Agra Ventures Ltd. (CSE:AGRA, OTC:AGFAF) has told investors its wholly-owned subsidiary, Farmako GmbH, is well-positioned to benefit from Germany’s planned legalisation of recreational cannabis, with the European country's new Chancellor, Olaf Scholz recently vowing to make the change a top priority.
The Vancouver, British Columbia-based diversified cannabis company said legalization of recreational cannabis in Germany would enable Farmako to expand its offering of cannabis extracts and dried flower as well as CBD and THC Testkits, while potentially also increasing the manufacturing and distribution of other cannabis products and accessories.
Frankfurt-based Farmako is a good distribution practice (GDP) certified pharmaceutical wholesaler that is currently focused on the medical cannabis market to facilitate patient access to reliable cannabinoid therapies and provide support to healthcare professionals.
READ: Agra Ventures records up to $491,000 in wholesale cannabis revenue in the past two months
AGRA noted that, as of 2016, cannabis for medicinal purposes has been legal in Germany, however, further decriminalizing cannabis for recreational use is now a priority for the country's new government within the next two years.
"If cannabis is legalized and German citizens can get behind its responsible use based on a solid framework as we expect it, then we as a pharmaceutical cannabis provider are best positioned to import and supply our products to a significantly increased client base," Farmako MD Katrin Eckmans said in a statement.
"Sustainable production, highest medical quality and affordable pricing have always been priorities for our team, and legalization is expected to make it more efficient and effective for us to make a difference,” she added.
The new German government is a coalition of three parties including the German Social Democrats, the German Free Democrats, and the Green Party. Traditionally, the German government has been more conservative and, therefore, this shift in the mix of its ruling political parties is expected to result in substantial changes.
Citing a recent study by market research company infratest dimap, AGRA said 49% of German citizens are in favor of recreation cannabis legalization. In 2014, only 30% of German citizens were in favor of legalization, which means that medical cannabis legalization and its use, as well as more research and understanding of cannabis and its benefits, have been revolutionary in the eyes of German citizens.
AGRA said not only do individual businesses like Farmako stand to benefit from the legalization of recreational cannabis in Germany, but its economy is predicted to grow, the crime rate is forecaste to decrease and an estimated 27,000 new jobs are expected to be created. Additionally, it said it is projected that the government could earn $5 billion euros annually in tax revenue and save money on policing.
"It only seems right for Germany to follow in Canada's footsteps when it comes to the legalization of cannabis for recreational purposes,” AGRA director and CEO Elise Coppens. “We have seen how the addition of medical cannabis has benefited Germany in both economic and medicinal aspects, and AGRA believes that recreational cannabis will bring more positive outcomes for Germany just like it has for Canada.”
AGRA also announced that it has entered into a settlement agreement to resolve outstanding legal claims against Sanna Health Corp, initiated by a former executive of the wholly-owned subsidiary. Under the settlement, AGRA will issue the former executive 552,609 common shares in addition to a cash payment. The settlement shares will be issued at a deemed price per share of $0.4524.
Agra Ventures’ brands and subsidiaries offer a portfolio of cannabis and related products to customers on a multinational basis. It is leveraging advanced technology, innovative practices, and one of the largest greenhouse complexes in the world to develop, produce and distribute high-potency and affordable cannabis products.
Contact the author at stephen.gunnion@proactiveinvestors.com