Aurora Cannabis, one of the largest Canadian cannabis producers, announced its acquisition of a 51-percent ownership stake in Gaia Pharma. The move provides Aurora a foothold in Portugal, the company’s 24th country in its global portfolio, according to CEO Terry Booth.
Specific terms of the deal were not disclosed with the announcement.
Just last week, on Feb. 21, Gaia Pharma received approval from the Portuguese Health Ministry to build a cannabis cultivation facility in compliance with the European Union’s Good Manufacturing Practice (GMP) mandates. The first phase of this build-out is expected to be completed in late 2020, with a production capacity “of approximately 2,000 kg per [year], growing to 4,000 kg per [year] upon completion of the second phase.”
Portugal (population: 10 million) recently rejected two proposals to legalize adult-use cannabis, both of which would have set up a regulatory retail structure. Just last summer, the country’s Parliament approved a medical cannabis law; sales are now under way. (In 2001, the country decriminalized all drugs to combat a growing heroin addiction epidemic.)
“The formation of this joint venture and the approval of the cultivation facility in Portugal are additional important steps in Aurora's plan to develop a strong European manufacturing presence, ensuring that patients across Europe have access to the pharmaceutical grade medical cannabis they need,” Dr. Axel Gille, Aurora's VP of Business Development Europe, said in a public statement.
More broadly, Aurora’s move in Portugal comes amid a flurry of M&A activity on the continent. Cannabis reform is taking hold in legislative chambers in the UK and Germany, for instance. Earlier this month, the European Parliament urged its member states to begin taking medical cannabis “seriously.” Elected representatives adopted a resolution to promote medical cannabis reform measures and renewed an emphasis on debating ways to address the clear lack of substantive research on the plant. (This resolution comes at the same time that the UN’s Commission on Narcotic Drugs is nearing a vote on cannabis recommendations from the World Health Organization, which suggested that it’s time to reschedule cannabis under international treaties. That vote, however, has been delayed until sometime after March.)
All of that is to say that European cannabis markets are poised for considerable M&A transactions in 2019. Aurora Cannabis’s entrance is part of a larger story, one that will become more clear as European countries redress their cannabis laws.
“We are very pleased to be entering yet another European market, and look forward to collaborating with our joint venture partners, the government of Portugal and the Portuguese medical community, to encourage the development of a rigorously regulated and safe medical cannabis system that is well supplied and accessible to patients," Booth said in a public statement.