German tech investors have taken their first step into the cannabis space backing leading domestic business, Demecan.
The Berlin-based company was the only German firm to secure one of three cultivation contracts to support the country’s blossoming medical cannabis market. And Demecan has now secured the support of btov Partners which has previously invested in tech startups such as Facebook, DeepL, Foodspring, Blacklane, and Data Artisans, reports the TechCrunch website.
In a 7 million Euro funding round initiated by Demecan Btov was one of two major contributors, with the second being a network of high-net worth individuals.
The cash will be used to expand Demecan’s production facilities for medical cannabis and support the development of its wholesale network across Germany. Jennifer Phan, of btov, which manages assets of 420 million Euros, said Demecan benefits from ‘first-mover advantage in a highly regulated market’ and is ‘the only German manufacturing and trading company in the European market’.
Germany legalized cannabis medication in 2017 and there were an estimated 30,000 patients by the end of 2018, with imports of cannabis totaling 22,000 kilograms. Earlier this year Canadian companies Aphria and Aurora and Demecan successfully bid to win licences to supply the German market which is currently reliant on imports from Holland and Canada.
Further Supply Opportunities
The licensing regime, approved by Germany’s Federal Institute for Drugs and Medical Devices, means Demecan will be able to produce at least 2,400 kilograms of dried cannabis flowers over the next four years. The company is also an active importer and wholesaler of medical cannabis.
Meanwhile Canadian company Quality Green, says it has designs on the German market with applications for export licenses pending, reports Investing News website. If successful the company says it will begin exporting next year, as it believes the cultivation licences issued to Demecan and the two Canadian firms will not be sufficient to meet with demand.
Germany is seen as the biggest European market opportunity with an advanced medical cannabis program and a population of 90 million. It is attracting major overseas investment, and the investment into Demecan is one of the first major homegrown investments into the cannabis industry.
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