The final piece of its cannabis production line has now slotted into place for MGC Pharmaceuticals (ASX: MXC) after final legislation was passed by the Maltese Parliament last week.
The legislation legalises the production of cannabis for medical use in Malta and gives a resounding green light for MGC Pharma to kickstart its production line of cannabis products on the Mediterranean island.
The news is a superb follow-on from last month’s announcement that the Maltese Government had awarded MGC a contract to develop its very own 4,000 square metre facility after a competitive tender process was completed.
MGC was one of only five companies to be granted a contract to build and operate a licensed medical cannabis facility in the country and substantiates its proclaimed strategy of operating a “vertically-integrated” medical cannabis operation from the heart of Europe.
MGC said it is now expecting to have final formal agreements from the Malta Medicine Authority to be signed in the coming weeks, with other commercial channels also in motion.
From contracts to construction
In view of its Maltese production phase commencing in the near term, MGC also said that it has identified 4,000 square metres of land which will serve as the basis for a “medical cannabis production and cultivation facility” with construction planning already commenced.
Malta provides the ideal geographical location to serve the growing European market, as MXC under this contract will be able to produce all tetrahydrocannabinol (THC) and cannabidiol (CBD) strains of pharmaceutical grade cannabis extract for medicinal purposes due to a “perfect climate” with an average yearly temperature of 23 degrees celsius.
The ideal growing conditions are also supplemented by an attractive business and cost environment compared to other EU locations that could potentially allow the Australian pot stock to establish a commercially viable growing operation in the epicentre of one of the largest consumer markets in the world: the EU.
The medical cannabis market within the EU is expected to be worth $56 billion by 2020 with leading European nations such as Germany, France and Italy expected to serve as the largest target markets.
In Germany alone, the medicinal cannabis market is estimated to be worth around $17.5 billion per year and observes a lower wholesale price of raw materials, at €3.5 per gram, according to MGC Pharma.
As a market, Germany is particularly intriguing considering the precedent-setting Supreme Court decision made in 2016, Germany’s highest court. The court softened and simplified access to medicinal cannabis for domestic patients and reduced the burden for patients to qualify for medical cannabis prescriptions.
Since the decision was taken in 2016, Germany’s medical cannabis patient population has swelled from a few hundred to more than 13,000 by end of 2017, according to Marijuana Business Daily, with tens of thousands more patients predicted to obtain prescriptions in 2018, and in the coming years.
According to industry analysts, Germany’s approach to cannabis legislation closely mirrors the approach being taken by Canada and some states in the US and thereby could create a substantial market in the years to come.
At the current time, analysts estimate that there are more medical cannabis patients in Germany than the rest of Europe combined and that Germany is holding its place as the business leader within the European Union.
With Germany seen as Europe’s traditional business pacesetter, it could well be the case that other countries follow suit. Countries such as the Netherlands have already made significant strides towards decriminalising recreational use of cannabis while Spain has also taken steps at easing historically stringent legislation.
“I am pleased to inform you that the production of cannabis for medical use has now become legal and regulated under Maltese legislation and a plot of land within one of the Maltese industrial zones has been designated to us for our project. Once the licence by the Malta Medicines Authority is issued we will be able to commence work on the project in Malta,” said Roby Zomer, Co-founder and managing director of MGC Pharmaceuticals.