Two Canadian-based companies are turning to acquisitions and supply agreements to address a “systematic” shortfall of medical marijuana in Italy that’s estimated to be in the thousands of kilograms.
Toronto-based Nuuvera said Thursday it is acquiring one of only seven companies in Italy with a license to import medical cannabis.
Hours later, the German subsidiary of Alberta-based Aurora Cannabis won an exclusive tender to supply 100 kilograms of medical marijuana to the Italian government through the country’s Ministry of Defense, which oversees MMJ production and distribution — at least for now.
Italy has suffered from a medical cannabis shortage for years, stemming from the fact it has just one domestic producer – the military – and has awarded a small limited number of import licenses.
Military production currently tops out at about 250 kilograms (551 pounds) per year, and a government report provided to Marijuana Business Daily pegs near-term demand at 2,000 kilograms (4,409 pounds).
Nuuvera, which is awaiting its producer’s license, says it’s ready to make up for what it called a “current systematic shortage.”
“We want to work with Italian authorities to address the shortage of supply that is causing problems to Italian patients,” said CEO Lorne Abony. “We have 77,000 kilograms of offtake in Canada, so we can address the shortage.”
Some estimates put the number of Italy’s potential MMJ patients at over 1 million, he said.
Legalization dies, but medical is reborn
Italy’s Department of Health started allowing doctors to prescribe marijuana to their patients in 2007, but the country’s Parliament has failed to adopt comprehensive national regulations since then.
A watered-down marijuana bill, DDL 3235, died when Parliament was dissolved in December ahead of March general elections.
The bill has undergone significant changes since it was first introduced in 2015. The original version called for full legalization, but the 2017 version had been stripped to focus just on medical.
In lieu of the passage of DDL 3235, the government issued a decree, whose key features included:
- Giving the military more money to increase MMJ production.
- A one-off tender by the military to import cannabis from abroad.
- The possibility for the Ministry of Health to authorize private or public companies to grow and process cannabis, confirming that the Italian military doesn’t have a legal monopoly over cultivation.
- Affirming that medical marijuana is covered by the National Health System in all of the country’s 21 regions.
“The decree, and all existing ministerial acts, provide a sufficiently clear framework for companies,” said Antonio Costanzo, head of international development with Nuuvera. “But I expect new legislation in the future to provide additional clarity and remove some of the descretionality of the Ministry.”
The decree means medical marijuana is technically covered by the nation’s national health insurance system for the entire population – if citizens can find a doctor and supply. Those two problems have thwarted most patients and hobbled the industry for a decade.
General practitioners are allowed to prescribe marijuana if another treatment is not effective.
Listed applications include chronic pain, cancer, multiple sclerosis, epilepsy, glaucoma and anorexia.
Regulatory challenges notwithstanding, the market’s potential has caught the eye of Canada’s largest medical marijuana companies.
Now that MMJ is included in Italy’s national health care system across the board, “there’s every reason to expect that the Italian and German medical cannabis systems will grow equally as fast as Canada’s, which now encompasses approximately 300,000 registered patients,” said Aurora Chief Corporate Officer Cam Battley.
Canada had 235,000 client registrations at the end of September 2017.
Nuuvera’s move
Nuuvera, traded on the on the TSX Venture Exchange as NUU, made its splash in Italy by buying FL Group, which holds one of only six import licenses for medical marijuana.
Nuuvera said that license holders had been limited to importing from the Netherlands.
However, its acquisition of FL Group makes Nuuvera the first importer to have access to tens of thousands of kilograms of available supply.
“We plan on growing our Italian business substantially,” said Abony, its CEO.
Nuuvera signed a strategic partnership with one of Canada’s top producers, Aphria (TSE: APH), to supply 77,000 kilograms — all earmarked for international markets, including Italy.
The company wouldn’t disclose the total price tag for FL Group but said it paid 900,000 euros ($1.1 million) for the import license.
Aurora’s move
Aurora’s wholly owned German subsidiary, Pedanios GmbH, won a public tender to supply medical cannabis to the Italian government through the Ministry of Defense, which oversees medical cannabis production and distribution in Italy.
The ministry issued an open tender in November for the supply of 100 kilograms of cannabis.
Pedanios was one of two finalists for the contract, along with Spectrum Cannabis, the European subsidiary of Canopy Growth (TSE: WEED).
The tender was worth 573,770 euros, according to documents.
Aurora said it was the first private cannabis company to supply the Italian government directly.
“I would not be surprised to see Germany plus Italy combined reach a million patients within 36 months or less, if their systems prove to be as efficient and smoothly operated as the Canadian regime,” said Aurora’s Battley.
Matt Lamers can be reached at [email protected]
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