Four of Canada’s largest cannabis companies reported earnings this week. While many investors anxiously awaited management’s outlook for the newly-legal recreational market at home, executives clearly wanted to talk up ambitions abroad.
It’s not hard to see why. Projections for fully legal cannabis in Europe, for example, dwarf comparable North American estimates.
The third edition of the European Cannabis Report forecasts a market worth 115.7 billion euros (US$130.33 billion) by 2028. Meanwhile, legal cannabis in the United States could amount to just $75 billion by 2030, according to a recent estimate by Cowan.
“Europe is undergoing a fast-paced wave of regulatory and legislative changes. A legal version of Moore’s law is at play, i.e., the number of countries that have legalized medical cannabis programs is doubling every two years,” wrote the authors of the European report.
If the commentary following the latest crop of cannabis earnings is any indication, Canada’s licensed producers are working hard to make an impact in Europe and beyond.
Aurora Cannabis Inc. (ACB.TO) kicked off the week with pre-market earnings on Monday. The Edmonton-headquartered company is currently active in 10 countries outside of Canada. (Australia, Brazil, Cayman Islands, Colombia, Denmark, Germany, Italy, Malta, Poland, and South Africa.)
Aurora said it established a “pan-European” company in August. Aurora Europe will oversee national divisions on the continent, including Aurora Deutschland GmbH, Europe’s largest distributor of cannabis according to the company, as well as Aurora Italia, Aurora Malta and Aurora Denmark.
The Aurora Nordic 1 facility in Odense, Denmark is expected to harvest its first crop this fall as construction continues on nearby Aurora Nordic 2. That facility, which is expected to be completed in the first half of 2020, will be Aurora’s second largest by capacity once Aurora Sun in Medicine Hat, Alberta comes online that same year, the company said.
“The EU I think it’s going to be very, a very rich market for us,” chief corporate officer Cam Battley told analysts on the company’s first-quarter earnings call.
“We’re going to be able to move more products we believe in Denmark then we’re able to move in Canada,” chief executive officer Terry Booth added.
Aurora also bolstered its plans in South America, entering into a definitive agreement in September to acquire ICC Labs Inc. for $290 million.
Cronos Group Inc. (CRON.TO) reported its third-quarter earnings before the opening bells on Tuesday.
The notoriously science-driven Toronto-based company is building up capacity outside of Canada in Israel, Australia and Colombia. Cronos is working on expanding its global reach through several joint venture agreements.
The company has a presence on five continents, including production and sales in the highly sought-after German medical market, and plans for expansion into Poland and Australia.
“We see Germany as extremely important for our global reach and to plan to continue to grow and open this channel through our Peace Naturals branded medical products,” chief executive officer Michael Gorenstein told analysts on a conference call Tuesday morning. “The growth opportunities for Cronos are vast, and extend across the globe as markets open.”
Tilray Inc. (TLRY) CEO Brendan Kennedy said his company now has the ability to import and distribute its products throughout Latin America, and will use its Portugal campus as a base of operations for European Union markets.
“Tilray Portugal will focus on supplying the global medical market, primarily in the EU. Tilray Germany and Tilray Australia and New Zealand are similar in that they focus on importing products and on sales and marketing,” Kennedy told analysts on a conference call following the release of third-quarter financial results.
Nanaimo, B.C.-based Tilray has said it was the first to legally export medical cannabis from North America to the European Union, Australia, New Zealand, and South America.
“We’re now at a point where 35 countries have legalized medical cannabis and it’s really clear to me how we get from 35 to 40 to 50 to 60 countries that have legalized medical cannabis in a relatively short amount of time, two or three years I think that’s where we’ll be,” Kennedy said.
Canopy Growth Corp. (WEED.TO) capped the week of cannabis earnings on Wednesday. The company has secured agreements to export cannabis to Australia, Brazil, Czech Republic, Denmark, Germany and Spain.
Canopy has previously announced plans to spend more than 100 million euros (about $150 million) to expand production in the European Union over the next two years.
“I think Europe is actually the most, or almost the most, exciting activity going on. So we’ve been busy in Germany,” chief executive Bruce Linton told analysts on the company’s second-quarter conference call. “I think we’ve had about 1,000 pharmacies in Germany move our product and we’re now in the process of seeking approval for upgraded formats of the product. We have plants in the ground in a couple of countries in Europe already in greenhouses.”
Linton also expressed excitement about Jamaica, and the opportunity to capitalize on the country’s steady flow of tourists.
“I think Jamaica is going to do a great job of not exporting cannabis but importing more tourists and Tweed Jamaica is going to be something when you’re on vacation, you may become officially ill and have access to that product and it will make your vacation more enjoyable,” he said. “The credibility we have in Jamaica has caused us to have an opportunity to export to another Caribbean island, which we haven’t named, but we think is the dominoes tipping over to that region.”