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Looking to expand overseas? Here’s what you need to know

Jan. 10, 2024 by SOMAÍ

Cannabis has long been trending as a global product, providing regional players with the chance to expand into international markets. Somai Pharmaceuticals founder, chairman and CEO Michael Sassano explores the opportunities for Australian firms. Published in Cannabiz.

Australia has fantastic cannabis growers, producers, brands and clinics, and those companies looking to stretch across the seas can follow a few easy steps to ensure success, the first of which is to identify your company’s target market.

If Asia were more open to cannabis, Australians would have a clear geographic advantage in serving those emerging markets. Thailand will likely follow a medical program that may benefit Australian brands and clinic models. There are also countries like South Korea dabbling in CBD. However, Asia as a whole has been slow to embrace cannabis and related businesses.

The most promising overseas cannabis market as of today is Germany. The UK, Switzerland and Poland could also be excellent testing grounds as more European countries enter the space and follow the German template. In fact, Germany is fast becoming the standard for other European countries looking to develop robust cannabis cultivation and manufacturing industries, as well as internal consumption models.

Models for Australian cannabis expansion into other markets

Whatever your place within the cannabis sphere, there is a global market for your skills.

If you are a cultivator wanting to enter the German market to show off your cannabis flower, you are in luck – selling flower is relatively easy due to the country’s robust distributor infrastructure. And because it is mostly commoditised, you don’t need a large sales force to sell it. In fact, you can sell to Germany, Poland, the UK and others from the comfort of Australia.

If you are a manufacturer, plenty of groups are looking for white labels. Most European cannabis distributors are using the same white-label companies; it is not uncommon for 15 to 20 brands to use the same manufacturer. Diversity is needed, and new manufacturers would be greatly welcomed.

However, unlike cultivators, Australian manufacturers will need to invest in local sales staff. And some markets, like Germany, are very competitive so it might be prudent to enter newer or smaller markets like the UK, Poland and Switzerland, where one local representative would suffice.

Meanwhile, the clinic model is sweeping Europe, with establishments in Germany, the UK, Poland, Switzerland among others. Expanding from Australia should be relatively easy since the overall model is similar; just like in Australia, new patients are more likely to seek out clinics as opposed to GPs if they are interested in therapeutic cannabis. Regulatory differences, advertising and staffing will be your main concerns.

Good Manufacturing Practice: an essential certification for expansion

All cannabis products entering Europe must conform to pharmaceutical EU-Good Manufacturing Practice (EU-GMP) standards. Many secondary drying and packaging companies can help international cultivators get their certifications – Portugal has the most, and Germany is a close second.

Be prepared for a long process, especially if you are radiating your product and entering Germany, as a radiation licence can take six months – on top of the time it takes to get your product certified.

All manufacturers must conform to EU-GMP standards from the start of their process. If you are a manufacturer, you will not be able to buy your extract from Canada or South Africa (which comply with Current Good Manufacturing Practice (cGMP) and African compounding GMP regulations, respectively) and make EU-GMP-certified products, even if your facility is EU-GMP accredited. 

You will need all starting materials except flower to be EU-GMP-certified active pharmaceutical ingredients (APIs). Much of the manufactured product in Australia today is not EU-GMP-certified and, therefore, does not meet the global standards for sale to Europe and many other countries.

Cannabis pricing in the global market

The European cannabis market is not as competitive as Australia in terms of pricing.

Germany is unique in that it has a partially insured market. Flower is mostly uninsured and can range in price from €12-18 per gram retail and around €3-6 per gram wholesale. Extracts are predominantly insured, with a bottle of 10:10 THC:CBD retailing for around €225 insured and €100 euros not insured, and wholesale for around €125 and €40 respectively.

Interestingly, in the uninsured markets of Germany, the UK, Poland, and Australia, manufactured products like drops and vapes will sell for around the same price as their local currency. As an example, a vape cartridge can sell for around A$100, £100, and €100 euros. 

Watch your currency conversion as the market progresses and your company expands.

Expansion on the horizon for Australian cannabis companies

As more Australian cannabis groups succeed domestically, many will seek growth overseas, and those emerging countries will be thrilled to have Australian know-how supporting their local needs. 

As you expand, consider geographic advantages and business models, check your GMP status, and enjoy better margins as more countries enter the arena. 

Australian cannabis products and clinics are strong and will be well received abroad.