Luc Springinsfeld of leading investment bank Bryan, Garnier & Co explores the European medical cannabis market and the rise of medical cannabis investment in Europe.
Since the beginning of 2019, there have been a dozen mergers and acquisitions or private placement deals with values above €5m involving companies focused on medical cannabis in Europe. In total, north of €100m of new money has been invested in medical cannabis-focused companies across Europe over the past 18 months. While this represents a sharp increase compared with the period before 2019, we are still far from the levels experienced in North America, where more than $3bn was invested in the medical cannabis market through more than 450 deals in 2019.
In the early days of the industry, most investments were from high net worth individuals (HNWIs) and family offices, or from exclusively cannabis-focused funds. However, the past 12 months have seen increasing interest from traditional venture capital (VC) firms. While many remain barred from investing in cannabis-related companies by the constraints of their limited partnership agreements, we expect more dedicated funds and a wider base of investors to emerge, attracted by the high growth potential of the cannabis market.
A strong focus on Germany
In Europe, 80% of deals concerned Germany-based companies, all of which are active in the distribution of medical cannabis products within the country.
One notable example is the €20m fundraising by Sanity Group, which saw the US-based cannabis-focused VC firm Casa Verde invest in the company alongside more traditional VCs such as Holtzbrinck, Cherry and TQ Venture. This round had a first close announced in August 2019 and a second close in February 2020.
Pioneering medical product distributor Cannamedical also recently announced a capital increase of €12m, funded by US-based traditional healthcare investor Steve Wiggins, which brought the total amount invested in the company to EUR27m. The deal was closed in April 2020, in the midst of Germany’s government-imposed lockdown, demonstrating the continued appetite of investors for the space despite the Covid-19 crisis. CanPharma, another leading German medical cannabis supplier, is also currently raising a double-digit million-euro round. Other companies involved in the German cannabis sector and likely to raise additional funds in the coming months include Emmac Lifesciences, Foliumed and Wundr/iuvo.
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