Little Green Pharma discusses merger with Cannatrek

Consolidation has been a long time coming in global cannabis, especially in markets that are pretty much established now – see Europe, for instance. But in Australia, it has taken on a particular urgency. The market grew somewhat steadily, despite not having record numbers, with regulatory barriers comparatively low for import permits. This caused a situation similar to what's going on in Germany and Portugal, where it makes more sense to import cannabis products rather than growing them domestically. However, in Australia, imports grew exponentially faster than pricing discipline could develop. With margins getting thinner and compression finding its way into the market, there has been a growing recognition that scale is no longer optional if a company wants to remain relevant.

It is within this context that Little Green Pharma and Cannatrek broke their announcement of a proposed merger. Paul Long, Managing Director of Little Green Pharma, frames it plainly. "As markets mature, consolidation is inevitable. The Australian market is competitive and commoditized, and scale becomes critical if you want to fight price compression and still invest for the future."

© Cannatrek

Australia-Europe connection
Cannatrek brings that scale on the Australian side. "It is the second largest brand in the domestic medicinal market, profitable, vertically integrated, and operating with a strong balance sheet," Paul explains. "Little Green Pharma, by contrast, has spent years positioning itself for Europe." In other words, Cannatrek's Australian cash generation pairs with LGP's European infrastructure, particularly its cultivation and manufacturing footprint in Denmark.

"Australia is still important to us," he says. "It is our home market and our corporate head office will always be here. But realistically, we are not going to see the same growth and scale here that we see in Germany or Europe more broadly."

That assessment is grounded in structural differences. In Australia, import permits are relatively easy to obtain and GMP requirements are less restrictive than in many other countries. For instance, the GMP stamp can be put on products that have just been packaged under GMP, rather than getting processed under it. No wonder import permits have been skyrocketing compared to cultivation licenses.

On the other hand, Europe is obviously different. Access is slower, documentation requirements are heavier, and true GMP remains a bottleneck. That friction favors companies that invested early and survived the lean years. "For the last 3 or 4 years, it has been very difficult to access capital in Europe," Paul says. "Building a brand here is capital heavy. You need teams, sales engines, marketing capability. That is not something you can just replicate overnight."

From Denmark by LGP
Little Green Pharma's Danish facility is pivotal within this context. Originally designed for extraction and oil production, the site required a little reinvestment to meet the quality standards demanded by the European flower market. LEDs, improved blackout systems, upgraded HVAC. It was not a cosmetic upgrade. "When we acquired the site, the quality was probably a 1," Paul says. "Today, it is closer to a 7. With further investment, we can take it to an 8 or 9."

The facility is now approaching capacity, supplying both LGP's own brands and a growing number of white label partnerships, including for some of the largest players in the German market. Its location near the German border is not incidental. Scale economics start to assert themselves quickly at that point. "For every additional hundred kilos we grow, the cost per gram comes down," he explains. "At volume, that changes everything."

Cannatrek's capital and operational expertise will be the key to unlock that potential. The proposed merger allows LGP to push the Danish site closer to its intended output, potentially reaching production volumes measured in tens of tons annually.

The integration is not limited to infrastructure. Paul points to knowledge transfer as an equally important outcome. "There is a lot of operational expertise within Cannatrek. Sharing processes, techniques, and systems improves performance on both sides."

© Cannatrek

Eyes on emerging markets
Geographically, the combined group is positioning itself around a clear hierarchy. Australia remains foundational. Germany, the UK, and Australia form the first pillar of scale markets. Beyond that, emerging European jurisdictions like Poland, Italy, France, and Czechia represent the next wave, markets with enough population and regulatory momentum to justify early investment.

In France, LGP expects to be among the first products available as the medical program evolves. "Our ability to submit full technical documentation is a real differentiator. There are only a handful of companies that can do it properly."

With this proposed merger, it is clear the goal of Paul and Little Green Pharma is to be better prepared for Europe while keeping a foothold in their domestic market. "It's a dual approach, if you will. Australia is and always will be important to us. But we are laser focused on Europe, and together with Cannatrek, we'd be ready to enter emerging EU markets as well."