Aurora Cannabis Inc. (NYSE:ACB) gained 3.70% in the last trading session to close the day at $7.56 after the company reported that it had agreed to acquire a majority stake in Portuguese company Gaia Pharma Ltd. at an undisclosed sum. The company is planning to establish a medical cannabis production facility as well as for other related products as the company expands its reach to Europe.
Aurora Portugal Lda
Following the acquisition of the 51% stake, the new company will change its name to Aurora Portugal Lda. On 21 February 2019, the Portuguese Health Ministry through INFARMED approved an application by Gaia Pharma Lda to construct a EUGMP-compliant facility for the cultivation of cannabis. INFARMED is the division of Health Ministry responsible for regulation, authorization, evaluation as well as control of medicines and other products for health protection of humans in Portugal.
The move is part of the company’s strategy to establish an edge in countries where the cannabis market is still booming. The building of the new facility will occur in phases with the first phase lined up for completion by the Q4 of FY2020. Once the first phase is completed the facility will have a production capacity of over 2,000 kg per year which will double once the second phase gets completed.
Growing cannabis market in Portugal
With Portugal’s population of over 10 million, there is potentially an attractive cannabis market in the region. The country is part of Eurozone and has a regulatory framework that is producer-friendly which encourages setting up of a local production facility that could utilize the available affordable labor. In 2015, the country enacted new regulations that allow the distribution of recommended medical cannabis to patients across the country as well as exporting to other countries across Europe where medical cannabis is legal.
Terry Booth the CEO of Aurora indicated that they were pleased to enter the European market and they expect to continue working with other joint venture partners to develop a safe and regulated medical cannabis system for the distribution of the products to the patients. Besides Portugal, the company is already active in 24 other countries.