As Canada works out the right way to cope with calls from its southern neighbour to develop into the 51st US state, it’s increasing its personal invasion on a really completely different entrance.
Canadian hashish’ dominance within the European market is stronger than ever, and the monetary returns from a few of its greatest gamers make it straightforward to see why.
However as operators flip to Europe to flee the saturated and intensely aggressive home Canadian market, may this flood of low-cost, high-quality hashish into Europe merely export the issue?
Final 12 months, business giants Aurora Hashish and Excessive Tide posted spectacular earnings because of their enlargement efforts. Now, each corporations are hoping to strengthen their foothold within the European market, betting that its urge for food for Canadian hashish will stay insatiable.
We spoke with Excessive Tide CEO Raj Grover and Aurora CEO Miguel Martin to debate their plans, and their outlook for the way forward for this provide chain.
The state of the Canadian hashish market
Having been one of many first international locations to legalise medical hashish in 2001, and having develop into the biggest nation to legalise adult-use hashish federally in 2018, Canada represents maybe essentially the most mature market on the planet.
Canada has additionally performed an important but usually missed position within the ‘seeding’ of medical hashish markets all over the world for the reason that implementation of the Marihuana for Medical Functions Rules (MMPR) in 2014.
As such, Canadian hashish has all the time had a presence in European markets, and ten years later, most international locations proceed to obtain a good portion of their market provide from Canadian producers.
Quite a few components are actually supercharging this dynamic, seeing Canadian medical hashish exports within the first six months of 2024 almost double.
In the meantime, home gross sales have been beneath stress, declining by almost 13% within the final monetary 12 months, in keeping with Prohibition Companions’ newest International Hashish Report.
Because the European market has grown over the previous few years, each when it comes to dimension and in its acceptance of hashish, Canadian producers have more and more appeared in direction of it to safe higher margins and fewer competitors, aided by many producers current adherence to EU GMP requirements.
European progress
One of many key benefactors (and instigators) of this has been Aurora, which reported complete web income of C$88.2 million in its newest quarter, a 37% enhance year-over-year.
It additionally reported a document web earnings of C$31.2 million, marking a 282% enhance from the prior 12 months, and achieved a document adjusted EBITDA of C$23.1 million, up 316% year-over-year.
This progress was primarily pushed by a 51% surge in world medical hashish income, which reached C$68.1 million and accounted for 77% of the corporate’s consolidated web income.
“A lot of our progress—if not all of it—has come from Europe and Australia,” Martin instructed Enterprise of Hashish.
“Our three major markets in Europe, shifting west to east, are Poland, Germany, and the UK. Australia can be a serious marketplace for us.”
Requested whether or not he anticipated this stage of progress to proceed, Martin mentioned that whereas they could not preserve the identical ranges of seen in 2024, he expects ‘all of those markets to proceed rising.’
“Proper now, lower than 1% of the grownup inhabitants is a part of the medical system, which implies there’s nonetheless important room for enlargement. So long as the business strikes ahead in the proper manner—and we actually intend to do it the proper manner—corporations like ours will likely be well-positioned to navigate and achieve these markets.”
Other than the upper margins it might obtain promoting into the European medical market, avoiding Canada’s hefty tax levy, Martin factors out that working in a ‘extremely conservative medicinal pharmaceutical mannequin’ like medical hashish means Aurora is much less affected by market fluctuations.
Its Canadian stablemate, Excessive Tide, has been much less concerned within the European market up to now, but it surely’s engaged on altering that shortly.
Final month, Excessive Tide introduced that it had acquired a 51% stake in Purecan GmbH, a German pharmaceutical wholesaler with established provide chains all through the nation and a license to import medical hashish.
The €4.8 million acquisition marks the corporate’s entrance into the thriving German medical hashish market.
Its CEO, Raj Grover, defined, “It has been two years within the making, as we’ve explored completely different entry factors into the profitable German market.”
Excessive Tide additionally had a standout 12 months in 2024, solidifying its place as Canada’s prime revenue-generating hashish firm for the third consecutive 12 months.
Nonetheless, not like Aurora, its progress was largely discovered within the home adult-use market by way of an aggressive retail enlargement, opening 29 new Canna Cabana shops in 2024.
Initially, it had hoped to interrupt into Germany’s adult-use market, however given the quickly shifting political panorama, it seems that is considerably delayed, if not completely off the desk.
As such, Grover defined that its acquisition of PureCan varieties a part of its ‘secondary technique’ to interrupt into the market.
“At our core, we’re retailers. Our major enterprise is brick-and-mortar hashish retail, with 191 working shops throughout Canada. Our most important aim was to enter Germany by means of bodily retail areas.
“Nonetheless, the German authorities collapsed, impacting our preliminary plans. In response, we’ve got partnered with a good educational establishment in Germany and engaged professors to help with a analysis pilot challenge.
“This analysis initiative serves as our secondary technique for coming into the German market, and we discover ourselves well-positioned inside this evolving worth chain.”
Stick with Enterprise of Hashish for half two of our deep dive into Canadian hashish in Europe, set to be revealed within the coming days.
