Curaleaf Holdings, Inc. (CSE: CURA) (OTCQX: CURLF) said that it acquired a 55% stake in Four20 Pharma, a top five German producer and distributor of medical cannabis in the European Union.
The deal is worth €19.7 million or approximately $19.7 million, according to SEDAR filings.
“We are pleased to complete the transaction with Four20 Pharma and I am personally thrilled to welcome Torsten and Thomas to the Curaleaf family,” said Curaleaf executive chairman Boris Jordan. “Our early focus on Europe has given Curaleaf a formidable strategic asset and strong foundation in one of the industry’s critical global markets.
Four 20 Pharma is one of the largest operators in Germany, having captured more than 10% market share. The company employs 41 team members and is based in Paderborn, Germany.
The allure of Germany’s nascent industry has captured the interests of the largest cannabis corporations, especially as U.S. legalization stalls while adult-use consumption in Germany is slated to roll out in early 2024.
“Curaleaf is the only U.S. MSO uniquely positioned to capitalize on the opportunity,” Jordan said.
Curaleaf said that the deal provides the company a strategic pathway to acquire complete control of Four 20 Pharma by 2026.
“Four 20 Pharma is an ideal asset to accelerate our growth in Germany as the country readies for its conversion from medical cannabis to adult-use,” said Miles Worne, president of Curaleaf International — which already happens to be the largest vertically integrated cannabis company in Europe.
“Curaleaf International continues to build our platform in eight markets, and this deal further underscores our aspiration to be a major player in the European market and the global industry leader,” Worne said.
Though Germany’s adult-use program is still in its infancy, Cantor Fitzgerald analyst Pablo Zuanic wrote in a report last month that sales could begin in early 2025.
Zuanic posited that the actual commencement of sales may be more dependent on whether imports are allowed — “a big if,” he added — or if only domestic production will end up ultimately supplying the German recreational market. Canada, the only G-7 recreational market, does not allow imports.
“If imports are allowed (more likely from within the EU only, at first, at least), we think sales could begin as soon as early 2024 (assuming potential exporting countries enact rules that allow the export of rec cannabis),” he wrote.
The currently existing medical marijuana market — which began in 2017 — has been slow to materialize, he added, with only €300 million in sales as of the report’s August publishing.
Curleaf estimated that the German market could be worth upwards of €1 billion by the end of the first year of legalization.