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Curaleaf Holdings announced on Tuesday the 9th of March that a definitive $286 million agreement had been signed to acquire Emmac Life Sciences, a UK based Medical Cannabis company. The deal will provide Curaleaf with a major foothold in the European Cannabis market.
The terms of the agreement are that Curaleaf will pay $286 million up front consisting of 85% in Curaleaf shares and 15% in cash.
The transaction also includes a clause of another $57 million being payable upon certain performance targets being achieved, meaning that the deal could end up being worth $343 million.
Emmac are a vertically integrated European cannabis company, and they have an existing footprint in a number of European jurisdictions including the United Kingdom, Germany, Italy, Spain and Portugal. Emmac currently exports medical cannabis that is grown in Portugal to the Israel medical cannabis market and has plans to substantially increase production of Medical Cannabis.
Curaleaf is a multi-state operator in the United States and has operations across 23 US states with 23 cultivation facilities, 30 processing sites and over 100 dispensaries. Curaleaf’s headcount is now in excess of 3,800.
This deal signals Curaleaf’s global ambitions and is indisputably the largest cannabis company on a revenue and footprint basis in the world.
The deal illustrates that there is growing interest in the European Medical Cannabis market and North American capital is beginning to take the sector seriously and sees that attitudes towards cannabis around Europe are changing as the stigma that has engulfed cannabis for many years is gradually subsiding.
The liberalisation concerning cannabis seems to be happening around the globe and the trend is growing exponentially in the US and it feels like it is a matter of time in Europe.
The European cannabis market has the capacity to exceed the size of the US cannabis market over time due to the larger population. This makes Europe an essentially growth target for the North American cannabis companies.
In Q1 of 2020, Curaleaf was generating 90% of its revenue from medical cannabis operations. However, the proportion of their revenue has shifted and now 60% of Curaleaf’s revenue is generated from recreational cannabis use.
The legalisation of cannabis across Europe is still in its infancy but it is expected to make progress in the near future. The pilot scheme that is being launched in the Netherlands is a prime example of how governments can enable the industry to trial the legalisation of cannabis for recreational use.
It will be extremely interesting to see how the legalisation of recreational cannabis use is implemented across Europe and the nature in which the legislation is conceived.
The deal between Emmac and Curaleaf is expected to close in the second quarter of 2021.
Curaleaf trades on the Cannadian Securities Exchange under the symbol CURA and it trades under the symbol CURLF in the US OTC markets.