What Curaleaf’s landmark EMMAC takeover means for cannabis in Europe

Curaleaf has acquired EMMAC Life Sciences in a landmark deal valued at $285 million. Cannabis Health speaks with EMMAC’s CEO to find out what the acquisition means for the sector at large.

Curaleaf is the largest cannabis company in the US. Hitting $600 million in revenue in 2020, the company is aiming to reach $1.2 billion in 2021.

With ambitions to enter the burgeoning European market, the Massachusetts-based company has acquired EMMAC Life Sciences, one of Europe’s largest cannabis companies.

The European firm, which employs 190 people, currently imports its products to Germany, Portugal, Switzerland, Italy and the UK. It has a cultivation site in Portugal and two GMP manufacturing facilities in the UK and Spain.

The high-profile deal, which is Curaleaf’s first major international acquisition, is not just a significant milestone for the companies involved, it could also have a wider impact on the European sector at large.

“I think it’s very important for the sector, not just EMMAC,” Antonio Costanzo, CEO of EMMAC, tells Cannabis Health.

“We are the leader in the sector in Europe, so if the leader becomes the target and is acquired by the largest company in the world, it means that all of a sudden there is a lot of interest for Europe.”

The European cannabis sector is one of the fastest growing in the world. In the UK, EMMAC says it is seeing a 40 percent month on month increase in the number of patients and prescriptions since June 2020.

Meanwhile, Italy has more than doubled its importation of medical cannabis between 2019 and 2020.

“There is a clear trend. It’s not a matter of if, it’s a matter of when and how countries will open up their markets and allow people to use cannabis for medical purposes,” Costanzo adds.

Costanzo says that the acquisition has happened at the right time for both firms. Prior to the deal, EMMAC was preparing for an initial public offering (IPO), following in a similar path to Kanabo and MGC Pharmaceuticals which became the first cannabis companies to list on the London Stock Exchange (LSE) last month.

Antonio Costanzo, CEO of EMMAC. Photo: DANIEL JONES 2020

“Growth of the sector has been spectacular in the US, so Curaleaf wanted to start looking internationally. They thought Europe was the right place to go and they came to us to discuss a takeover,” Costanzo says.

“We thought that for our shareholders the best option would be the acquisition as it  would give us a certainty on the future and the development of the company.”

For EMMAC, the acquisition means additional financial, human and strategic resources, which it intends to use to accelerate its growth across the continent.

“This is very important for us because it will give us the strength, the power and the resources that we need in order to accelerate our growth, to open up new countries and to solidify the leading position that we have today in the European space,” Costanzo says.

“There is a strong feeling that Europe is deemed to be the next very high growth market and we expect to see the same type of growth in Europe that we’ve seen in North America in previous years.”

Although details remain under wraps, the company says it has identified targets for a series of mergers and acquisitions that will expand its geographical reach.

Costanzo continues: “We’re not much looking at acquiring companies that would add to our manufacturing capabilities or production capabilities, but more on the distribution side. We want to grow our manufacturing capabilities organically”

The company’s cultivation, extraction and manufacturing operations are distributed between Portugal, Spain and the UK.

“These three assets, we believe, are sufficient for the growth that we are forecasting,” he adds.

According to Costanzo, EMMAC is already expanding its extraction facilities and has plans in place to expand its cultivation site and manufacturing capabilities.

In addition to financial resources, EMMAC hopes to benefit from Curaleaf’s research and development and its experience of navigating the US cannabis market during its monumental shift towards legalisation.

EMMAC hopes that this will help the company avoid mistakes that the US and Canada made in its adoption of medicinal and recreational cannabis.

“I think there is a major difference between Europe and North America in the approach to medical cannabis because Europe is taking very much a pharmaceutical approach to medical cannabis,” Costanzo says.

“They’ve adopted EU GMP standards and put cannabis into pharmaceutical regulations.”

This was not the case in North America where completely new regulations were put in place specifically for medical cannabis.

Curaleaf’s expansion into the European market is expected to direct an increasing amount of attention to the continent, not only for its medical cannabis industry, but also its future recreational market.

The European market is following a similar trajectory to that seen in the US and Canada several years ago with the legalisation of medical cannabis followed by incremental changes to recreational cannabis legislation.

Costanzo is confident that the legalisation of recreational use in Europe will happen in the coming years, however he anticipates that it will be a “complicated” period for the sector.

“Curaleaf have gone through that transition from medical to recreational by keeping the two running together. So, I think that is going to be the key element where they can bring a lot of expertise to us in navigating that period of time.”