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DE: Canadian grower enters EU marketplace through strategic acquisition

AgraFlora Organics has acquired 100 per-cent (100%) of the issued and outstanding shares of The Good Company GmbH, a parent company of German EU-GDP medical cannabis distributor Farmako GmbH.

Farmako is a leading European medical cannabis distributor headquartered in Frankfurt Germany with affiliated companies in the United Kingdom, Luxembourg and Denmark.

Farmako is equipped with the following German and European industry certifications and distribution licenses affording the Company access to Germany’s geometrical growing medical cannabis marketplace:

  • Medical wholesale distribution license under German Medicines Act (“AMG”);
  • Permit for Narcotic Drug Handling as per German Betäubungsmittelgesetz (“BtMG”); and
  • Certificate of EU-Good Distribution Practice (“EU-GDP”).

Germany’s medical cannabis laws were introduced in March 2017 and the country is poised to become one of the largest federally regulated medical cannabis markets in the world. The German patient population for medical cannabis is experiencing exponential growth with over 100000 patients now active; an increase from approximately 800 in 2017. According to market data from Insight Health, each eligible German patient is prescribed on average approximately 30 grams of medical cannabis per month; when extrapolated this equates to annual cannabis demand of 36 tons.

United Kingdom
Additionally, Farmako has been granted an authorization for the wholesale distribution of medicinal products including medical cannabis by the UK’s Medicines and Healthcare products Regulatory Agency (the “MRHA”). "Recent UK legislation allows for the prescription of cannabis from a medical specialist via a regular pharmacy model. Access to this high profile market when coupled with broad National Health Service insurance coverage for medical cannabis to ensure patient outcomes is a key strategic element of AgraFlora’s global platform," the team with the company explains. 

AgraFlora and Farmaco
Sebastian Diemer Co-Founder and Chief Executive Officer of The Good Company GmbH stated: “On behalf of the Farmako team I express our sincerest elation to join the AgraFlora group of companies. In the eight short months since inception we at Farmako have managed to capture material amounts of market share from peer group competitors such as Aurora Canopy and CC Pharma (Aphria); successfully distributing 150000 grams of medical cannabis into arguably the world’s highest value patient population.

"Reliable supply of premium cannabis flower from AgraFlora’s 2.2 million square foot Delta Facility coupled with a fully integrated European supply chain Farmako is positioned to emerge as a true contender to Aurora Canopy and CC Pharma within the German operating theatre. AgraFlora’s Canadian cultivation facilities yield the finest cannabis products which will exceed the expectations of educated sophisticated and quality-driven European consumers; providing us with the consistent supply of EU-GMP certified medical cannabis required to continue to seize mark share from our peers.”

AgraFlora will pursue the processing of EU-GMP compliant cannabis products from its flagship 2.2 million square foot Delta Greenhouse Complex (the “Delta Facility”) for integration into Farmako’s European distribution channels. EU-GMP certified cannabis products are eligible for import/export and sale in the European Union. European Good manufacturing practice (“EU-GMP”) certification is an internationally recognized system mandated with ensuring all produced goods meet the highest consumer health and safety standard.

"Planned German distribution of cannabis products produced at its Delta Facility at a forecasted unit contribution of C$0.80 per gram affords AgraFlora the opportunity to achieve unparalleled retail margins due to its seed to sale vertical integration," the team with the company explains. "Price sensitivity within the German pharmaceutical cannabis market is considerably lower than in traditional recreational markets due to broad insurance coverage equating to median retail prices of approximately C$20.00 per gram."

"The Company’s Delta Facility is second in size and magnitude only to the Smiths Falls facility owned by Canopy Growth Corp. the world’s largest cannabis company. By way of additional comparison AgraFlora’s Delta Facility is 100000 square feet larger than Aurora Cannabis Inc.’s facility in Edmonton Alberta and it is also more than 700000 square feet larger than the current size of the Leamington facility owned by Aphria Inc."

"The Delta Facility is a state-of-the-art pressurized semi-open Venlo greenhouse which is widely considered to be one of the most technically advanced and environmentally friendly greenhouse operations in the world."

AgraFlora plans to commence Phase 2 of the Delta Facility retrofit in December of 2019 which will include:

  • 10 flower rooms with over one million square feet of canopy;
  • 40000 square feet of EU-GMP postharvest/processing space:
  • Equipped with ozone-rich drying rooms;
  • Installation of an industrial kitchen; and
  • Workflow design to include commercial and ethanol extraction capabilities.

"The combined AgraFlora – Farmako entity will be equipped with world-class upstream cultivation assets as well as highly efficient European downstream capabilities that will act as a beachhead into the 700-million-person European marketplace as well as crystallize a defendable advantage within the edibles cannabinoid-infused beverage and product formulation market verticals. Farmako’s first-mover advantage coupled with their surgical execution and best-in-class operations within the German cannabis market are further validated by this recent announcement," they further explain. 

"Farmako’s prestigious good distribution practice certification marks the highest standards of medical cannabis distribution in the world permitting the bulk warehousing of medical cannabis on German soil allowing for direct sales into an underserved marketplace. This acquisition solidifies AgraFlora as a global cannabis leader and further reinforces our vertically integrated mandate."

For more information:
AgraFlora Organics  

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