420 with CNW — Cannabis Companies in Germany Attract Investments as Nation Gears Up for Recreational Sales

March 8, 2022 04:25:00

Cannabis startups in Germany are experiencing an uptake in investment funding as they look to capitalize on the potential of legalization of recreational marijuana. This comes as the sector of medical marijuana, which is legal, is experiencing tremendous growth.

Investment funding in the cannabis sector experienced a slow growth in 2020 before regaining its momentum last year. According to Stephen Murphy, the CEO and cofounder of marijuana research firm Prohibition Partners, this year has begun with a positive start as investors position themselves to benefit from the burgeoning market.

Additionally, investors are looking forward to the legalization of recreational marijuana in Germany. The ruling coalition has made promises, but its legalization appears not to be close at hand. Canadian and American businesses that have their business operations in Europe are also positioning themselves to gain from an expanding recreational market.

Cansativa Group, a startup based in Frankfurt, has raised $15 million in a Series B funding round that was led by Snoop Dogg-backed investment company Casa Verde Capital. According to its cofounder Benedikt Sons, this round provided better results in comparison to the first one. The company is the only distributor of cannabis that is cultivated in Germany.

Another startup, Sanity Group, has received $3.5 million from Casa Verde in a financing round. The company is based in Berlin and focuses on medical marijuana. So far, it has managed to raise more than $76 million. According to founder and managing director Finn Hänsel, this is a record in funding a cannabis startup in Europe.

The legalization of medical marijuana in 2017 is responsible for the boom in startups. Companies such as Cansativa, Sanity Group, Cantourage and Demecan rose during this time. However, investors have been reluctant to back them until last year when the ruling coalition pledged to legalize the recreational use of marijuana.

Investors are hopeful that Germany’s stance would work in destigmatizing cannabis elsewhere with more countries following suit. Germany already is Europe’s largest market for medical cannabis. Last year, insurance compensations for medical marijuana saw a 9% increase in comparison to 2020 as the total amount reached almost $17 million.

The marijuana research firm Prohibition Partners estimates that Europe’s annual sales of medical cannabis stands at $270 million. The firm estimates that if Germany legalizes the recreational use of cannabis, sales figures are estimated to reach up to $4 billion every year.

For this to be possible, lawmakers must create regulations around its cultivation, production and distribution as well as sales and marketing. According to Jacob Sons, the cofounder of Cansativa, the legislation, which is in its early stages, will provide a blueprint to the region.

These developments in Germany are likely to be of great interest to internationally focused companies such as Flora Growth Corp. (NASDAQ: FLGC) as new markets could open up and offer expansion opportunities.

NOTE TO INVESTORS: The latest news and updates relating to Flora Growth Corp. (NASDAQ: FLGC) are available in the company’s newsroom at https://cnw.fm/FLGC

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