International medical cannabis company Akanda Corp. has entered into a definitive agreement to acquire 100% of the issued and outstanding shares of Holigen Limited from The Flowr Corporation. The proposed acquisition will significantly accelerate Akanda's seed-to-patient business model in the EMEA region, improving the Company's ability to meet growing demand for medical cannabis and positioning it for adult use markets as regulations evolve.
The highly complementary acquisition of Holigen, the owner of a Portugal-based cultivator, manufacturer and distributor, provides Akanda with both the capacity and route-to-market for delivering first-party and third-party EU Good Manufacturing Practice (GMP) certified medical cannabis to legal EU markets through an efficient vertically integrated model. Holigen's wholly owned subsidiary RPK Biopharma Unipessoal, Lda, consists of a high-quality 20,000 square foot indoor EU GMP certified grow facility located near Lisbon (in Sintra) dedicated to the cultivation of high-THC premium cannabis as well as a large seven million square foot (180+ acres) outdoor facility located two hours south in Aljustrel. Combined, the Company believes these facilities will provide the flexibility of capacity in Portugal to produce two tonnes of 1P premium indoor cannabis, over 100 tonnes of 1P outdoor cannabis, and over eight tonnes of 3P manufacturing capacity annually.
Holigen's prized purpose-built indoor grow facility is the only one of its kind that can produce EU GMP medical cannabis equivalent to the recreational grades available in North America. Pursuant to the terms of the acquisition, Akanda will also benefit from the genetics library available from Flowr, including its award-winning BC Pink Kush, BC Black Cherry and BC Strawnana as well as certain new exotic genetics that will be exported to Portugal from Canada. Holigen harvested approximately 300 kilograms of medical cannabis in the first quarter of 2022. Initial in-process testing for both genetics of medical cannabis are indicating high THC content levels of greater than 25%.
The European medical cannabis market has continued to grow as additional countries have updated their regulations to legalize the use of medical cannabis. Prohibition Partners estimates the medical market generated approximately US$382 million in 2022 and will reach US$2.5 billion by 20261.
"Holigen is a transformative building block in our mission to help people lead better lives through improved access to high quality and affordable cannabis products," said Tej Virk, Chief Executive Officer of Akanda. "Together with Holigen, we will become the clear leader in current and emerging markets in Europe for both medical and eventually adult use customers. Portugal is one of the EU's leading jurisdictions to conduct cannabis business with a forward-looking government, in addition to a responsive regulator. The government has been actively discussing the advancement of legalization of adult-use cannabis and Akanda is dedicated to our presence in the country as the landscape continues to evolve. This acquisition materially accelerates our strategy and financials, and positions us to create significant, sustainable value."
Virk added, "We are leveraging our recent Initial Public Offering to secure state-of-the-art GMP-certified facilities that have been the recipient of nearly US$16 million of investment over the past several years. There are also powerful strategic synergies with our first-party/third-party operating model and assets in Africa and the UK, including the immediate opportunity to supply the growing number of European patients that are seeking access to these high-quality cultivars."
Added Louisa Mojela, Executive Chairman of Akanda, "With this acquisition, Akanda will gain the substantial knowledge and skills of the Holigen team, which has extensive experience in the U.S. west coast and which has overseen the buildout of one of the most advanced indoor grows in the world in Portugal. The cross-pollination of this expertise will help Akanda deliver on our promise of manufacturing high-quality, scalable and affordable medical cannabis at our Bophelo campus and our footprint for our ESG initiatives. We expect to leverage this expertise for emerging market opportunities in Lesotho, Africa."
"The combination of Akanda and Holigen is an ideal synergistic opportunity for Holigen," added Flow. "With outstanding agricultural resources in both hemispheres, we can optimize production year-round, which is truly unique. And the exceptional cultivation talent the combined organization will have will enable us to innovate with unique genetic strains. Finally, this combination creates a more vertically integrated operation, with significant underused grow, processing, and distribution capacity, allowing us to control the value chain, expand revenue sources and capture market share."
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