Editors’ Note: This is the transcript version of the podcast we posted on September 8. Please note that due to time and audio constraints, transcription may not be perfect. We encourage you to listen to the podcast embedded below, if you need any clarification. Enjoy!
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Niklas Kouparanis: I think the biggest mistake was Rena, that the Netherlands and also California decriminalized cannabis before they legalized it. And so, decriminalization of cannabis is not equal to legalization. When we’re talking about legalization, and that’s what we’re talking about in Germany, is legalizing the whole value chain. Very, very important point.
So what we need first of all in Germany is we need to take our time.
Rena Sherbill: Welcome again to The Cannabis Investing Podcast, where we speak with C-level executives, analysts and sector experts, to provide actionable investment insight and the context with which to understand the burgeoning cannabis industry. I’m your host, Rena Sherbill.
Hi, again, everybody. Welcome back to the show. It’s great to have you listening with us in September. Hope all the Americans enjoyed their Labor Day. Got a nice weekend out of it. So we’ve been talking this summer a ton about California, right, one of the most mature markets, and we’re not done talking about California. But something that we’re talking about today is another market that’s about to come online, or soon to come online, which is Germany. Followers of the cannabis industry know that Germany has had a bunch of good news in terms of manifesting legalization over there.
Today we have on Niklas Kouparanis, who is CEO and Co-Founder of the Bloomwell Group, which is Germany’s largest cannabis company. And Niklas has also been very instrumental in talking to government bodies, about regulatory framework in Germany, about legalizing adult use. And he talks to us about that today, how Germany is looking at the legalization picture, how they’ve learned the lessons, not just from Canada, not just from California, but places like the Netherlands and other places in Europe. And how they’re advising other countries in Europe to go down the legalization path.
It’s a great conversation about what’s happening in Europe, but also how the broader global picture is being designed is being thought of both by regular — both by governing bodies, and by the people fighting for legalization from the cannabis world. So Niklas gets into all of that really edifying conversation, a real inside look at Germany and Europe. And what’s happening with cannabis there.
Wanted to also put it out there that I will be attending the Benzinga Cannabis Conference in Chicago, September 13, and 14. Anyone who lives in Chicago or who might be there, hit me up, I’d love to meet you love to talk to you. And really excited to bring back some insights from that conference as well. I already have a number of people that I’m super, super excited to talk to, a really excited to bring some interviews, some conversations, and also some takeaways from their talking to really pretty much every leader in this space that you could want to talk to. So I’m excited to bring that back from the front.
But in the meantime, please enjoy this conversation. And please be in touch about anything else you’d like to hear about or hear from. I’d love to hear from you.
Niklas, welcome to the Cannabis Investing Podcast. Really happy to have you on the show. Thank you so much for coming on.
NK: Thank you, Rena. It’s a pleasure being here.
RS: It’s great to have you. We’ve been doing a really deep dive into California this summer, mostly because I’ve been out there but also because it’s the biggest market in the world and something that I think we can all learn from. And kind of on the other side of that is what we’re talking to you about today, which is the European market, specifically the German market, and kind of how that’s getting started, how it’s taking off. So I’m really interested to hear how you came into the industry, how you came into the space and what your thoughts are kind of broadly on the cannabis industry coming into Europe.
NK: Yeah, very interesting topic. I think a lot of puzzle pieces are moving in in Europe now. So Niklas Kouparanis is my name. I’m the co-Founder and CEO of Bloom Well Group. Bloom Well Group is one of the biggest medical cannabis companies in Germany. I’ve been in the cannabis industry for more than five years now. I’ve been one of the first in Germany wherever important and distributed medical cannabis, even before we had the legalization for medical use in Germany back in 2017, at the beginning of 2017. And I’ve been building multiple companies in the space and now very happy to be the co-founder of Bloom Well Group.
I basically came into the industry back in 2015. My mother’s born in New Jersey, so I’m also a U.S. citizen. I have a lot of family in California. So back in the days in 2015, I saw the market actually evolving in California, the medical market and of course later also the recreational market. And that inspired me to take a deeper look into the European cannabis market and also the medical cannabis market, especially in Germany. We had an extraordinary permission back in the day the before, which is the narcotic agency in Germany for around about 1,000 patients, 1,000 patients and in Germany. So rather small market, but I kept an close eye to the market and things were changing at the end of 2016. So I thought to myself, that is a once in a lifetime opportunity when such a market opens up for entrepreneurship. So I joined basically the market at the beginning of 2017.
