Curaleaf bets on more liberal Europe with $ 300 million deal for cannabis producer
The world’s largest cannabis retailer has struck a more than $ 300 million deal to buy one of the biggest marijuana growers in Europe, as it bets political attitudes towards the drug will soon change. liberalize in the region.
Massachusetts-based Curaleaf Holdings, which operates more than 100 cannabis stores in 23 U.S. states, said on Tuesday that the cash and stock deal worth up to $ 342 million for Emmac Life Sciences, based in London, would give it an early advantage in an emerging market. .
“The trends in cannabis consumption and political liberalization sweeping the United States are also increasingly present across Europe,” said Boris Jordan, executive chairman of Curaleaf.
The company will pay $ 285 million upfront and an additional $ 57 million based on performance.
Recreational cannabis use remains illegal in Europe – the Netherlands and Portugal have decriminalized personal possession below a certain limit, but the drug is still technically prohibited. A number of countries including Great Britain and Germany has, however, in recent years legalized its medical use.
Money has been rushing into the industry since Canada in 2018 became the largest economy in the world to legalize the use of cannabis for any purpose, whether users seek medical help, for example for chronic pain, or just want to get high.
In the United States, cannabis remains illegal at the federal level, but dozens of states, including California, Colorado, and Arizona, have approved its medical and recreational use. With the Democrats’ takeover of the U.S. Senate, hopes of federal decriminalization have been rekindled among cannabis supporters.
“It’s a question of when, not if,” Jordan said, adding that he expected to see new legislation proposed before President Biden’s first term ends.
Antonio Costanzo, managing director of Emmac, said the deal was a “milestone” not only for the company, but also for the European cannabis industry, which he said was three to four behind years compared to North America.
“We are going to see recreational use open up in the next few years, but in the short term, medicine will stimulate growth,” he added.
Emmac, which produced around 10 tonnes of cannabis last year at its Portuguese facilities, sells medical cannabis in countries such as the UK, Germany and Italy.
Jordan said he expected the United States to remain the world’s largest market for marijuana, but stressed that Europe has twice the population. Legal cannabis sales hit $ 17.5 billion last year, 46% from 2019, according to cannabis data provider BDSA
“Cannabis consumption habits in Europe are as good if not better than in the United States [and] this illicit market will eventually become legal, ”he added.
Curaleaf, listed in Canada, is the world’s largest cannabis supplier in terms of sales with $ 653 million in revenue last year. It will soon be eclipsed by Aphria and Tilray, once their merger is complete, with annual revenue of around $ 700 million.
The recent wave of recreational cannabis legalization in US states has “drastically” changed Curaleaf’s business model, Jordan said. At the start of last year, the company was making around 90% of its money from medical cannabis. Now, he said, about 60% came from recreational use.