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Organigram Holdings is investing 14 million euros ($14.9 million) in Berlin-based cannabis operator Sanity Group as the Canadian producer seeks expansion in Germany.
According to a news release, the funding from Organigram’s strategic investment pool, named Jupiter, includes:
- 11.5 million euros via an unsecured convertible note.
- 2.5 million euros to purchase an equity interest from Sanity Group shareholders, providing the New Brunswick-based producer a minority stake in the company.
The deal also allows Organigram to initiate an advance of 3 million euros in the unsecured convertible note for future opportunities.
“A meaningful presence in Germany and Europe are essential to achieving our ambitions to be a global cannabis leader,” Organigram Chief Strategy Officer Paolo De Luca said in a statement.
Organigram CEO Beena Goldenberg highlighted the company’s expanded footprint in Europe.
“This has the potential to provide a pathway for us to launch our own brands and industry-leading (intellectual property) through Sanity’s extensive distribution network,” Goldberg said.
“This relationship also bolsters our European revenue generation through a significantly expanded commercial agreement.”
Under the deal, Organigram and Sanity Group expanded their supply agreement to increase production and commercialize the Canadian producer’s brands and intellectual property in Germany.
Sanity distributes products to more than 2,000 pharmacies and works with roughly 5,000 physicians in Germany, which launched a limited adult-use cannabis market on April 1.
Organigram said in the release that it has a 10% share of the German medical cannabis market.
The convertible note carries a 10% annual paid-in-kind interest for a minimum of three years and may be discounted in Sanity’s next qualified financing.
The Sanity Group deal comes on the heels of Organigram entering the U.S. cannabis market with a March acquisition of a minority stake in North Carolina-based Open Book Extracts.
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