RS: It’s funny, your connection to California, speaking about that juxtaposition, it’s funny that that’s exactly kind of like how you were looking at the industry. What do you, I mean, speaking of kind of the growth of these markets as they come online? What’s something that you’ve taken from your journey and kind of this path towards legalization? What’s something that struck you? And maybe, do you feel like might be unique to Europe? Or maybe there’s nothing unique, and it’s just kind of like the pains of growing this industry?
NK: Yeah, I mean, if we look at California, if we look at the cannabis industry in California, I think it’s a rather bad example of how to do legalization. So that is something where we can learn from basically in Germany and also in the European Union. Because, I mean, still in California, what is the issue that 75% of consumers are still getting their cannabis from the illicit market? That is something we don’t want to have in Germany. And that’s because of on the one hand side, of course, tax loss, right. Also point of sales and also cultivation? Because I mean, there is a limited size of point of sales of dispensaries, but no limited size for cultivators. And I think that’s why in California, there’s still a huge illicit market. And that’s something we don’t want to have in Germany.
So when we look at Germany, and when we look at legalization, I mean the change of government in November last year and basically what the coalition agreement said, is that we want to legalize cannabis for adult use through licensed shops in Germany. That’s all there was for them.
But things have changed. And we are developing facts in Germany, which is very astonishing, for me. And it’s a good sign, because we have great people who are actually involved in in developing the new cannabis law and the health ministry, which were also part of developing the medical cannabis law. So there are people in power who actually know what they’re talking about. So that’s great. And that’s why there’s also a lot of public pressure when it comes to legalizing cannabis.
So we had expert hearings back in July this year, where basically the health ministry said that and the responsible person for drug laws in Germany said that we need people added to the table who are actually from the industry who are experts in the field, but also lawmakers, of course, police, and we need to evaluate how to actually learn from markets like Canada, like California, like U.S., which is unfortunately, till today not federally legal, and how to not make this mistakes when we legalize cannabis in Germany.
So that’s very good. For the future, I think the first draft of the law will be by the end of the year, beginning of next year. Then after that it needs to be passed through the Bundestag, and Bundesrat, which are the two houses in Germany, and then it needs to be implemented. What we of course, also have is international law, it gets a little bit complicated here, because Germany, of course is also part of the UN Single Convention on Narcotic Drugs. And basically two ways of doing that legalizing cannabis domestically and still being a part of the UN Single Convention.
It’s the way that Canada took basically, which is just saying, we don’t really care about the UN single convention, but we will just legalize cannabis. That is something I don’t think we will do in Germany, because Germany, of course, is also part of the European Union. And the European Union relies on or refers to the UN single convention. So it’s also prohibited under the European law that you legalize cannabis domestically.
So there are two ways of looking it. First of all, you can step out of the UN Single Convention legalized cannabis and stuff like and again, under the permission that you have legalized cannabis. And of course, you need a change on a European level, which is in the process right now. So there are talks already incentivized by Germany, of course, on a European level, so that we also have a European solution for a domestic market. Gets a little bit complicated here, very detailed. So I don’t want to bore you about the details. But that is something what we need to do in Germany right now. If you want to know more about it, Rena, please feel free to ask.
RS: Yeah, well, what’s — it’s interesting. I mean, it It’s somewhat similar in the sense of like, when you’re looking at the United States, and it’s a group of states that are pushing forward this legislation, it’s similar to Europe having these neighboring countries also part of the European Union, maneuvering through this. So I guess like I also don’t want to get to like policy-wongish on the episode, but I do think that it makes sense to like, understand the kind of finer points and as you were talking about, like, the differences between how Germany’s rolling it out, let’s say and how California rolled it out, and lessons to be learned from that.
What’s something that you’re taking away from Europe in terms of? I mean, you spoke about how they’re getting it, right, what’s something like in the minutia, as you’re talking about, like different countries opening up? And, people from Germany going to Holland, or what have you? And how does that — well, Holland, I guess, a bad example, because it’s totally legal there. But, kind of like neighboring countries, and how do you see that working both from like a broader policy perspective, and then also how you’re navigating it as a CEO in the industry?
