This week for our Power Players interview we spoke to Deepak Anand, a Canadian lawyer and CEO of Materia Ventures, a multi-faceted operator active in several European countries. We discussed the evolution of MED on the continent, the best place in Europe to set up a CBD business, and why the Canadian market is gaining steam. He’s also a prominent voice on cannabis Twitter.
This interview has been edited for length and clarity.
WeedWeek: Can you tell us a bit about yourself and Materia Ventures?
Deepak Anand: I’ve been involved in the Canadian cannabis industry for just over seven years. I’ve been a policy advisor to a number of different governments internationally and have worked very closely with the government of Canada in establishing the MED program and also the REC program. Materia Ventures is a company that I founded about a year, a year and a half ago. We’re focused on the European market with respect to medical cannabis and CBD.
WW: You’re investing in companies, then?
DA: No, we’re an operator. We don’t currently cultivate anything in the market, but we manufacture and distribute products in Canada and also internationally. We’re a house of brands on one side, and a MED manufacturer and producer on the other.
WW: All focused on Europe?
DA: All focused on Europe.
WW: Can you give us an overview of the European market right now?
DA: Absolutely. MED has been legal in a few European countries for quite some time now. The biggest market in Europe is currently Germany. There’s also a few additional countries that have legalized cannabis for medical purposes, including the U.K., Denmark, Portugal that have set up a framework.
Much like we’ve seen in Canada and the U.S., there’s been slow uptake amongst many countries in general, with respect to patients coming on board and physicians actually prescribing cannabis for medical purposes. But Germany seems to have gotten over that.
Germany: MED Trailblazer
WW: Can you give us an idea of what the German market looks like?
DA: Medical cannabis in Germany, unlike the U.S. and unlike Canada, is actually legal at the federal level. It is also possible to get access to cannabis for medical purposes from a pharmacy. You could go to a physician who would prescribe you with medical cannabis. You would then walk out with the prescription and take it to any pharmacy. There’s a number of pharmacies in Germany that have become MED specialists.
It’s quite mainstream and quite easy to access, particularly when I compare this to Canada or the U.S., where we still don’t have retail pharmacies that dispense the product. Germany is, I would say, ahead of the rest of the world with respect to that.
WW: Is that smokable?
DA: Yes. The main forms of cannabis that are being prescribed are 1) Dronabinol, a combination of a synthetic and a full-spectrum product. 2) But the majority of the that is being prescribed currently are either being smoked or vaporized. There have been some oil products that have being launched in the German market, but that’s been slow from a sales perspective.
WW: Where does it come from?
DA: Close to 100% of product in Germany is being imported. A bulk of product is coming in from the Netherlands. Canada also seems to be a big supplier of cannabis that comes into Germany for medical purposes. And now we’re seeing product from additional countries, like Spain, Portugal and Israel, start to trickle in.
MED Gains Traction in Europe
WW: Germany is a key European economy. Where does it go from here in Europe?
DA: A few things to mention there, one with respect to the way that medical cannabis is regulated. It’s very different, the way Europe works on everything pharmaceutical or medical. There’s typically a harmonized approach: All 31 members of the European Union look to harmonize their laws and regulations of many things.
With respect to cannabis, however, we’ve seen a great amount of separation. For example, in Germany, it’s regulated completely separately than it is from Denmark. Germany has regulated this very much as a pharmaceutical product. But you’ve got a number of East German states that regulate cannabis differently. So even within Germany, there’s still regional implications that apply. I don’t expect it to happen anytime soon, but what’s on the horizon will be more of a harmonized approach.
The other thing that you’re seeing is countries, Denmark is an example, have created a trial program allowing for products in addition to flower and oils. We’ve seen capsules that have been launched most recently in the Danish market. So we’re seeing additional markets come on stream. We’re seeing the U.K. having legalized cannabis for medical purposes now. They’re expanding out their prescribing base. Patient numbers in Europe are going to increase, albeit slowly.
There’s also larger countries in Europe, such as France, that have indicated they’re going to come up with a two-year program. Again, there’ll be slow uptake of patients, and there’s still some uncertainties with respect to the regulatory structure. But there are other larger European markets that still need to come on stream.
I talked a lot about medical cannabis but not enough on CBD. With respect to CBD, we’ve seen the U.K. and Europe move in two different directions. Of course, post-Brexit, we’ve seen the U.K. is separate from Europe generally. But with respect to CBD, there’s something called the novel foods process.
At one time, CBD was included as a novel food. The European Food Safety Authority, which regulates food products in Europe,said they want to legalize CBD and allow it to be sold in retail locations. But in the last few weeks, we’ve seen Europe say that they’re going to walk that back and are actually going to consider CBD as a narcotic product.
The U.K. on the other hand has proceeded with regulating CBD as a novel food. And therefore, if you want to get on a retail store shelf and have an ingestible CBD product, all you need to do is have this novel food application submitted to the Food Safety agency in the U.K. So we’re seeing quite a divergence on CBD.
More generally, particularly for me being Canadian, one of the interesting things that I observed was the CBD market across all of Europe is very much mainstream. It’s available at pharmacies, Christmas markets. It’s available very openly and freely, and Europeans in general have not really had a hard time accessing CBD.
But I think the position that some governments are taking across Europe is one that’s going to be a restrictive one. And so there’s quite a bit up in the air with respect to CBD. But the definitive point is that the U.K. would still be a really good entry point for anyone looking to get into the CBD market because the regulator there has allowed for ingestible products to be sold at retail pursuant to a novel foods application.
Will Europe Legalize REC?
WW: What about REC? Do you see anything similar to what’s happening in North America evolving there?
DA: A lot of noise has been made with respect to REC, although I don’t know how quickly everything is going to materialize. We’ve seen Switzerland announce that they’re going to come up with a REC program. We know that Luxembourg has also made a similar announcement. In fact, Luxembourg has come out and met with Canadian governments at different intervals just to understand how they legalized at the federal level.
In Germany, there’s a few states that have also asked for REC to be permitted. Although we don’t know how far that’s going to go, I think we can expect recreational cannabis to come into Europe.
I am not expecting it to happen in the next year, year and a half. Frankly I think that countries looking at REC should first worry about having a solidified MED framework in place.
Pivot to Canada
WW: How’s the Canadian market doing?
DA: I have three or four things that I want to highlight. If you look back on the last year of legalization. I think generally, people consider it a non-event. And that’s both a good thing and a bad thing depending on how you look at it.
One of the challenges has been the slow rollout of retail. But now we’re seeing significant uptake in Ontario, which is our largest province population-wise. We’ve seen over 1,000 applications for retail licenses, which at one time was contemplated to be only 22. In other provinces, like Alberta, we’ve already crossed the 500 store mark. So I’ll also say that retail generally seems to be going well.
The second point I wanted to make was with respect to the black market, because that keeps coming up. the uptick of retail and, two, the price points that we’re seeing through the legal channels seem to be coming down. So greater access combined with the fact that we’re able to provide a decent quality product at a very competitive price are compelling reasons for elimination of the black market. I don’t think anyone was expecting the black market to have gone away on day one of legalization, but that’s slowly seems to be moving in the right direction.
Also, we’ve seen vapes be one of the largest categories currently being sold with respect to what we call cannabis 2.0 products. We started with the flower and oils and then eventually rolled out into edible products and vape pens, et cetera. And so we’re seeing vape pens be quite a big, dominating category.