During the last year, we have seen a significant shift in the cannabis sector to where the market is considerably more focused on the international opportunity. Although Canada remains a great opportunity, the market is saturated, and distribution is limited. For this reason, we have seen a significant increase in the number of companies that are focused on the cannabis market in the European Union (EU).
With a population that is twice the size of the US, we are bullish on the cannabis opportunity in the EU and believe that this will be the next frontier of growth for the industry. Today, we have highlighted 3 companies that are focused on a number of markets in the EU and believe that these are opportunities to have on your radar.
Canopy Growth is a Global Cannabis Leader
Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) is the largest cannabis company in the world and has been highly focused on the global opportunity. The last few years have been busy for the Canadian cannabis producer and we are bullish on the growth prospects associated with the international markets that it has leverage to.
When it comes to the opportunity in the EU, Canopy Growth has been nothing short of an execution story and has been reporting ramping revenues from the region. Last year, the company completed a series of acquisitions to enhance its leverage to the EU and we want to highlight the leverage that it has to Spain.
Last year, Canopy Growth entered the market through the acquisition of Cáñamo y Fibras Naturales, S.L., a licensed cannabis producer in Spain. The acquisition will allow the company to further expand its European production footprint. The asset complements Canopy Growth’s existing 430,000 square foot licensed production facility in Denmark, as well as its state-of-the-art ISO 13485 internationally certified facility in Germany.
Cáñamo is one of three companies in Spain authorized to cultivate, distribute and export cannabis containing more than 0.2% of tetrahydrocannabinol (THC) for medical and research purposes. The company is also licensed to conduct hemp cultivation and we are favorable on the growth prospects associated with the operation. Through the acquisition, Canopy Growth has been able to enhance its ability to capitalize on the increasing demand for medical cannabis and CBD products across Europe.
One of the reasons we are bullish on the acquisition is related to Canopy Growth’s ability to fund and grow the business. Earlier this month, the company reported better-than-expected quarterly financial results and we expect the international side of the business to play an important role in its growth on a going forward basis.
Aurora Cannabis is Working to Turn Things Around in Germany
Aurora Cannabis (ACB.TO) (ACB) has been one of the most well-known names in the cannabis industry and is an opportunity that we have been following since inception. Like Canopy Growth, the company has been highly focused on the international cannabis opportunity and has been a beneficiary of the legal cannabis movement in the EU.
The last few months have been tough for Aurora Cannabis and we continue to follow the trend. When it comes to the international cannabis opportunity in Europe, we are most excited about the company’s leverage to the German medical cannabis market. Aurora Cannabis recently announced that it would start to sell products in Germany and this is something that our readers need to be aware of.
Going forward, the name of the game for Aurora Cannabis is execution and we will monitor how the management team is able to turn the story around. Following a series of downgrades from leading broker-dealers focused on the cannabis sector, sentiment seems to have bottomed and this is an opportunity that we will continue to closely follow.
The United Kingdom has been Slow to Advance
One market that has been slow to evolve in the EU is the United Kingdom (U.K.) and this is an opportunity that we are highly focused on. During the last year, we have noticed a significant increase in the number of companies that are focused on the hemp and CBD opportunity. When it comes to the THC opportunity, there market is not there yet and this is a trend that we will continue to follow.
GW Pharmaceuticals (GWPH) initially set up operations in the U.K. and it has been highly focused on the development of cannabis based pharmaceutical treatments. During the last year, the company has recorded impressive growth and has reported substantial revenue growth. The management team has been highly focused on bringing new products to the market and this is an opportunity that we are excited about.
During the last year, GW has been trading in a volatile pattern and we will continue to closely monitor the opportunity. Although the last year has been volatile, 2020 is proving to be a period of growth for the business and we believe that it has reached an inflection point. We are of the opinion that GW is flying under the radar and is a company to have on your radar.
Published at Thu, 20 Feb 2020 12:17:35 +0000