NK: Yeah, great question. The Netherlands also, just to get that right, the Netherlands also is not a very good example, for cannabis legalization. So the Netherlands decriminalized the use and possession of cannabis in 1976 and has legalized after that the only the point of sale. So the rest of the value chain is completely part of the illicit market. So what they did actually is empowering the illicit market and not drain it, but that’s something what we want to do in Germany. So you need to legalize the whole value chain, right? Otherwise, you will just empower the illicit market and will not drink. So that is something we need to do.
RS: Interesting, because that’s a really good point to bring up. And I just want to interrupt because I want to ask you, talking about California and Holland. You can see the mistakes that they made in empowering the illicit market, do you think that the — I mean, I would I was going to ask, do you think that the politicians have learned from this but it’s like, if they would have learned from it, they would be doing things to change it more rapidly. Do you think that the government or the policymakers kind of regret how much power they’ve given to the illicit market by making it so difficult and onerous and limited on the legal players?
NK: I think they regret it. I mean, they’re changing it in the Netherlands right now. I think the biggest mistake was Rena, that the Netherlands and also California decriminalized cannabis before they legalized. So decriminalization of cannabis is not equal to legalization as we were talking about legalization, and that’s what we’re talking about in Germany is legalizing the whole value chain? Right. Very, very important point.
I think that the Netherlands already learned from it right. There is a pilot trial right now going on in the in the Netherlands, which basically allow for 10 cultivators to produce cannabis for the coffee shops, or for the dispensaries in 10 distinct municipalities. So that means they’re really learned from it, and they are trying to change it right now. And California, of course, we have a legalization completely right now. But nevertheless, you have limits for point of sales, not a limit for cultivators and, of course, tax policy is a huge issue in California. These are examples where we learned from in Germany and also the government learned from and also took a close look to it, how we can actually not make these mistakes in Germany.
So what we need first of all, in Germany is we need to take our time. I expect legalization probably being in place in Germany, in the middle of 2024. So still approximately two years to go. Nevertheless, we have a good fundament when it comes to legalization because we have a law already, which was drafted by the Green Party back in 2018, but declined by the Bundestag, because we had a different government back in the days in 2020. But that is a cannabis law, which we can use right as a fundament for the law, which is drafted right now. So I mean, we don’t need as much as time because we don’t need to draft a completely new law.
What I also think is, I mean, just look at Germany, Germany has a population size of 84 million inhabitants. And that is bigger than California and Canada combined, which are the two flagship markets in the world right now. So it’s a huge, huge opportunity of course, for companies on the one hand side, but it’s also a huge challenge to satisfy that market. Because when we’re talking about Germany, we’re talking about the biggest cannabis market domestically when legalized in the world. First Year estimation when it comes only to flowers 400 to 800 tons market size, roughly about €16 billion. So of course, that is something we need to handle as industry. And also we need to keep in mind when we draft the law, and when we put the law in place.
What is important to satisfy that market, of course, on the one hand side is we will be relying on imports in Germany, Germany needs to be the first company who actually allows imports under a recreational setting. Canada does do it and Uruguay also doesn’t do it till now. And as you knew — as you know, us not federally illegal, and you cannot cross the border with cannabis, for example from California. And so very important that we have imports in Germany to satisfy that market, because right now Germany doesn’t have any cultivation. We have medical cultivation, but that is only like 2.6 tons max a year, which is nothing when we’re talking about a market size between 400 to 800 tons first year.
Then, of course, what Germany also needs to do and what we’re talking about and we were also part of the expert hearings back in July. And we also presented approaches to that opportunity is when we’re talking about e-commerce. E-commerce, very important, because if you don’t allow e-commerce and only dispensaries, you will have dispensaries in the big cities in Germany, but you will not have any dispensaries, because it’s not economically reasonable on the countryside. So you would just shift the illicit market from the cities to the countries also very important to have in Germany.
Also, when we’re talking about the licenses, for example to grow cannabis or to distribute cannabis or to open up a dispensary, we need to have that requirements as an industry before we even have the legalization in order to prepare also important. We need to use the data we have generated for five years now in the medical space also important when it comes to side effects when it comes to how we can teach our sales persons in the dispensaries to actually give education to the consumer because that is also something very important what we need to do in Germany.
