Kanabo Group sheds further light on Materia acquisition 

As reported by The Times in July 2021, Kanabo Group (KNB FOLLOW) announced its recent acquisition of the European businesses of 11157353 Canada Corp, known as ‘Materia’, in a deal which the Company said will make it Europe's biggest publicly traded cannabis company.  

The Israeli-based firm, which made its debut on London’s main market back in February 2021, stated at the time that the funds made available under the facility agreement will be used solely to support the funding requirements of Materia's European subsidiaries.  

In a recent interview with Cannabis Wealth, Kanabo and Materia said the acquisition will utilise Materia’s innovation in the supply chain to bring products into European markets.  

Kanabo believes that Materia’s complementary infrastructure will be “crucial” to expanding and strengthening its existing supply value chain of medical cannabis and CBD products. 

Kanabo’s CEO, Avihu Tamir, explained: “When we met Materia for the first time there was immediately a few points that pop; that it is the entering the most interesting market in Europe right now, Germany, and have not just a licence, but a sales team in Germany, that is already selling products and having a relationship with physicians and pharmacies.” 

Speaking to Cannabis Wealth, Tamir commented: “The second thing, which I think is one of the biggest assets that Materia has, is having an EU GMP facility in Malta, so it is inside the EU. Above all, I would say management, which has a clear plan.  

Tamir added that “on the one hand is product development and commercialisation, where the assets that we are bringing into the R&D centre in Israel gives us (Kanabo Group) the capability to bring them to the market and to commercialise them under the Kanabo brand. 

Materia is bringing the processing and production capabilities, its relationship with suppliers around the world and access into the most interesting market the CBD markets in the UK and the German medical cannabis market. So, there is minimum overlap and maximum synergy.” 

Having acquired previous experience in the medicinal cannabis space, Materia’s managing director for Europe, Nick Pateras said: “We can tap into low-cost, high-quality supply, as well products that have genetics and have the stability that no one else has seen in Europe, yet. The next step is extracting and producing what we know the market will move towards now.” 

In terms of products, Kanabo is focussed on utilising Materia Malta’s facility, including formulas developed for its VapePod device, and those targeted to treat medical conditions such as insomnia, post-traumatic stress disorder (PTSD), neuropathic pain and anxiety. 

Since its flotation to the LSE, shares in Kanabo Group have seen an over three-fold increase in value from its entry price of 6.5p. The stock was trading 3.66% lower today at 19.75. 

KNB price chart

Materia owns a cannabis processing plant in Malta as well as a wholesaling business in Germany, which currently stands as the largest market for legal marijuana in Europe.  “It’s very unique because it allows you to make Malta the doorway to Germany and Europe in general,” Kanabo's chief executive Avihu Tamir said in an interview with Yahoo Finance UK.  

Tamir said the Group’s first product to launch in the UK will be one targeted at smokers.  

He said: “Sadly smoking is the number one delivery method right now. So, we are solving this issue by having a product that is easy for patients to jump from smoking into something else that mimics the same benefits of inhalation, but at the same time gives the comfort for physicians to be able to prescribe a product that has a specific dose, and which has medical validation behind it. Pain management is obviously the biggest challenge that the market has. In the last five years, physicians have been starting to feel uncomfortable prescribing opiates.” 

Tamir  continued: “The second product is for mental health. We see a lot of success with cannabis, and there are medicines that are problematic. If you are looking in the market right now, all of the products are almost the same oils with different brands, but exactly the same flowers. The options that you have now in Germany are probably the same amount of options you will find in one dispensary in California, so that is very limiting for patients.  

Materia is going to bring products into the market, dealing with the supply chain challenge.” 

He added: “The last challenge is the patient access challenge, and that is something that both companies are going to work together on. We will be investing more in patient access, to have safe access for patients and for them to be able to get a prescription, especially in the UK.” 

Speaking at the time of the announced acquisition in July 2021, Tamir stated: “Together with Kanabo's R&D and commercialization capabilities, I expect this enlarged group to become the biggest public cannabis company in the UK and EU and puts us in a unique position as the multibillion-pound medicinal cannabis market begins to grow in Europe."  

“The company’s ambition is to be coming forward with products that provide new ways of speaking to patients and physicians, and that are accessible, relatable and trustworthy, and really demonstrate to people that cannabis is a new medicine. We are adhering to the strictest pharmaceutical standards, and it should actually be considered, just like any other medicine. 

“We are talking about patients all over the US, all over Europe and all over the world, who have had to suffer through a quality of life, because they have not had access to cannabis – let’s change that. Let’s allow people to understand that cannabis is a new product,” he said. 

In a recent interview with CNBC, CEO Avihu Tamir discusses Kanabo’s listing on the London Stock Exchange and the market opportunity for medicinal cannabis in the U.K. and Europe.  

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