Netherlands to expand cannabis production, potentially creating competition for Bedrocan

(This article has been updated to clarify that the Office of Medical Cannabis controls the number and selection of supplier of medical cannabis in the Netherlands, though Bedrocan has been the sole supplier.)

The Netherlands is taking steps to boost the country’s medical cannabis cultivation, a move that could end Dutch cultivator Bedrocan’s longstanding monopoly position for supplying the country.

An application process to boost medical cannabis cultivation will be published “this spring,” the Office of Medical Cannabis (OMC) told Marijuana Business Daily.

The Netherlands is currently the main supplier of medical cannabis across Europe, and the move suggests the country doesn’t want to surrender that position.

A Bedrocan spokesperson told MJBizDaily the company “supports the Dutch government in requiring the highest possible quality in the production of medicinal cannabis in the interest of the patients.

“And we believe that competition between producers is beneficial for the quality of products and thus for patients.”

International companies are following the planned expansion closely given that the Netherlands is the largest exporter of medical cannabis flower in the world and borders the large German market.

In preparation, Canada-headquartered Aurora Cannabis bought facilities in the municipality of Wageningen, local media reported. Wageningen is home to the world’s top-ranked agricultural university.

Bedrocan likely to lose monopoly

Bedrocan is currently the only company in the Netherlands that is legally allowed to cultivate cannabis for medical and pharmaceutical use.

That’s because it is the only company to have obtained a permit from the Minister of Health, Welfare and Sport (Minister van Volksgezondheid, Welzijn en Sport) after a successful tender application based on the Opium Act.

The Dutch company grows for the local market and, through the OMC, exports medical cannabis to several European and non-European countries.

The latest application process for cultivation started in April 2018, but the OMC halted it less than three months later, publishing a detailed explanation of the decision last December.

As part of the selection procedure, the OMC wanted applicants to cultivate a trial crop in the Netherlands.

Dutch regulators then recognized that while proving experience with standardized cultivation is key, being able to prove it with crops outside the Netherlands should also be possible. This way, foreign candidates that already have facilities elsewhere do not have to incur unnecessary costs for their participation in the tendering procedure.

A new application process could start any moment.

And, considering how the latest one was aborted, it looks as if holding a trial crop in the Netherlands during the application phase will not be required this time around – a move that would make it easier for cultivators to participate.

The rules for the new application process are not yet public.

Mariska Dreschler, director at GreenTech, believes expanding cannabis cultivation opportunities in the Netherlands is the right move for local businesses.

Netherlands-based GreenTech is one of the largest horticulture trade shows in the world.

“Dutch growers can and should use the expertise that they’ve built up in decades of horticultural excellence, stepping into this promising new crop to create new opportunities for the country,” she said.

Dreschler added that there is great potential for partnerships that combine the strengths of Canada and the Netherlands.

“But if we don’t move quickly, talent will continue to emigrate to the countries with growing legal industries that welcome them,” she warned.

As companies prepare to enter Bedrocan’s home turf, the Dutch company is getting ready to re-enter North American markets.

In 2016, Bedrocan’s partnership with Canada-based Canopy Growth fell apart, as the former wanted to distance itself from Canopy’s adult-use ambitions.

A moratorium agreed to by the companies barring Bedrocan from operating in Canada and South America is set to expire, and Bedrocan is poised for an early return to those markets.

Domestic market Europe’s oldest

At more than 15 years old, the medical cannabis market in the Netherlands is the most mature in Europe.

According to MJBizDaily’s report, “Medical Cannabis in Europe,” Dutch pharmacies dispensed 550 kilograms (1,213 pounds) of medical cannabis in 2018 at an average retail price of roughly 6.15 euros ($6.88) per gram.

Reimbursement is possible but rare. The Dutch National Health Care Institute has reaffirmed several times in recent years that there isn’t enough evidence to justify including medical cannabis in the country’s basic health insurance plan.

Any Dutch doctor is allowed to prescribe for any condition, but, as is common in Europe, only as a last medical resort.

The number of prescriptions fell from 53,300 in 2017 to 49,500 in 2018.

Strong Dutch medical cannabis exports

While the Dutch domestic market stagnated in 2018, the country exported a record 2,050 kilograms of medical cannabis for pharmacy dispensing, more than the exports of all Canadian cannabis producers combined.

In 2018, the OMC doubled exports to Germany, reaching 1,500 kilograms on an annualized basis. The German government expects its first domestic harvest at the end of 2020, but the limited amount of cannabis that will be cultivated means the country will rely on imports for years to come.

Last year, the OMC also agreed to increase shipments to Italy from 400 kilograms in 2018 to 700 kilograms in 2019.

Other countries receive less than 100 kilograms per year from the Netherlands.

A number of countries in and near Europe are gearing up to challenge the Netherlands’ cannabis supremacy, including DenmarkIsraelPortugal and even Malta.

Alfredo Pascual can be reached at [email protected]

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