We need to look at the taxes in Canada, we need to look at the taxes in California and pay close attention to what went wrong there. And we don’t need — we need taxes, of course, but we don’t need as high as taxes you have, for example in California, because otherwise, it doesn’t make sense. You don’t incentivize the industry to actually fulfill the whole value chain. Also very important. And you need to make it economically reasonable to open up a dispensary for example.
Of course, also, we need to be — we need to pay close, close attention, like I’ve said before, to international law, and also to national law. We don’t need of course, we will have federal legalization in Germany, that’s the difference when we’re talking about the U.S. But we need to make sure that it is really a federal law. And it is applied nationwide. We don’t need provinces and we don’t need different states in Germany having different laws in place, which will make it very difficult to maneuver through the cannabis industry and satisfy also the need in all the different parts of Germany.
Also what we learned from Canada, and that’s my last point is also bureaucracy. We don’t need too much bureaucracy, because like we saw in Canada, we had huge cultivators which were publicly listed billion dollar companies, which cultivated a lot of cannabis. But then when it came to dispensaries and how to roll out actually, the distribution channels, there was a lot of bureaucracy involved and then getting worked out, I think in Canada, it took three years for the legal market to become bigger than the illicit market. So that was also — we need a federal law, which is really applied nationwide. Very important.
And just to get back to your question what you asked before. We saw and the when we’re talking about domino effects within the European Union. We saw before that when Germany legalized medical cannabis, we saw a domino effect all over Europe, and especially in the European Union. Medical cannabis is not legal in Spain, it’s legal in Italy, it’s legal in Portugal, it’s legal in Denmark, and so on and so forth.
And we will also see that of course, in the recreational setting. Because when Germany does it right, right now and that’s my last point, then we will have a role model not only for the European Union, but also I think worldwide how legalization of cannabis is done right.
RS: Yeah. It’s such a good point about, decriminalizing before legalizing. We’re seeing it happen in New York. I come from Tel Aviv, we’re seeing it happen in Israel, just the proliferation of the illicit market when that happens. What’s the illicit market like in Germany right now?
NK: Yeah, we have approximately and I think that’s a conservative approach. We have 4.7 million cannabis consumers in Germany on the illegal market. Cannabis is not decriminalized in Germany. So you still have, you still get sued if you get caught with cannabis. If it’s a small dose of cannabis and if it’s for own consumption, most of the time, you could not charge anything but still, you need to appeal in court. So that is something of course, what we don’t want to have in under illegal market and what we will not pass obviously.
RS: So you’re thinking that legalization comes to Germany in around 2024? How are you — what’s your goal kind of with Bloom Well and beyond as you approached that that year?
NK: Yeah. I mean, the good thing about Bloomwell Group is that we have set up the company to be a platform. We are also the only company in Germany, which is a B2C platform. We are focused on the patient right now, of course, strictly medical till now. And we have built a platform which can basically source cannabis all over the world. We have, for example, cultivators in Portugal, we have cultivators in Canada, where we source product from.
We are not — we do not cultivate ourselves. That is not something what we are focusing on, but everything what comes after the cultivation we do. So we can basically source, store, package product, after that we can prescribe product also. We have the biggest telemedicine company in Europe under the Bloomwell umbrella. So we have more than 10,000 patients on our platform more than 90 doctors all over Germany. And as a last step, we can also distribute the product. So you see it’s already a very B2C-focused lifestyle — it’s a lifestylish platform, under the medical umbrella, which we can, of course also use when recreational cannabis comes into play.
So we have built that platform already with the goal in mind that someday cannabis will be legalized in Germany, and we need to apply our model also to a legalized market. And that’s why we are very much prepared when it comes to the legal market. And of course, we’re using the two years’ time, we have now under the medical umbrella to even use our advantage even more and be there as a company, when the recreational cannabis market in Germany needs us.
RS: I’m struck something that we’ve talked about on the cannabis — on the podcast since we started was, the notion of needing to de-stigmatize what cannabis means what cannabis can do, how people think about it. And in the states, this is obviously like prevalent, with sometimes it’s a matter of religion, sometimes it’s a matter of exposure, sometimes it’s a matter of somebody had a bad experience, and that’s colored it. And for the past few years, I’ve heard about how in Europe, there’s a lot of education that needs to happen in terms of because I think the adult use market is smaller than it is in the states as much as I’ve read about it, and also just kind of personally experienced. Like, it seems that drinking is a little bit more of the culture, historically.
