After sweeping changes were made to medical cannabis legislation this year, Denmark has found itself in a uniquely advantageous position in the international market. Although there are social and regulatory challenges, Denmark is poised to become one of the biggest players in the industry.
Annie McCann
On 1 January 2018, a four-year medical cannabis trial was implemented in Denmark and companies were given legal permission to produce, import and sell specified cannabis products.
CannGros, a Danish company founded in lieu of the trial, was granted permission under the new regulation to repackage and sell imported cannabis products.
“We were inspected by the Danish Medicines Agency in December 2017 and obtained our license to import and control cannabis substances in January,” Director of CannGros Henrik Uth says. “We were the first in Denmark to obtain this license.”
CannGros now sells Bedrocan, Bediol and Bedica. According to Uth, the legal product list is growing.
“There are six products on the list of cannabis products approved by the Danish Medicines Agency; three of which are ours and three which belong to another company.”
The other company is Stenocare. In October, Stenocare became the first European cannabis company to launch an IPO on the Spotlight stock exchange. Investors have snatched up shares, rising from 8.80 dkk on September 24 to 18.34 dkk per share.
However, the frenzy around medical cannabis has not gotten Uth too swept away. His company's growth has slowed due to the reluctance of doctors and consumers to trust the product.
“We are very early in the trial scheme. There’s been a lot of sceptical doctors and a lot in the media about the doctors who are not willing to prescribe these products. For the same reason, the development and sales is slow.
“We have a positive development, however, not a dramatic positive development.”
Denmark's Horticultural Roots
Within Denmark's budding cannabis industry, the humble city of Odense is becoming a hub for emerging businesses.
The head of Health at Odense City’s Invest in Odense department Lone Krogsbøll believes Denmark is in a unique position to capitalise on the market more effectively than other countries.
“We have know-how within horticulture that they don't have in Canada,” Krogsbøll says. “We have much higher salaries than in most countries. We also have expensive energy taxes, so there’s really an incentive for the Danish horticulture industry to make it cheaper and more efficient. That’s why we today have a huge advantage within the industry and in competition with other countries.”
So far, Canadian companies such as Canopy Growth, Aurora Cannabis and CannTrust have found vast success in their domestic markets, with Canopy reporting revenue greater than CAD $70 Million for 2018. These same companies are now expanding internationally - with Denmark as their first port of call.
“We already have a lot of interest internationally from investors looking to come to Odense, searching for horticulture companies,” Krogsbøll says.
“They want to be a part of this medical cannabis fairytale.”
Krogsbøll suggests that existing horticulture companies in Denmark adjust their practices if they want to succeed in the emerging industry.
“It’s a way for some of our horticulture companies to rethink their business and scale,” Krogsbøll says. “We see not just that we get a lot of new jobs, but also that a business that has been in Odense for many years has an opportunity to upscale again.”
Cultivating a Cannabis Brand
Larger cannabis companies in Odense, such as Spectrum Cannabis, have created upwards of thirty jobs during their upscaling and construction process. Spectrum is a subsidiary of Canopy Growth; the largest global medical cannabis producer operating in Canada since 2014.
Already in the company's construction phase, rows upon rows of cannabis plants can be seen at Spectrum's new Odense greenhouses. Amidst daily construction, the intergenerational “mother plants” and young plants are stimulated by lighting and heat that mimics summer and spring.
The company's manager Lisbeth Kattenhøj says Spectrum is advantaged by their thorough supply chain management; importing, growing, testing and developing their own products.
“In the beginning, we will not have as many specialised products as Canada,” Kattenhøj says. “Importing will give us the opportunity to have a higher variation of products. That will benefit us working with competitors, but also for Danish patients in general.”
With nine strains in progress, Kattenhøj says patients will soon see greater variety for the formulation and ingestion of their prescribed medications.
“For patients, what matters is that you can have a variety in strength and composition; whether it's high or low THC, whether you want to vaporise your treatment, or ingest it as a soft-shell cap. I think that’s where patients will see the largest difference and how we will be able to differentiate ourselves in the market.”
Sustaining Industry Growth
Cannabis growers are optimistic, but say that the regulations require ongoing adjustments. For example, extracting active cannabinoids can only legally occur with Danish-grown cannabis, leaving importers like CannGros disadvantaged.
“I think there are a few, let's say, ‘errors' in the regulations,” Uth says. “Of course, it is a political thing to develop a Danish cannabis growing industry, yet we live in the European Union, where goods usually move free across the borders.”
“But it's very good that Denmark has been so proactive and allowed businesses to develop. It gives Danish companies a head start in gaining competencies and building more within this field of knowledge.”
Fears of unfounded hype have seen businesses like CannGros avoid entering the stock exchange. But Krogsbøll sees “stronger companies with investments from abroad” as vital to boosting Denmark's economic potential, while Kattenhøj views the trend as an opportunity to put Denmark ahead of the pack.
“We’ve been on the Toronto stock exchange for quite some time, and we have heavy investors from outside the company,” Kattenhøj says. “Stenocare as well were heavily successful from the beginning, so I think that shows a trend.
“Whether the hype will be as big as it is now, I don’t know, but there’s definitely a huge demand for medical cannabis.
"There’s a lot of hype around this industry, but that's also because there’s huge potential.”
HEAT: The cannabis sheds at Spectrum use simulated heat and light for up to 16 hours a day. Source: Annie McCann.
Σχόλια