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Diversified Cannabis Company Establishes Strong EU Footprint

Jeff Nielson Jeff Nielson, Stockhouse
1 Comment| February 1, 2019

Click to enlargeCannabis is a global, diversified industry. Aura Heath Inc (CSE: BUZZ, Forum) is a global, diversified cannabis company. On January 24, 2019; the Company announced a deal that emphasized the “global” in this cannabis business model: a binding letter of intent (LOI) to acquire 80% of Pharmadrug Production GmbH, based in Germany.

Aura Health isn’t a new name to the Stockhouse audience. On September 20, 2018; we introduced investors to BUZZ with a full-length feature article.

CannabiSendak is one branch of the Company’s Israeli operations, focusing on development of a chain of licensed medical cannabis dispensaries. These operations are augmented by Buzz’s other Israeli subsidiary, HolyCanna Ltd, holder of one of the very few medicinal cannabis cultivation licenses in Israel. Its location in north-central Israel provides ideal cultivation conditions for cannabis.

The acquisition of Pharmadrug is the final puzzle-piece in this international expansion. The synergies here are very strong, but (for North American investors) perhaps not obvious. Israel has already established itself as a hub for medicinal cannabis research, described by some as “the Silicon Valley of medical marijuana”.
With synchronicity in their production standards and with the final passage of Israel’s cannabis export law just completed, Israel immediately becomes a natural conduit for the supply of medicinal cannabis into the rapidly germinating German (and European) medicinal cannabis market, with HolyCanna poised to service this market.
(click to enlarge)

Pharmadrug provides the key regulatory and distribution access point to this market. More specifically, this acquisition adds value for shareholders in the following ways:
  • A cash-flow positive pharmaceutical distribution company with a 20+ year operating history
  • A Schedule I European Union narcotics license that authorizes the distribution of medicinal cannabis to pharmacies in Germany and the rest of the EU (as additional markets are legalized)
  • A supply agreement with Bedrocan International B.V.
  • A supply agreement with an additional (unnamed) Western Canadian Licensed Producer
The purchase price for this 80% interest is €5 million, payable in three installments. The vendor, Anquor Pharmaceuticals Ug will retain a 20% interest.
The EU has only recently finished establishing its regulatory framework for the legal distribution of medicinal cannabis. Aura Health is now strongly positioned to become an early mover in not only Germany’s (relatively) new medicinal cannabis market, but also other EU jurisdictions as the normalization of cannabis laws opens up additional markets.
Pharmadrug’s existing supply agreements, combined with its new supply source (via Israel and HolyCanna) secures a robust supply of medicinal cannabis to service these additional markets.
North American investors are already seeing the growth potential of the cannabis industry within Canada’s cannabis market (population: 36.7 million) and the state-by-state evolution of cannabis in the U.S. With its population of 82.7 million people, Germany is now the world’s single-largest market for the legal distribution of medicinal cannabis. And as legalization spreads through the Euro Zone, this (potentially) opens up a market of more than 500 million people.
Aura Health’s latest acquisition provides an exciting global cannabis platform, strongly positioned to be an early mover as the EU follows North America in legalizing cannabis for medicinal use. This strategic positioning in the European market also makes Aura Health an attractive partner for Canadian LP’s – or even a take-out target. All this derived from a market cap of (at the moment) only $12 million.
FULL DISCLOSURE: This is a paid article of Stockhouse Publishing.

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Some more numbers needed,indoor or outdoor production profile ?Financing needed to pay for pharmaceuticals distribution?
February 1, 2019

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