Two Canadian cannabis producers, Aurora Cannabis (TSX:ACB) and Aphria Inc. (TSX:APHA), have been awarded contracts by the German government to cultivate and distribute medical marijuana throughout the European country.
Both companies say the decision by Germany's Federal Institute for Drugs and Medical Devices is provisional and subject to a mandatory 10-day waiting period, which allows unsuccessful bidders to submit a challenge before the final contract is signed.
If finalized, the cannabis produced by both Aurora and Aphria will supply the German medical marijuana market, which is the largest in Europe according to a recent report by market research firm Brightfield Group. Brightfield estimates that Germany's medical marijuana market was worth $73 million U.S. in 2018 and is forecast to grow to $2.7 billion U.S. by 2023.
Both cannabis companies say the provisional decision awarded them each the maximum number of five of the 13 available lots in the tender, which runs for a period of four years. Berlin-based Denecan also received a contract from the German government.
Jefferies analyst Owen Bennett said in a note to clients that the decision is positive for Aurora, as it helps to validate the quality of its medical operations and puts the Edmonton-based company in good stead when attempting to enter other markets. For Leamington, Ontario-based Aphria, the German contract validates its global approach and success in winning foreign distribution rights.
