Organigram, a prominent licensed cannabis producer, has announced a significant strategic investment aimed at bolstering its presence in the European cannabis market. Utilizing funds from its Jupiter strategic investment pool, the company will initially invest €14 million (approximately C$21 million) in Sanity Group GmbH, a leading Berlin-based cannabis company.
This investment comprises €11.5 million through an unsecured convertible note and €2.5 million for equity interests from existing Sanity Group founders and shareholders, securing Organigram a minority stake in Sanity Group. An additional €3 million (~ C$4.5 million) may be extended as a second tranche of the convertible note, subject to certain conditions. Sanity Group has established itself as a key player in the German cannabis market, boasting a robust distribution network encompassing over 2,000 pharmacies and collaborations with around 5,000 physicians. The company holds approximately 10% of the German medical cannabis market, with its avaay brand ranking second in market share and demonstrating significant revenue growth following recent legal reforms.
In addition to its German operations, Sanity Group is participating in a Swiss recreational cannabis pilot program and plans to expand its retail footprint in Switzerland. The strategic alliance expands upon a previous supply agreement between Organigram and Sanity Group, with increased purchase commitments pending Organigram’s EU-GMP certification at its Moncton facility, expected by year-end. This certification will facilitate Organigram’s launch of its brands and products in the German market, supported by Sanity Group’s extensive distribution channels.
Paolo De Luca, Organigram’s Chief Strategy Officer, emphasized the strategic importance of Germany and Europe in their global cannabis strategy, citing potential growth opportunities amid evolving regulatory frameworks. CEO Beena Goldenberg highlighted the partnership’s potential to enhance European revenue streams and leverage Sanity Group’s market insights.
Finn Hansel, CEO of Sanity Group, expressed enthusiasm about the partnership with Organigram, underscoring Organigram’s leadership in the Canadian cannabis market and their alignment in innovation and responsible product development. The investment underscores both companies’ commitment to capitalizing on Europe’s expanding legal cannabis market, driven by regulatory reforms and increasing consumer demand.
The German cannabis industry, bolstered by recent legislative changes, is poised for substantial growth, with projections indicating significant market expansion and potential influence across Europe. The partnership positions Organigram to capitalize on this growth trajectory through its strategic investment in Sanity Group, reinforcing their foothold in Europe’s evolving cannabis landscape.