And I feel like in America, it’s more around — I mean, not more, but there’s a big kind of like cannabis, adult use community already existing, that doesn’t seem to exist yet in Europe. How have you found in terms of a, do you agree with what I just said like, do you agree with that sentiment? Do you think that the past couple of years have been evolving that kind of notion? And if it is kind of true that there’s more of a conservative approach, how are you seeing people latch on to the idea of a cannabis both in the kind of non-psychoactive side and also the psychoactive side?
NK: Yeah, very interesting question. I think the great thing about the cannabis industry and also the great thing about Germany, is that we have had medical cannabis for five years now. That’s what you’re also seeing the other markets. First of all, there’s medical cannabis, and after that there’s recreational cannabis happening.
I think that is the case because we have used for example, in Germany the five years, the five years we have now to destigmatize the plant. Because we showed and that’s also what our data shows is that cannabis is really hate helping patients. And that’s what we also had another market. So that is the first step. I think what you always need in order to get the public opinion on your side when it comes to legalizing the plant.
And after that, of course, the overall goal in Germany is when we’re talking about politics, and when we’re talking about legalizing cannabis is protection of minors is products security. And this can also only be achieved through a fully legal and regulated market. So what we will do also in the future, I mean, we are at the beginning of our journey.
What we also will do in the future when it comes to legalized market, we will use the data we already have under the medical umbrella to tell the public, what are the side effects, what happens when you consume cannabis, to do education. We will use also brand ambassadors as a company, if you ask me as a company, to bring that topic or bring cannabis into the public eye and educate the public about cannabis.
And I think what we can learn from other markets and the data we have from, for example, from Colorado, or from Canada or from California, that it is not a bad idea to actually legalize cannabis, when you do it the correct way.
RS: Yeah. I’m curious when you are kind of talking to consumers and patients, are you also part of these policy discussions at all? Are you part of the kind of the regulatory conversations?
NK: Of course, I mean, we’re one of the biggest cannabis companies in Germany. And of course, it’s very important, that’s what I always said, is to have the industry on board when it comes to regulatory changes. And in order to legalize cannabis, you need the industry on board. Because I mean, at the end of the day, we need to satisfy the market. Otherwise, if we don’t satisfy the market, we will still have a huge chunk of the consumers going to the illicit market. That’s not what we want in Germany.
So of course, we were part of the expert hearings, like I’ve said before of the Health Ministry, and we discussed about abuse, and we discussed about the other markets, and we discussed about the learnings. And we also discussed what we need to do as an industry and how laws need to be implemented in order to make it work long-term in Germany.
RS: Do you feel that — do you feel encouraged by the regulatory bodies the government wanting to — I mean, I know that the path is towards legalization. But do you feel that there’s an earnest approach to wanting to get it right? Or do you feel that there’s like the hold up between now, and federal legalization and widespread federal legalization not just in Germany?
Do you feel like the holdup is really about wanting more research really about wanting more data? Do you feel like it has anything to do or how much does it have to do with — wanting like the pharmaceutical lobby or other industries to get more a part of it? How much do you think that affects these conversations?
NK: I think we have a very clear pathway in Germany. The Health ministry is very aware of the fact that if we do it correctly in Germany, we could be a role model for the rest of the world. And we feel that pressure, of course also in the industry. And like I’ve said, the most important goal in Germany is we want to drain the illicit market. We want protection of minors, and we want product security. That is why we legalized cannabis.
And if we’re talking about how politics are approaching that topic, it’s very professional. It’s always about what we can do better than what happened, for example, in other states in the U.S. or in Canada. And it’s always very focused without a lot of emotions. It’s very focused, typically German. It’s very focused on how we get it done right. So I see — I’m very optimistic and I see it evolving fast in Germany. And I think we can do it right if we do the right things now, like I’ve said before. So I’m very, very satisfied with the process there.
