Sales from Canopy Growth’s large cannabis production center in Denmark are expected to start in September, expanding the limited medical marijuana supply in the German market and giving a boost to the Canadian company’s international revenue.
Canopy is among a number of major Canadian cannabis firms using Denmark as a springboard to meet soaring demand for medical cannabis in the European Union.
Tapping that demand is part of the core strategy of many publicly traded Canadian cannabis firms, whose valuations have soared in recent years based mostly on high expectations for capitalizing on markets outside North America.
Rival producer Aurora Cannabis, for example, recently disclosed the first “saleable” harvest from its Denmark facility would take place in the coming months.
“We expect to see Denmark begin to supply European markets this coming September and contribute to our margin,” outgoing Chief Financial Officer Tim Saunders said on a conference call after announcing the company’s quarterly earnings.
A regulatory filing last week identified Germany as the key market.
Germany has seen high interest in its domestic cultivation program, with 79 applications for the 13 contracts to be granted. However, the amount it is calling for remains well short of anticipated demand in the coming years.
Canopy’s international revenue surpassed 8 million Canadian dollars ($6 million) in the nine months ended Dec. 31, according to the company’s third-quarter fiscal 2019 results, a nearly sixfold increase over the same period the previous year.
Canopy subsidiary Spectrum Cannabis Denmark’s 430,000-square-foot greenhouse in Odense already possesses a cannabis production license from Denmark’s Medicines Agency, Laegemiddelstyrelsen.
The license was issued with no conditions, meaning Spectrum does not have a production cap or limits to the product types it can produce, the company said.
Canopy owns 82% of Spectrum Cannabis Denmark.
Spectrum Denmark has received clones for testing and as mother plants to populate the Odense facility.