Medical marijuana companies in Denmark attracted external capital of more than 1.5 billion Danish kroner ($217 million), including founders’ own investments, which works out to an average of $6 million per business.
The funding was raised since the Danish government launched its medical cannabis pilot program in 2018.
According to a new report, conducted by Copenhagen-based Iris Group for the investment promotion agency Invest in Odense, the largest investments came from founders and employees who invested $96.5 million, comprising 44% of investments.
Other sources of funding were:
- Share capital (25%).
- Seed and venture capital (25%).
- Loan capital (25%).
- Grants from public funds or programs (15%).
- Angel Investors (10%).
- Other sources (5%).
For the report, the Iris Group surveyed Denmark’s 36 medical cannabis companies in 2021.
The 36 companies included a few large medical cannabis producers, including a European subsidiary of Canada’s Aurora Cannabis and Australia’s Little Green Pharma, plus a large group of small and newly established companies.
The $217 million in funding doesn’t include investments from companies such as Canopy Growth, a Canadian producer that pulled out of the market when it sold its Danish assets to Little Green Pharma.
Those companies employ 286 full-time employees.
The analyses suggested that Europe’s market for medical cannabis is evolving toward a more pharmaceutical approach to product development and distribution, as opposed to a dispensary-style model commonly seen in North America.
“Most of the growth in the European medical cannabis sector will be generated by sales of extracts and isolates rather than dried flowers,” the report noted, citing various forecasts.
Dried cannabis flower accounted for less than 90% of medical cannabis sales in Europe in 2020, falling to a little more than 70% in 2021 and over 50% in 2022.
A Prohibition Partners report in 2021 suggested flower could fall to just under 45% of all sales in 2023.
The Danish government launched a four-year pilot program for medical cannabis in 2018. The program was extended in 2021.
The report, however, does not go into much detail about the struggling pilot scheme. That program peaked at 1,000 patients in the second quarter of 2019 but failed to reach 500 patients in each of the past nine consecutive quarters.
Considering all regulated medical cannabis products, including those accessed via the trial program and magistral preparations (medical products prepared in pharmacies), there were nearly 2,000 patients in 2019, falling to a little more than 1,400 at the end of 2021.
The program has effectively experienced no growth over the past two years, meaning the vast majority of the Danish medical market remains underground, untapped by legal companies – and out of sight for regulators.
Instead, the report found that Danish medical marijuana companies expect future growth to be primarily driven by increased exports.
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However, the report doesn’t acknowledge that every export market needs an import market, and import markets for medical marijuana have developed at a much slower pace than most businesses plan for.
For instance, the report notes that Germany is the top import market for Danish medical cannabis products, but the German market for publicly reimbursed products has stagnated in recent quarters.
The full report is available here.