Canopy Growth (TSX: WEED) (NYSE: CGC) completed an all-cash acquisition of Spain-based licensed cannabis producer Cáñamo y Fibras Naturales S.L. (Cafina).
Financial terms of the deal were not disclosed.
Canopy Eyes European Market
Canopy said that the acquisition provides it the foundation to expand its European production footprint into one of the most ideal-growing regions in the world. The company wants to build a strong presence in Europe. It has a 430,000-square-foot licensed production site in Odense, Denmark, as well as its ISO 13485 internationally-certified Storz and Bickel facility in Tütlingen, Germany.
With the acquisition and planned corresponding expansion in Spain, Canopy said it improves its long-term positioning to address demand across Europe for medical cannabis and CBD products. The company is also partnered with a second licensed producer in Spain that produces cannabis flowers for the company under an existing supply arrangement.
“Operating multiple production assets within Europe will allow us to increase revenue in the EU free of supply constraints,” Canopy President and Co-CEO Mark Zekulin said in a statement.
“This strategic acquisition in a scalable, low-cost production environment diversifies our owned production capabilities in Europe, similar to our approach in Canada where we have production facilities in seven different provinces. Adding Cafina will allow us to quickly build out our presence in Spain using its existing cultivation licence as a launch pad, while ensuring our Canadian footprint – the largest in the world – can continue to serve the medical and recreational needs of Canadians,” Zekulin added.
Cafina is based in the province of Alicante in Spain and has already established a small greenhouse for research-related medical cannabis production in addition to focusing on crop-related R&D and the sale of hemp seed.
Cafina is one of three companies in Spain approved to cultivate, distribute and export cannabis containing more than 0.2% of tetrahydrocannabinol (THC) for medicinal and research purposes, and does so today in a 1,600 sq. ft. greenhouse. The company is also licensed to conduct hemp cultivation.
The company received its general and research license in November 2018 from the Spanish Agency for Medicines and Health Products (AEMPS) and had previously been granted a hemp license which authorized the cultivation of cannabis sativa (<0.2% THC) and small-scale extraction of cannabinoids for research purposes.
Cafina CEO Xavier Delas Martinez will continue managing the site as Canopy invests the money to scale the operation through calendar 2019.