Tilray’s facility in Portugal is expected to receive Good Manufacturing Practice (GMP) certification in the coming months, which the Canada-based cannabis company says will open the door for the first shipments from its European facility as early as this summer.
Monetizing European demand for medical cannabis is core to the strategies of many publicly traded cannabis firms, and Tilray – along with Canadian rivals Aurora Cannabis and Canopy Growth – is in a race to tap that market.
A key for all three firms to make global inroads is achieving EU-GMP certification, the accepted seal for international quality compliance.
But unlike its rivals, which are preparing to start sales from their facilities in Denmark this year, Tilray is banking on lower-cost Portugal. (Aurora plans to open a facility in Portugal through a joint venture, but no sales timeline has been disclosed.)
Tilray – sporting a market capitalization in excess of $6 billion – reported international sales of only $2.9 million in 2018.
Investors expect those figures to increase dramatically to justify the company’s valuation.
Demand for medical cannabis in Germany, for example, has soared. Health insurers in the country covered 73.7 million euros ($83.7 million) worth of medical cannabis products last year.
Tilray’s “European campus” in Cantanhede, Portugal, is key to its growth plan.
“We have begun production at Tilray Portugal with a view toward facilitating exports of our cannabis products to countries in the European Union from Portugal rather than from Canada,” the company noted in a regulatory filing with the U.S. Securities and Exchange Commission this week.
Tilray said it was awarded a license to cultivate, import and export bulk medical cannabis in July 2017 by the Portuguese National Authority of Medicines and Health Products.
“The 60-acre campus includes a 65,000-square-foot outdoor cultivation plot, which was harvested in the fall of 2018, a 108,000-square-foot greenhouse with a first harvest completed in February 2019, and a 66,000-square-foot manufacturing facility with an expected completion date in the early part of the second quarter of 2019,” the filing stated.
“Tilray Portugal will serve as our primary supply source for patients in the European Union that have access to cannabis-derived products. Locating cultivation and manufacturing operations in the European Union results in easier and more cost-effective production and distribution.”
In a conference call with investors in mid-March, Tilray CEO Brendan Kennedy said product from the Portugal facility will be used to meet demand in countries around the world.
“We won’t sell product from Portugal until later on this summer, so you’ll see inventory accumulate from there in anticipation of our GMP inspection so we can export to other countries around the world,” Kennedy said.
“As we’re able to sell that product, which is more in the second half this year, that’ll expand the margins,” Chief Financial Officer Mark Castaneda said.
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