Interview with Cannabis Trader Cantourage: "Can grow dynamically in any legal framework"

Cantourage imports cannabis from growers around the world. We manufacture medical products from it in Germany and distribute them throughout Europe. The majority of our competitors only specialize in the distribution of cannabis flowers. We are a producer and distributor of medicinal products and thus cover a crucial step in the value chain, especially within the cannabis industry. This also allows us to present a different product portfolio than our cannabis flower competitors.

We have more than sixty cultivation partners from eighteen countries. This broad product portfolio covers various patient needs. In the context of cannabis therapy, it is important to understand that the interplay of different compounds within the flower produces individual effects for patients. We cover a very broad spectrum, and in addition to inexpensive preparations, we also offer cannabis flowers that are perceived as being of particularly high quality due to special cultivation techniques. These techniques result in unique flowers with distinct profiles of effects. This enables us to meet the multi-layered demand for cannabis products. This is unique in Europe.

Before my role as CEO of Cantourage, I worked at a major cannabis company. At that time, we successfully won a tender from the German government to produce cannabis in Germany. From that experience, I know how significant the regulatory hurdles are in Germany. In addition, there is the energy demand that arises when you grow cannabis "indoors" within the framework of these regulatory requirements - it requires artificial lighting and cooling and dehumidification systems, among other things. Other countries simply offer better conditions for cultivation. Also, in some of these countries, such as Canada, there is already extensive experience in growing cannabis, which can lead to better products and yields. Importing cannabis, therefore, has a positive impact on cost and quality, making it the best option for Cantourage.

Before 2017, cannabis was only available in Germany with exceptional permission. At that time, there were only a few hundred patients nationwide. After 2017, it was difficult for patients to find a doctor who would prescribe cannabis, although the barriers to doing so had fallen significantly. In principle, cannabis can be prescribed for many indications. In practice, however, its status as a narcotic has ensured that many doctors and pharmacists have remained skeptical - partly due to special documentation requirements. The situation has now been remedied by digital providers who offer cannabis therapy via telemedicine. In this process, the doctor assesses the indication, selects suitable preparations and prescribes them. Digital processes make the complex procedure as simple as possible for everyone involved. For this reason, patients with pre-existing conditions can easily initiate cannabis therapy today.

We believe that the removal of the status as a narcotic will nevertheless trigger additional growth effects. Firstly, cannabis is present in the media and secondly, more general practitioners are now also likely to consider therapy and suggest cannabis to their patients. While cannabis was previously regulated in the same category as strong opium-based painkillers, it may soon be legally equated with over-the-counter medications like Ibuprofen 600. Doctors prescribe this medicine, and it is dispensed daily at pharmacies with a prescription. Because cannabis helps many patients for various indications, more patients are likely to try it once the narcotic status is lifted. This has been the case in other now-liberalized markets, such as Canada.

In principle, any human physician who is not a dentist can prescribe cannabis. However, many physicians are not yet very familiar with the preparations. If telemedicine services work with qualified physicians who provide patients with thorough advice and select suitable products, this offers added value. In addition, there is the argument that speaks for telemedicine independently of cannabis: it is simply convenient. That is why telemedicine for cannabis continues to be justified. We ourselves operate a comparable service in the UK and are also keeping an eye on the market in Germany.

The current plans of the federal government envision a legalization process in several steps. In addition to personal cultivation, which is not a straightforward endeavour, there will be social clubs where cannabis can be grown for all club members. The number of members in these clubs is limited. Cost-effective, large-scale production is thus out of the question. In addition, it will be complex to grow numerous strains, which cannabis patients often rely on. Furthermore, specialized dispensaries will be permitted to sell cannabis in model regions for a period of five years. At this point, we are closely monitoring further developments. Whether it is worthwhile to engage in model regions or not depends on the specific framework conditions. We will not repeat the mistake made by Canadian companies a few years ago. Growth at any cost is not our approach. We are confident that our high-quality yet affordable products will continue to give us a strong position in the future.

Cannabis is a complex plant that requires a high level of expertise and passion on the part of growers and producers. Those who do not have a very good hand at growing plants on their windowsill at home will not be able to grow high-quality cannabis either. Our products undergo laboratory testing, where we determine the exact concentration of active ingredients and adhere to very low limits for mould or fertilizer residues. The result is a medicinal product with few side effects in combination with low-pollutant vaporization.

We have to wait for the exact regulatory framework. If, as in comparable model regions in other countries, the entire value chain has to be located within the model region, the chances of profitable business dwindle considerably. I do not believe the industry is in a gold-rush mood and rushing into model regions. While a commitment is not out of the question for us, it depends on the framework conditions. We would like to see a regulatory framework that benefits patients and users and sets clear guidelines for companies like Cantourage. Cannabis must remain a regulated product even after full legalization. If full legalization were to occur tomorrow, we would be perfectly positioned to benefit thanks to our business relationships and broad product portfolio. We can therefore wait and see what the future legislation looks like and make the best decisions accordingly.

Even though we are already well-positioned and offer a wide range of cannabis products, our cultivation partners are continuously bringing new strains to the market. We have already signed many contracts and are gradually adding the products to our portfolio. As patients change preparations from time to time, innovations instantly catch the attention of cannabis users. The wide variety we offer, along with our innovations, ensure that we can grow disproportionately in markets that are already expanding. This is true for countries like Germany and the United Kingdom. Growth within Europe is also important for us. Recently, we took a significant step in Austria, where we can offer our Dronabinol solution.

We are indeed exploring options to expand or deepen our value chain. The contact between patients and medical professionals still plays a decisive role when starting cannabis therapy in the first place. In this regard, we see this as a potential complement to our existing offerings. In addition, the need for working capital is also increasing as our business grows. We anticipate this will enhance our market positioning, enabling us to respond more swiftly to specific demands - for example, if there is a shortage on the market or demand increases sharply. The capital measure will not exceed a high single-digit million amount. We also intend to continue focusing on lean structures in the future.

Yes. We would also like to see more liquidity in the stock. The majority of shares are still in the hands of management or key anchor shareholders. We all believe that the share is far from having exhausted its potential and therefore remain committed. However, we also recognize that Cantourage will need more shareholders in the future. Cantourage is a low-cost growth company with a strong market position - our high double-digit revenue growth clearly demonstrates this. Add to that the potential of the cannabis market. The exact size of this market in the illicit sector cannot be precisely quantified. In addition, there is the scientifically proven medical benefit for various medical conditions. In our view, this mix of factors will likely cause a positive surprise and allow the legal market to grow rapidly as liberalization progresses. Cantourage is perfectly positioned to benefit from this.