RS: So how do you see it opening up — if we’re talking about, you know, let’s say we’re talking again in five 10 years, I don’t know how long this takes, perhaps more. But in terms of — perhaps much more, I don’t know. But in terms of international commerce opening up around cannabis, how do you think about that? If we don’t have all the steps figured out yet, how do you think about it broadly? And maybe even in a more detailed way? How do you see that developing?
NK: Internationally or Germany?
RS: Internationally.
NK: So I think, what is a big blocker right now for other countries to legalize cannabis, is the UN Single Convention for Narcotic Drugs. We need to make sure that a change will happen on UN level. So for Europe, specifically, first of all, you need to change on a European level. And I think, if we’re looking about — if we’re looking at long-term goals, right, and if we’re looking at Europe being the front runner, when it comes to legalizing cannabis, which will happen, I think.
I think the European Union has the chance to or the opportunity to change the UN Single Convention if we look in the future five 10 years from now. Because when Germany right now makes it happen that the European Union is no longer referring to the UN single convention for narcotic drugs, when it comes to cannabis, which needs to happen in order to have a legalization in Europe, then the UN Single Convention or the UN needs to ask itself, if it’s still or if it’s outdated, if they have cannabis included into the UN Single Convention, if so many countries 24 countries like, like the European Union, decide to not actually apply to that single convention when it comes to cannabis.
So I think long-term, if we’re looking at Europe, Europe can be the first step to actually change the UN Single Convention, which will change the perception of cannabis that will change the illegal markets of cannabis in the world long-term. So huge opportunity here for us and of course, a lot of pressure for the German government.
RS: Yeah. And what has you excited or nervous in terms of looking out across Europe? Like what other countries or developments are you encouraged by or the opposite?
NK: Yeah. I mean, the front runners right now are Germany and Switzerland. Switzerland also has a pilot project in place right now for cannabis. So basically, in the near future, I think at the end of the year, there will be dispensaries in different kinds of provinces. And it will be a pilot project, which will be evaluated after four years. So Netherlands is changing, like I’ve said before, we also have a pilot project for the legalization of the whole value chain. Right now, not only the point of sales.
We have Malta, which is moving we have Luxembourg, which is moving. Spain is in discussion for legalizing cannabis. Cannabis got decriminalized in Portugal. Denmark has a great medical cannabis program in place. So we’re seeing a lot of movement in the European kind of cannabis space, especially when it comes to legalization. But what we need is a, the biggest country right now Germany, right, legalizing cannabis doing it right. And then having a change on the European level.
RS: What are you seeing in terms of, the German population like, you said that they’re reliant on importing cannabis. I know that Israel imports a lot of indoor high THC flour. And I know that it’s a little bit different because we’re talking about a medical market, and not yet an adult use market. But what kind of trends are you seeing in the German patient, in terms of cannabis?
NK: Yeah. I mean, the German medical market right now, when we’re talking about flours patients really are relying on high THC flour. That’s what we see. What we also see in Germany when it comes to imports, Germany under the medical umbrella is right now dependent on imports. Only a maximum of 2.7 tons get imported into Germany and get cultivated in Germany. But a total of 20 tons are needed in Germany to satisfy the medical market. That was the size of the medical market when it comes to flours only flours. Right now talking about extracts in 2020.
We also did a survey when we’re talking about recreational cannabis as Bloom Well Group in Germany, and we are talking about the perception of cannabis in general, recreational cannabis now. And it basically states that half of the general population would like to buy cannabis legally in a dispensary. And 80% do not have any concerns when adults consumed Cannabis. And also 80% to 90% are against criminalization of cannabis. So what you see is that the picture of cannabis as such, is outdated and that the population in Germany also wants cannabis legalization, if that answers your questions.
RS: Yeah, it does. It does. What are your thoughts about the companies that are getting into Europe? Like, Tilray (NASDAQ:TLRY) is one that comes to mind, but there’s a bunch of other examples of American or Canadian companies getting into Europe kind of early. Do you have thoughts about what those companies are doing or what you see happening in terms of the development there?
NK: Yeah, I mean, big cannabis companies, medical cannabis companies picking today’s now recreational cannabis companies also Canopy (CGC), Aurora (ACB), Tilray got into the market pretty early into the medical market in Germany. Because of course, Germany as a flagship market in Europe, you need to be there. In general, we have also cannabis focused VCs, which are investing into cannabis startups in Germany and all over Europe, especially also, for example, cultivators in Portugal. We have closed the bank biggest seed investment round in the European cannabis space last November, lead investor was M8 Ventures, which is the VC of Boris Jordan. I think, you know Boris Jordan. Boris Jordan is the founder of Curaleaf (OTCPK:CURLF), which is clearly one of the biggest cannabis companies in the world, especially focused on the U.S.
