
Marijuana Business Daily's latest
European market report (see above).
Germany's medical cannabis market
could contribute some meaningful
revenue to Canadian producers' balance
sheets in the near future, Bennett added,
but " that's still very, very small in the
context of things. "
Relatively high prices for medical
marijuana in Germany have been a
bright spot, according to Bennett-but
he expects that advantage to fade as
competition increases, supply improves
and downward price pressures set in.
" If Germany really doesn't accelerate
over the next 12 to 18 months, then I
think there are big question marks in
terms of the opportunity in wider Europe
over the next several years, " he said.
SIGNS OF A GLOBAL
RETREAT
Indications of a partial Canadian
pullback from international cannabis
markets are beginning to show.
In June 2019, a Canopy Growth news
release trumpeted the company's longterm
view of international markets,
" leveraging its substantial cash position
to lay the foundation for a global,
revenue-generating network. "
CEO Bruce Linton, who had overseen
those global ambitions, was fired that July.
downsizing its European workforce by
about 25% and shutting down offices in
Italy, Portugal and Spain, according to
BNN Bloomberg.
Aurora told Marijuana Business
Magazine it was still committed to
producing medical cannabis in Denmark
and Germany despite the cuts.
This past June, Auxly announced that
its majority-owned Uruguayan subsidiary
Inverell S.A. wouldn't be planting a crop
for the 2020-21 growing season, citing
" the slower-than-anticipated pace of
cannabis-specific regulatory development
in Latin America. "
In July, Aphria reported $47.9 million
(CA$64 million) in impairment charges
related to its international operations in
Jamaica, Lesotho and South America,
blaming the impact of the COVID-19
pandemic. The company pressed pause
on building a cultivation facility in
Colombia, and CEO Irwin Simon said
Aphria could simply supply that market
with exports from Canada.
Still, another comment made by Simon
on Aphria's July 29 investor call serves
as a reminder that international hype
remains a feature of Canada's cannabis
industry landscape.
" With all our GMP certifications and
our licenses, the opportunity for Europe
is going to be tremendous, " he said.
" And don't be surprised if Germany
becomes legalized over the next couple
of years. "
September 2020 | mjbizdaily.com 59
http://www.mjbizdaily.com
MJBizMag September 2020

Table of Contents for the Digital Edition of MJBizMag September 2020
