The (German) Bid Is Back In Town
July 24th, 2018
For those who missed the notification via the European online bid portal on the 19th, or even the headline on Friday, July 20, the German Bid is back! 15 months after the more or less quiet issuance of the bid the first time (although this announcement turned the first ICBC in Berlin, held just days after into not only a deals circus but a global event from the start).
Since then, through delays, and lawsuits, BfArM, the federal agency who controls all narcotic drugs in Germany – and thus has responsibility for bid administration – has now issued the redux. Also as quietly as they could.
No luck. The global industry, itself a lot more developed during this period, along with the globally focused industry press, was watching.
The tender application process is posted here. For now, only in German.
What Is Interesting?
German authorities posted the bid six days after the news of the bid’s formal demise first surfaced in the press.
The week prior, in the first week of July, the agency had apparently issued an (undated) mass mailing to all bid respondents that they were cancelling the process while refusing to confirm to the press that they had done so. Or issuing a date on which the next tender application would be issued.
A group of industry related professionals, industry advocates, activists and others based in Europe is already informally organizing to get the tender text translated into English – for reasons ranging from holding BfArM accountable to public scrutiny from interested investors.
If a company has a snowball’s chance of becoming a cultivator, being able to afford a German-speaking attorney is not an issue. Being a retail-level investor, however, is a different matter these days.
The deadline for response is late October.
What Is Similar?
At first bird’s eye glance, the second tender requirements look almost identical to the first one. Which means of course, that those who submitted a highly scoring bid last time won’t have much to do on this front all summer. Except make sure they can deliver the commodity. It is clear from activity starting all over the continent that futures contracts for guaranteed, high quality product as of the bid’s delivery date are going through the roof. If one can find them at all right now.
For those in the suspected front runner positions last time, that too should not be any problem. The mostly Canadian companies who either announced or were rumoured to be part of the “Final 10” have all expanded, upgraded, and in some cases gone public. On several international if not U.S. exchanges.
This, beyond “federal grow” experience, is one of the real differentiators this time. But it is not the only one.
What Is Different?
If German authorities were hoping to keep the news quiet (or posting it only auf Deutsch) to limit respondents, good luck with that one. And this time, there well may be “American firms,” who, through strategic financial and geographic positioning in the last 15 months have changed the equation. And thus could qualify. Even if the crop they provide is not from the U.S., nor is their corporate HQ located there. Or their public stocks issued on a national stock exchange.
However that development too is bringing U.S. capital at least into the global and this time potentially German game – even if American cannabis is still, for the time being, landlocked.
The Israelis and the Australians also pose more of a market presence if not threat this time. Both have been busy setting up market presence in Greece, Eastern Europe, and the Balkans. If nothing else, these firms will be on the frontline of deciding whether to enter the bid directly for round 2 or partner with someone a little more strategically if not advantageously poised but with a need for commodity backup should the Canadian recreational market put too much demand on domestically produced warehoused crop.
Read in other words, with access to serious bank.
Except this time, that is also clearly not the only important part of the equation.
The Bid Amount Is Still The Same – And So What?
The amount of crop grown in Germany (officially) has been officially set now for at least the next three years, barring patient lawsuits for deliberately producing less than the market can already (easily) justify. In fact, according to one of the country’s top health insurers, in the past year, only one third of all patient prescriptions have actually been cannabis. The rest have been the synthetic dronabinol or other variations on a theme (Sativex is expensive for the German market). In a frustrated market, this is the kind of thing that can happen.
It may have influenced things this time.
Literally, days before the first letters from BfArM apparently began to be sent out, one of Germany’s most activist, legally minded, patients, Guenther Weiglein, won another victory in court – in Bavaria, – known as the most conservative German state. The issue at hand? Not being fined for growing his own supply in a situation where he could not afford his meds any other way or access it via his insurer.
Bottom line on the story here? It will be far, far cheaper to import into Germany – and not from Canada, but across the European continent (not limited to just EU members). Holland is often mentioned, but that is not really the entire story. Dutch firms are limited by domestic, not German law, on how much they can export. So see Spain, Portugal, Eastern Europe and of course, Greece. And don’t expect frustrated German patients to sit this one out.
Germany Will Be An Import Market Sourced From Europe
This is not a surprise either. The big firms have been aligning themselves this way for the last 12 months.
The difference this time? By the time tender respondents have to start guaranteeing crop (no matter where it comes from or where it is grown), Israeli firms will most likely be finally in the game as exporters. Even if not based in Israel. Australians do not have such issues even now. But they too are moving into this market aggressively and via similar strategies.