So what we see of course, is a lot of traction from cannabis companies overseas, but also from cannabis focused VCs in the U.S. What is still missing and that’s I think it’s a pity is that other VCs abroad, are still a little bit reluctant when it comes to the cannabis space. I think it’s because of information, lack of information and know how, but that’s something I want to change over in the future.
RS: Yeah, absolutely. How much are you in touch with? I imagine you’re in touch with different cannabis players internationally, but how much are you in touch with around the regulations internationally? How much are you paying attention to that as it impinges or just broadly speaking about how the industry is developing? Or are you really much more focused on the European picture? I mean, I know — sorry. I know obviously, professionally, you’re more focused on the European picture. But I’m just curious how much, influenced, you’re looking at the American markets?
NK: Of course, we’re looking at the U.S. market. Of course, we’re looking at the Canadian market. I mean, the Canadian market is by now deflection market when it comes to cultivating cannabis. Of course, we’re importing from Canada. But I think that over the years over the last two years, Europe gained this — more and more gaining its independency. Also, when it comes to cultivation, we have great cultivators.
For example, in Portugal, who are supplying cannabis to Germany, but nevertheless, of course, we play close attention what happens all over the world and especially in the U.S. and in Canada, but I believe that now, Canada and the U.S. are the cannabis markets right now. But in the future, it definitely will be Europe. I mean, we have a population size of 780 million. And with the domino effect happening when Germany legalizes now, I think in the future, five to 10 years from now, we will have a legalized market on a European level in Europe. And I think that Europe will be the biggest cannabis market in the world in the future.
RS: And do you think a lot about like developing in that industry, like how to stand out? Is it — branding is obviously a talked about a lot in the U.S. market. But because of the different approach of how it works in Europe, do you feel like that that’s a big thing to concentrate on? Or what is something to focus on so you’re not — so you’re building that moat in Europe before kind of the Curaleafs and the Tilrays are really able to kind of solidify their presence there?
NK: Very great question. We talked about this topic of course, obviously, a lot with Boris and how he actually did that with Curaleaf from becoming a market leader also in the recreational space, while being a medical cannabis company in the past.
And I think it comes down to three different things. First of all, of course, you need access to product otherwise, it doesn’t make sense, right? You need high quality product and you need great pricing, because otherwise we will not achieve the goal to drain the illicit market if we cannot compete with the pricing of the illicit market.
Plus, the second one, you need data. Data, relevant data of medical cannabis patients for example. You need to know who they are, where they’re located, what are they consuming in order to generate a head start when it comes to a recreational market.
And last but not least, very important, you need distribution channels already in place under the medical umbrella in order to use that distribution channels or the distribution channels you have to roll it out into a recreational setting. So with these three pillars in place already, you will be very successful also under a recreational setting, as a company.
RS: It’s interesting. What are, I’m just curious like, what are Boris’s thoughts on the European market developing or kind of — as you hear from different American executives? I mean, I know that you spoke of a reluctance on some parts, but the people that are excited, what do you hear from them?
NK: I cannot speak for Boris here. But obviously, he invested into our company. So he’s pretty excited. He also bought a European company cannabis company with Curaleaf. So he’s very excited about the European cannabis market evolving. And he also sees that as the future market coming up, I think that’s why he invested. And that’s what I also see that’s, that’s what I told you.
When we’re talking about other investors in the cannabis space, it is moving forward. But like I’ve said, I think the most important thing is that we need to change the blockers for other VCs in order to invest in cannabis companies and medical cannabis companies in Europe. Most of the times, these are internal guidelines, which block them to invest, or the LPs who don’t want them to invest. There is no specific law, which actually prohibits investing into the European cannabis space, but it’s more internally. So that needs to needs to change.
