From top Aurura cannabis products; Johnny Green
Last week we introduced Tilray who it was just reported had been lobbying the government for its license for over a year, according this piece….
While Tilray have had certain cannabis oils approved, the group had been building relationships with the Irish government over the last 12 months and other producers will likely experience challenges in getting their product to market .
Regarding the questions about Irish market size a recent report estimates it could be at full maturity a market worth 2.3 Billion,which somewhat explains the intense lobbying efforts by Aurora,who last week won a tender to supply medical cannabis ‘flower’ to the Italian government.
This week we are going take a look at Aurora and the Italian tender as it gives us some great pricing benchmarks.
The Irish Times in April this year outlined Aurora’s lobbying:
The company, which has 11 production sites in Canada alone, as well as operations in 24 countries internationally, has already held meetings with department officials, as well as the Health Products Regulatory Authority (HPRA).
No minutes, no records of who attended and its only from the media reports arranged and facilitated by Aurora,that we even know these high level meetings have being taking place, this further confirms the calls on here for an independent and transparent cannabis regulatory authority.
It is widely expected that this intense lobbying by ‘Peppermint Paddy’ will result in Aurora receiving a license, which we may or may not find out about, as we had to rely on Tilray, a public company’s press release to find out about their license.
This cloak and dagger nonsense is extremely disingenuous by the government and has created considerable confusion with when these products will actually be available and how much they will cost, Tilray has stated that it has shipped products, are they sitting in a warehouse somewhere…
Aurora is a Edmonton, Canada based cannabis company listed on the NYSE (ACB), the second largest shareholder if he exercises all his options will be current strategic advisor and activist investor, Nelson Petlz.
It was Peltz that fully exposed the fake empire built by Lord O’Reilly, forcing Heinz into a merger with Kraft . In Europe Aurora has decided to locate its headquarters outside Leipzig, Germany and was just awarded a cultivation and distribution license there, it also has a greenhouse growing facility in Denmark.
It was announced last week by the Italian government, that Aurora had won all three lots to supply the Italian Govt with 400 Kilograms (880) pounds of medical grade cannabis flower over 2 years.
In January 2013 Italy legalised medical cannabis and in 2014 the Defense Minister announced that the army would be exclusively growing it.
This approach is quite similar to the the cross-party support and kite flying for Bord na Móna to grow cannabis in Ireland, the outcome for Italy has been extremely disappointing.
The army has repeatedly failed to meet govt output targets,it also considered very poor quality and low grade cannabis.
The facility situated on military land outside Florence has the only license to grow cannabis in Italy, Italy has had to rely on very expensive imports from Holland to fill domestic demand.
National consumption of medical cannabis is about 880 to 1,000 pounds a year according the military, with the military only able grow about 200 pounds a year.
The average price offered by Aurora was 1.73 euros per gram only slightly above the cash cost of sales per gram.
Aurora in a previous deal sold 100 kilograms to the Italian govt for 3.2 euros per gram and agreed in April to supply Luxembourg with 20 Kilograms for 2.5 euros per gram.
Aurora has reported cost of sales at about 1.40 per gram so this is not far above break even, Canopy and Tilray had also bid but lost out on technical grounds or paperwork issues and did not make it to the final round.
The pricing breaks down as follows, it’s just above cost andessentially Aurora is buying market share, Italy is a major European market for medical cannabis with a population of 60 million.
The decision to involve the govt (army) has been a failure as they have not been able to satisfy demand with a waiting list of 20,000 patients and should be a lesson for the Irish govt.
1.78 euros per gram for the first lot of 320 kilograms of high-THC flower, totaling 569,600 euros, a 56% discount over the tender reference price.
1.29 euros per gram for the second lot of 40 kilograms of THC/CBD-balanced flower, totaling 51,600 euros, a 57% discount over the tender reference price.
1.77 euros per gram for the third lot of 40 kilograms of high-CBD flower, totaling 70,800 euros, a 41% discount over the tender reference price. (
The Italian ‘green gold rush’ or cannabis light craze sweeping Italy since a law change to facility hemp production has been deliberately ignored, its basically junk or decaf weed.
It is however illustrative of the demand in Italy for recreational cannabis,even bad weed sells.
Italy by holding an open tender and publishing the pricing has laid out a path for Ireland, let’s hope the government follows this example.
The experiment with the army growing has been by any metric a disaster and perhaps some type of JV may be a better solution in Ireland with Bord na Mona.
The Roll Up column by Johnny Green will attempt to keep Broadsheet readers up-to-date on the growing cannabis industry worldwide. Follow Johnny Green on twitter for even more updates.