Aurora Cannabis was forced to stop sales of medical marijuana in Germany over “a form of treatment that we use to maintain the product without microbial contamination,” Cam Battley, the Alberta, Canada, company’s chief corporate officer, said at Marijuana Business Daily‘s Investor Intelligence Conference.
MJBizDaily first reported at the end of November that Aurora products had become unavailable in Germany.
A company spokesperson said at the time the issue was related to a “proprietary step” in Aurora’s production process that requires “additional authorization” from regulators.
Germany’s Medicines Law prohibits the sale of medical products that underwent ionizing irradiation unless a special permit is obtained.
During his presentation at the Las Vegas conference, Battley was asked by an audience member to elaborate on the “proprietary step.”
Battley explained that it’s a process to ensure the quality of the products, specifically microbial levels.
“We realized we needed a permit,” Battley said, adding that “obviously, we’re a little red faced on that. Nobody likes an operational hiccup.”
He was referencing the special permit that’s required to distribute irradiated medical cannabis products in Germany.
Asked by MJBizDaily in November if Aurora irradiates the products it sells in Germany, the spokesperson said the company does not “gamma irradiate product for sale in the German market.”
Aurora’s spokesperson also did not say whether it performs any other type of irradiation, including electron beam (e-beam) irradiation.
At his Investor Intelligence appearance, Battley estimated “it’s going to take about four weeks” for Aurora to get the required permit. He also expressed confidence the company will “win” the German market after resolving the permit issue.
This is not the first time Aurora has experienced a setback in Europe.
In November, the Italian government canceled one of three lots of medical cannabis products that Aurora was supposed to import into the country.
Meanwhile, Battley predicted that “more derivative products” are coming to the German market.
Currently, full-spectrum extracts represent a small fraction of total reimbursements in Germany, and only Aurora and Tilray offer those types of products.
Canopy Growth sells dronabinol through its subsidiary C3. Sales of dronabinol in Germany are currently higher than that of full-spectrum extracts.
Aurora is one of only three companies authorized to grow medical cannabis in Germany, and the company expects its first harvest at the end of 2020.
How much Germany will pay for medical cannabis products is not publicly available, but the government recently disclosed it will pay on average 2.3 euros ($2.55) per gram for the total production of the three companies.
This suggests it will be extremely challenging to achieve profitability through Germany cultivation operations as the growing conditions – and security requirements – are much more stringent in the European nation than they are in Canada.
And the small contracted quantities of medical cannabis will make it difficult to achieve economies of scale.