German cannabis startups continue to earn millions

Cannabis expansion is a new frontier for future investors and business owners. While only three countries (Germany, Italy, and the Netherlands) had positive returns in 2018, cannabis sales doubled between 2017 and 2018 due to significant demand in Germany and Italy. More countries are committed to introducing legislation to move the European cannabis markets forward and grow the overall market.

Canopy Growth took over one of the largest German cannabis startups to date.

The Canadian cannabis company bought the cannabis division of Bionorica, a natural remedy manufacturer based in the Upper Palatinate, for $250 million (€226 million).

Cannabis has been of huge interest to investors on the stock exchange for several years. More countries continue to legalize cannabis for medical use. Tobacco companies and beverage manufacturers have also entered the emerging industries for a great deal of money.

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German cannabis startups are of great interest to investors

After the cannabis legalization boom of 2018, not many new markets have been added. In the place where cannabis is only available for medical purposes, sales have been limited by strict sales regulations.

The areas under cultivation have grown much faster than the demand, and thus, the quantities harvested.

According to the local health authorities, the hemp stocks stored in Canada have almost quadrupled within a year to around 400 tonnes. This corresponds to the quantity consumed in Canada in two and a half years.

Not all expectations have been fulfilled for Germany’s cannabis startups either. The Frankfurt cannabis trader Farmako, who started with great potential, had estimated its market value at $110 million (€100 million) but was then taken over for only a fraction of that.

Professional investors still see opportunities in Germany

Finn Hänsel is only in his mid-thirties but is already a veteran among the cannabis decriminalization movement in Germany. He still sees some opportunities for investment in Germany.

A year ago, Hänsel, together with his partner, founded the company Sanity Group. Their business model is the importation of medical cannabis to Germany as well as the distribution of hemp-containing, non-prescription cosmetic and lifestyle products such as bath additives.

“We are also working on new dosage forms for cannabis patients,” said Hänsel.

He does not yet want to reveal exactly what this is all about. However, it is easy to imagine that there could also be inhalation aids (inhalers) that would make consuming cannabis easier.

Finding new investors for German cannabis startups

Hänsel is currently looking for new investors for his company.

“The new realism of the cannabis market is not bothering him. Many competitors have invested a disproportionate amount of money in the construction of large greenhouses in Canada and Denmark, where the climate conditions for growing cannabis are not particularly favorable,” he claims.

He explains that in Canada, the production costs for one gram are around $3.30 (€3) while in Israel, it’s only $0.20.

“Our production sites in the Mediterranean area would prevail in the long run and it is precisely from there that Sanity would mainly source its products,” he continued. “$10 million in additional capital has already been promised and this amount will be added in the coming weeks.”

An IPO, Hänsel admits, is currently not conceivable. The mood among investors is too volatile for that.

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(Featured image by noelsch via Pixabay)

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First published in Frankfurter Allgemeine, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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