Organigram investment helps expand its presence into German market

| Sarah Clark

Organigram Holdings Inc. has taken a minority stake in German cannabis company Sanity Group GmbH, giving them a foothold in the German market. 

In an announcement on June 24, the New Brunswick-based producer says the $21 million investment comes from the proceeds of its Jupiter strategic investment pool from British American Tobacco.

Organigram could also invest approximately $4.5 million as part of a second tranche of the unsecured convertible note for future opportunities to be pursued by Sanity, subject to the satisfaction of certain conditions.   

Sanity controls about 10% of the current German medical cannabis market with its brand “avaay” and a network of 2,000 pharmacies and 5,000 physicians. Sanity is also participating in a recreational cannabis pilot program in Switzerland, with one store currently operational, a plan for more, and an expected investment in distribution channels in the market. 

Organigram’s investment into Sanity Group builds on its previous supply agreement with the German company in 2023 to distribute its cannabis into the German market, with Sanity committing to buy even more cannabis from the New Brunswick producer. The new commercial agreement also considers allowing Ogranigram to sell its own branded cannabis to the German market. 

Once Organigram receives EU-GMP certification at its Moncton facility, a requirement to sell into the German market, Sanity Group will move its annual purchase commitment to a percentage of Organigram’s dried flower offerings for the European market. Organigram says it expects to complete its final EU-GMP audit before the end of 2024.  

“A meaningful presence in Germany and Europe is essential to achieving our ambitions to be a global cannabis leader,” said Paolo De Luca, Chief Strategy Officer of Organigram. “We believe that after Canada, Germany will emerge as one of the more promising markets under a nationally legal model. 

“With its evolving program for medical cannabis and recent limited legalization for recreational consumption, Germany may eventually adopt a full adult-use cannabis framework. This growth opportunity is magnified by positive regulatory developments in several neighbouring European jurisdictions where Sanity Group is expanding its presence,” he concluded.  

Finn Hansel, co-founder and CEO of Sanity Group, said: 

“We are extremely pleased to close this strategic financing with Organigram, which has consistently demonstrated itself to be a leader in the highly competitive and regulated Canadian cannabis market. With its commitment to responsible R&D, innovation and product development, including through its relationship with BAT (British American Tobacco), we feel that we have chosen a partner that will support us in becoming a leader in the rapidly expanding legal European markets.”

Germany launched its new cannabis rules on April 1, 2024. According to Cannabis Data Company BDSA, Germany is estimated to bring in more than $2 billion in 2024 and more than $5 billion by 2027. 

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