What investors and contenders have to consider this time, frankly, if this bid exercise is little more than window dressing. And if Germany is worth all the expense, risk, and contortions. At least at this point.
Here is why. An established German national distributor, with existing contracts and relationships to the network of German pharmacies and with access to crop grown in a country geographically close to Germany (in any direction) for the short term, is in a better position than anyone relying solely on expensive German grow operations to meet the current demand and with better prices.
Plus there is this to consider. Why grow auf Deutschlandwhen companies can import raw crop cheaply and focus on processing, rather than growing in-country for a market that is going to be medical only for at least the next four to five years?
What is crystal clear, in other words, about recent developments, is that at least for the foreseeable future, the firms who make it through the bid this time will have expensive “store front grow ops” in a country which still rely on imports to supply a market which is establishing itself with authority.
One thing, at this juncture, therefore is crystal clear. Despite huge domestic interest in cannabis as medicine now in Germany, when it comes to growing, authorities seem determined to keep as much cannabis cultivation out of the country as possible, for as long as possible. And in the meantime, allowing other forces (including European and German distributors and even pharmacies directly) to source it from, literally, the rest of the world.
Follow Us on Social Media
About CFN Media
CFN Media (CannabisFN) is the leading creative agency and media network dedicated to legal cannabis. We help marijuana businesses attract investors, customers (B2B, B2C), capital, and media visibility. Private and public marijuana companies and brands in the US and Canada rely on CFN Media to grow and succeed.
CFN launched in June of 2013 to initially serve the growing universe of publicly traded marijuana companies across North America. Today, CFN Media is also the digital media choice for the emerging brands in the space.
Disclaimer: Matters discussed on this website contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, is not registered with any financial or securities regulatory authority and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may from time-to-time have a position in the securities mentioned herein and will increase or decrease such positions without notice. The Information contains forward-looking statements, i.e. statements or discussions that constitute predictions, expectations, beliefs, plans, estimates, or projections as indicated by such words as "expects", "will", "anticipates", and "estimates"; therefore, you should proceed with extreme caution in relying upon such statements and conduct a full investigation of the Information and the Profiled Issuer as well as any such forward-looking statements. Any forward looking statements we make in the Information are limited to the time period in which they are made, and we do not undertake to update forward looking statements that may change at any time; The Information is presented only as a brief "snapshot" of the Profiled Issuer and should only be used, at most, and if at all, as a starting point for you to conduct a thorough investigation of the Profiled Issuer and its securities and to consult your financial, legal or other adviser(s) and avail yourself of the filings and information that may be accessed at www.sec.gov, www.pinksheets.com, www.otcmarkets.com or other electronic sources, including: (a) reviewing SEC periodic reports (Forms 10-Q and 10-K), reports of material events (Form 8-K), insider reports (Forms 3, 4, 5 and Schedule 13D); (b) reviewing Information and Disclosure Statements and unaudited financial reports filed with the Pink Sheets or www.otcmarkets.com; (c) obtaining and reviewing publicly available information contained in commonlyknown search engines such as Google; and (d) consulting investment guides at www.sec.gov and www.finra.com. You should always be cognizant that the Profiled Issuers may not be current in their reporting obligations with the SEC and OTCMarkets and/or have negative signs at www.otcmarkets.com (See section below titled "Risks Related to the Profiled Issuers, which provides additional information pertaining thereto). For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity-based compensation in the companies it writes about, or a combination of the two. For full disclosure, please visit: https://www.cannabisfn.com/legal-disclaimer/. A short time after we acquire the securities of the foregoing company, we may publish the (favorable) information about the issuer referenced above advising others, including you, to purchase; and while doing so, we may sell the securities we acquired. In addition, a third-party shareholder compensating us may sell his or her shares of the issuer while we are publishing favorable information about the issuer. Except for the historical information presented herein, matters discussed in this article contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, is not registered with any financial or securities regulatory authority, and does not provide nor claims to provide investment advice or recommendations to readers of this release. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may from time to time have a position in the securities mentioned herein and will increase or decrease such positions without notice. For making specific investment decisions, readers should seek their own advice and that of their own professional advisers. Emerging Growth LLC dba TDM Financial, which owns CannabisFN, may be compensated for its Services in the form of cash-based and/or equity- based compensation in the companies it writes about, or a combination of the two. For full disclosure please visit: https://www.cannabisfn.com/legal-disclaimer/.