I think that VCs see themselves as the frontline of innovation, and investing into disrupting companies in new market. But most of the time, that’s what I see, they are simply following trends. So that is important that that needs to change for a completely new market coming up, because this cannabis market has never been there before. So there is no long-term data which you can rely on. So they need to do their own due diligence, look at the new markets take a look at the emerging cannabis industry in Europe. And they will see the potential which is actually evolving overseas. And I think then a lot of things will change also in the European cannabis industry. But I mean, the potential is huge, like I’ve told you. Germany will become the biggest cannabis market in the world.
So of course they pay close attention to what is happening in Germany right now. And what is happening by the end of the year with the draft of the law, and what is happening in the next two years. Because I think there was never a better time to invest in a medical cannabis company in Germany than now. Because now you will see the traction of the market evolving. And you have a huge upside potential for your investment when you invest in a company now when the recreational market kicks in.
RS: I’m curious and we can kind of end here. You’re talking about — we’ve been talking about the more mature markets, and then how they influence the European markets or how the process has influenced in Europe. But I’m curious the other way, like the markets that are less developed than Europe, are you also in touch with them? Or are they reaching out to you in terms of how to best maneuver policy, how to best growing industry? Is that something that you’re looking to share and spread around?
NK: Of course. Also, what I did in the past. For example, my father’s from Greece, obviously with the name Niklas Kouparanis, pretty Greek. So what I did in the past, I for example, consulted the Greek government how to implement laws to make it attractive for investor to invest in to the Greek market. We also were very close when it comes to the UK market, which has legalized medical cannabis back in the days, paid close attention then also consulted a couple of companies, and also policymakers how to actually do that.
So we are always very happy and open to share our thoughts, share our know how, and also share what kind of mistakes were made in the past in other markets and also in the medical cannabis market in Germany, in order to make it better and quicker and easier for other countries to legalize either medical cannabis also recreational markets. Very happy to do so.
RS: That’s awesome. I mean, this is more a personal interest question just because I live near Greece and I go there a lot and I love it and I love everything about it. But I’m always struck by it seems like that they there’s not a real strong relationship with cannabis or to kind of like, looking at cannabis as like capital the drug. Is there, and I’m really happy to hear that you’ve had those conversations with the Greek government. Are you encouraged by how they’re thinking about it?
NK: It’s only medical use right now in Greece. But interesting thing about Greece, it took a while. Bureaucracy is pretty strong in Greece and it takes time to actually implement the new law. But the biggest cannabis facility in Europe just got built in Greece. So for medical cannabis, Greece is moving pretty fast now, and will also I think, in the future be a production hub or cultivation hub for the European market for the European medical market, in terms of recreational use, and as we have covered in Greece so soon.
RS: Where is that built? Where is that cultivation site in Greece?
NK: Near Kalamata at the Peloponnese.
RS: Well, this has been a really interesting, edifying conversation for me, and I bet for our audience as well. Anything else you want to share Niklas or how the audience can get in touch with you?
NK: Just hit me up on LinkedIn anytime. If you have any questions or questions, Niklas Kouparanis. And it was great talking to you. And I think it’s interesting how everything is evolving. We are still at the beginning of a huge industry, which will open up and let’s do it right, let’s do it quick, but let’s also pay attention. And I think the German government is doing a great job right now. I think we can be a role model for the rest of the world and first, of course, for the European Union. I’m very happy about the process we are making and looking forward to developing the industry, in Germany and in Europe, and of course, all over the world in the future.
RS: Yeah, absolutely. I know a lot of people are looking to Germany with a lot of excitement about what this means, myself included. So I really appreciate you coming on and sharing with us so many, really bird’s eye view of what’s happening over there. Really appreciate it, Niklas. And hope to talk to you again soon as we hear more good news.
Thanks so much for listening to the Cannabis Investing Podcast. Subscribe or follow us on Seeking Alpha, Apple podcast, Spotify or Stitcher, and we’d really appreciate it if you left us a review on Apple podcast. It helps other investors find our show and makes us feel fantastic. If you have feedback or questions, we’d love to hear from you at rena+canpod@seekingalpha.com.
Nothing on this podcast should be taken as investment advice of any sort. I’m long, Trulieve, Khiron, IsraCann Biosciences, The Parent Company, Ayr Wellness and the ETF MSOS. Subscribe to us on Libsyn, Apple podcasts, Spotify or Stitcher. Thanks so much for listening. And see you next time.
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