Opinion: 2022 could be the year for pharmaceutical marijuana

Image depicting medical marijuana

Image of Michael Sassano(Editor’s note: This story is part of a recurring series of commentaries from professionals connected to the cannabis industry. Michael Sassano is the CEO and chair of Somai Pharmaceuticals, a Dublin-based company focused on pharmaceutical extraction, manufacturing and formulation of medical cannabis throughout the European Union.)

Last year proved to be an interesting one for the entire cannabis industry.

In particular, the emergence of large pharmaceutical companies entering the space has returned attention to medical cannabis and brought it out from under the shadow of the adult-use market.

There is a belief that the legal passage of adult-use marijuana renders the medical cannabis market obsolete.

However, that is not what we learned from 2021, and 2022 is looking like the year pharmaceutical cannabis becomes a major market driver.

A year of big deals

The few 2021 deals in pharmaceutical cannabis mergers and acquisitions dwarfed any recreational M&A over the past few years:

  • Jazz Pharmaceuticals kicked off the year with the acquisition of GW Pharmaceuticals for $7.2 billion.
  • By the end of the year, Pfizer inked a deal to buy Arena Pharmaceuticals for $6.7 billion.
  • Dermapharm Holding SE in Germany bought Canopy Growth’s cannabinoid subsidiary C3 for 116 million Canadian dollars.
  • Teva Pharmaceuticals did a preliminary distribution deal with Israel’s Cannbit-Tikun Olam.

To be fair, the Tilray-Aphria merger created the world’s largest adult-use cannabis company by revenue, with a combined valuation of roughly $8 billion at one point.

Likewise, there were many notable recreational market deals in the pre-2019 crash period, including:

Whereas most of those deals proved to be overvalued post-crash, pharmaceutical buyouts flexed their muscles in 2021.

Some big players such as Aurora and Tilray-Aphria also pivoted in 2021 toward pharmaceutical marijuana while most Canadian cannabis companies and multistate operators also enjoyed explosive growth in the recreational market.

Pivots by recreational operators toward pharmaceutical cannabis applications involved Curaleaf’s purchase of Emmac Life Sciences in a $286 million deal and the attention-grabbing Clever Leaves SPAC.

Even tobacco superpower Philip Morris has signaled a continued interest in the pharmaceutical cannabis market side with investments such as Syqe Medical.

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However, Canopy Growth and other Canadian companies threw in the towel on pharmaceutical cannabis to concentrate on the recreational market.

Big Tobacco and Big Alcohol are also signaling operational interest primarily in the adult-use market in moves such as Constellation Brand’s investment in Canopy Growth, British American Tobacco’s investment in Organigram Holdings and other entrants from Molson Coors into CBD to Pabst Blue Ribbon’s THC-infused seltzer to Heineken’s launch of a THC-infused drink.

Room to grow

Both the medical and recreational cannabis markets have much work to do, considering prohibitionist policies that have been in effect for decades are just now beginning to crumble globally.

The United Nations vote at the end of 2020 to reclassify cannabis paved the way for pharmaceuticals to enter the international space.

The potential uses for cannabis in pharmaceutical applications are accepted almost worldwide now and are a primary driver for legalization in Europe.

While recreational cannabis has swept most of North and South America and created early rumblings in Germany, Luxembourg, Malta, Portugal and Switzerland in the EU, it remains to be seen if medical cannabis applications will become globally accepted as registered and tested pharmaceuticals that doctors around the world can prescribe.

In the meantime, the dominance of the U.S. and Canada in recreational cannabis sales is hard to ignore: Those two countries account for nearly 80% of the global market revenue in the space.

But Europe is going to show the most advancement in pharmaceutical cannabis.

With nearly an entire globe having been denied access to medical cannabis, 2022 stands to be another blockbuster year for the entire industry as more countries and U.S. states come online and pharmaceutical companies innovate in another round of progressive developments.

Michael Sassano can be reached at ms@somaipharma.eu.

The previous installment of this series is available here.

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