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RIDDLE OF THE DAY - IS HEXO SELLING MJ IN EUROPE?

[riddler]

Yes, NO or Maybe??

HEXO began its plan to enter the European market in 2018 with the launch of HEXOMED. The CEO of HEXO at the time said:

“This is a major step for HEXO as we continue to execute towards becoming a top three global cannabis company,” said Sebastien St-Louis, HEXO Corp CEO and co-founder. “Receiving licensing in Greece will allow us to bring know-how and brands powered by HEXO to the European market. The new facility will also drive value for current and future Fortune 500 partners by giving them access to licensed infrastructure internationally with the vision of capturing first-mover advantage in the burgeoning European cannabis market.” 

In 2019, HEXO announced that HEXO Corp affiliate secures medical cannabis license in Europe HEXO Corp is pleased to announce that its affiliate, HEXO MED S.A., has received a medical cannabis installation license. The license, issued by the Greek government, will allow HEXO MED to establish cultivation, processing and manufacturing facilities in the region of Thessaly, Greece. With HEXO Corp's experience in the industry, HEXO MED is poised to become a leader in the European cannabis landscape.

HEXOMED was a JV wiith another company in Greece. Construction began, but was halted and HEXO backed out of the JV quietly without a NR or announcing the closure of the JV and HEXOMED. It was noted in the company Management Discussion and Analysis. There was no mention about how much money HEXO lost in this endevour.

HEXO then decided to enter the European through the acquisition of ZENABIS.But ZENABIS, according to its third quarter financial filings, formed ZenPharm to service the European medical cannabis market in October 2019. As of Sept. 30, the company said it held a 60 per cent ownership interest in ZenPharm. The other portion is owned by its partner Natrix Sciences Limited Malta.  But upon closer examination, ZENABIS has not sold a gram of MJ in Europe as of yet:

From ZENABIS most recent MD&A: 

Zenabis expects to commence recurring commercial exports to the European Union during Q2 2021 with regional sales in Europe by ZenPharm commencing soon after. However ZENASIS, a two years ago said in a June 2019 update that shipments would commence in the fourth quarter of 2020, but never did. 

So it would seem that HEXO does has not sold any MJ in Europe and given that its acquisition of ZENABIS will occur later in the year, it is fair to assume it could begin soon.

How much. who knows but it would seem from all accounts that this will take many years to build out, if it does, given that the European market is already saturated with producers, internatinoal and national. Look at the investment by Aphria into Europe and it is fair to assume that this new European adventure not amount for much for HEXO. We will see. 

As noted by another author:

"All in all, Zenabis’ European entry looks to be a small, non-exclusive supply deal with a distributor owned by another licensed producer,” he said. “If this deal for 1,500 kilograms over three years represents expansion into Europe by Hexo, I would describe this ‘expansion’ as very underwhelming.”

Stay tuned for our next riddle. 

Riddler