Open Editor's Digest for free
Rula Khalaf, editor of the Financial Times, picks her favorite stories in this weekly newsletter.
The world's largest cannabis producer and distributor is exploring a secondary listing in Europe, including in Frankfurt and London, to capitalize on increased investor interest after the use of the drug became legal in Germany on Monday.
Germany now has some of the most tolerant European laws on recreational use of the drug, with adults allowed to carry 25 grams. Commercial cultivation remains illegal but prescriptions and production have been liberalized.
“We are very interested in a European listing,” said Juan Martinez, president of Coralif International, adding that current restrictions meant that “the only possible listing in Europe is a very limited listing in the Frankfurt Second Council.” .
But the company added: “We are actively exploring ways to enhance shareholder value, which includes discussions with various stock exchanges, including those in Germany and London.”
Curaleaf is listed on the Toronto Stock Exchange in Canada, which legalized cannabis consumption and limited production in 2018. Cannabis is prohibited at the federal level in the United States, although it is legal for recreational use in 24 states.
Many cannabis companies are struggling to raise funding because of rules, including those from the UK's Financial Conduct Authority, which prevent investment in groups that make money from selling recreational drugs.
Curaleaf is the world's largest cannabis company, with a market capitalization of C$4.6 billion, and its shares are up 40 percent in the past year. It grows cannabis in the United States, Portugal and elsewhere, and has recently made acquisitions in Canada and Poland to capitalize on the wave of cannabis legalization and the growing numbers of people using it for medical or recreational reasons.
Although Coralif said last year that it plans to sell cannabis as a recreational product in Germany once it becomes legal, Martinez said the company's priority will be the country's medical cannabis market.
“Curaleaf has the advantage of having a playbook because we've done it before in the U.S.,” Martinez said. “We understand how markets evolve from a very limited medical program eventually to a broader medical program and then ultimately to a recreational cannabis program.”
The company expects the medical cannabis market to grow rapidly in Germany and elsewhere in Europe where the drug has been licensed for medical use. He noted that approximately 4 percent of the population in Florida uses medical cannabis, which is much higher than the level in Germany.
“There is still a lot of work to be completed in order to increase patient access and make cannabis a primary treatment under the current medical program in Germany.”
Martinez stressed that telemedicine and e-prescriptions for ailments like chronic pain were big opportunities for Curaleaf's products, praising the potential where “you can go to a telemedicine platform and in 15 minutes you get your prescription.”
He said its products comply with “very stringent” European Union production standards, and its factories are comparable “to the Pfizer factories of the world.”
Recommended
Another cannabis company, Frankfurt-based Bluewell Group, said the servers of its telemedicine platform went down temporarily this week after 50,000 people visited its site and 10,000 people signed up to get medical cannabis treatment at a discounted price.
Thanks to the wave of legalization for recreational use in the United States, the global cannabis market has expanded rapidly from $21 billion in 2019 to $47.1 billion last year, according to Euromonitor International.
But Linda Lichtmes, a consultant at the market research firm, said there was still “confusion about….” . . What is permitted and what is not permitted” under German law. It only allows people to consume what has been produced domestically, and prohibits imports from countries such as the Netherlands, which decriminalized cannabis in 1976.
“There has been disappointment among the industry that was preparing for production overseas,” she said, adding that competition for medical use is expected to grow due to limited commercial opportunities in the recreational market.
The Frankfurt and London stock exchanges declined to comment on potential individual listings.
