Canadian CANNAINVESTOR Magazine July / August 2017 - Page 115

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Currently, patients in Germany receives 1.8 grams of cannabis per day on average. Pharmacy prices fluctuate from €12 to €20 per gram. Yes, €12 to €20 per gram! As of March 17, the average price of marijuana from Health Canada-licensed producers was $9.12 per gram, according to Brad Martin of CannStandard in Calgary. Using May 2017 average euro to Canadian dollar as a base, $1.5037 x 16 euro (average cost between €12 and €20) = $24.05 per gram in Canadian dollars. Yes, $24.05 per gram! Not only that, on the cost side for Germany, it makes Canada an affordable choice due to this strength in the euro relative to the Canadian dollar. Maricann Group is forecasting its cost of production to be around $0.50 per gram, cultivating within its new German facility (compared with around $1.34 per gram cost in Canada). Despite the fact that pharmacy distribution means wholesale pricing for Canadian LP’s supplying the market it Germany, the potential for very high gross margins make it an attractive strategic option for investment by Canadian licensed producers.

Even though Germany is in its infancy when it comes to medicinal marijuana regulation, and only have approximately 1,000 registered users currently, the potential is there to tap into an over $3 trillion (USD) economy, that relies solely on imported cannabis products, has a liberal population that has already progressed toward alternative forms of therapy, has medical coverage to cover the cost of cannabis, and potential for high gross margins for those that intend to serve this market. With Canada as the leading G7 country with companies that have the expertise, infrastructure, and quality that is required, from an investment perspective, it might be wise to “sprechen Deutsch“ really soon.

Pardon my German!

Spiro Sertsis, CPA, CMA

@SpiroSertsis

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