Aura Health (CSE: BUZZ) this morning provided a corporate update on its European strategy, a market with few current distribution players. The company reaffirmed the closing of its previously announced acquisition of an 80% stake in Pharmadrug Production GmbH, a distributor of pharmaceutical narcotics within Germany.
The firm is licensed to import and distribute cannabis to pharmacies within Germany and across legal markets within the Eurozone. Currently, those imports are largely coming from that of Bedrocan International BV based out of the Netherlands.
“We are very pleased to share our operational progress with our shareholders and demonstrate our commitment to executing our European strategy. We believe the German and European medical cannabis markets represent a significant opportunity and we continue to identify and develop the assets to seize this opportunity.”
Daniel Cohen, CEO of Aura
German imports of cannabis increased to 1,500 KG from the Netherlands in 2018, with the Netherlands remaining as one of the largest import regions for German cannabis. Bedrocan has a monopoly on these imports currently.
As a result of this monopoly, German based cannabis importers are thus allotted a specified amount of cannabis from Bedrocan on an annual basis, for which Aura Health’s Pharmadrug just received an unspecified increase. As per Bedrocan International’s website, cannabis orders are produced in batches of 20 KG per shipment. It’s unclear what the average annual allocation size is however. Aura Health is however expecting a shipment to arrive this month, which will be promptly distributed to its network of customers.
While Germany continues to face supply shortages, Aura Health and Pharmadrug are turning to other export markets to source legal cannabis. Aura Health has as a result targeted two potential markets to obtain product from – Canada, and Israel. For the former, Aura has partnered with FSD Pharma (CSE: HUGE) to sponsor the company’s facility for eGMP certification and has also concurrently entered a supply agreement.
Pharmadrug has also had dealings with BlissCo, prior to Aura’s acquisition, to assist in obtaining eGMP certification for their British Columbia based facility. BlissCo and Supreme Cannabis recently announced a definitive agreement for a proposed merger that would see the two firms come together, which may provide a second source of Canadian grown cannabis for the German market.
With respect to Israel, Aura Health is a debt holder of HolyCanna, an Israeli based cultivator currently constructing its cultivation facility. The 60,000 square foot greenhouse is expected to begin exporting cannabis in the second half of 2020, while third party Israeli cannabis is expected to begin shipping to Germany in the first quarter of 2020. Israeli sourced cannabis is ideal for the German and European market in that facilities are already built to eGMP standards and thus no addition certification is required from the regulatory body. Due to this, Aura Health is in advanced talks with several cultivators for the supply of cannabis for the German market.
Aura Health, through Pharmadrug, intends to continue to expand its operations through sourcing additional cannabis from Canadian and Israeli operators. It intends to do so by assisting operators attain eGMP certification, where applicable, through sponsorship to enable their product to enter the nascent German market.
Aura Health closed yesterdays session at $0.16, down a half penny or (3.16%).
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