1.Can you give me some background on how Linneo Health got involved in the cannabis industry?
Linneo is an independent company, 100% focused on medicinal cannabis. Linneo grows medicinal cannabis under high-tech greenhouse conditions in Murcia, in south-eastern Spain, and focuses on the cultivation and GMP-certified processing of dry cannabis flowers for pharmaceutical purposes. Our current yearly indoor growing capacity could reach 25 tonnes, and this has the potential to be expanded if needed. Linneo also has access to unlimited, GACP-certified and organic outdoor cultivation to produce biomass for industrial cannabis extracts. Alcaliber remains our exclusive contract manufacturer for extracted products.
2.What are your major markets for produce?
Linneo is the premier B2B supplier for the medicinal cannabis industry in the world. Being 100%-focused on medical products, our accessible markets are those that have appropriate regulation for medicinal cannabis – for example Germany, UK, Israel and Italy. As more markets introduce cannabis regulations, we continue to expand. We supply a range of high-quality medical-grade cannabis products to various companies around the world who are active in the markets I mentioned earlier, and who have the right licenses to be able to access the final customer.
3.How do you see the European medicinal cannabis market developing?
As a general comment, it is clear that every single market, without exception, is under-explored and has potential if you compare it to, for example, some of the usage rates that you see in Canada, or in the United States. In Germany, less than 1% of the general population has had exposure to medical cannabis, significantly below the rate in North America. So even in the most developed European market, we continue to see potential for an expanded market to address patient needs for serious medical conditions like pain, anxiety and insomnia.
In Germany, there is a lot of discussion about recreational use of cannabis. As a company purely focused on medicinal cannabis, we don´t have an opinion on whether the German people and its government feel this is the right thing to do. My focus is ensuring that, in this debate, patients are not left behind. If Germany chooses to legalise recreational cannabis, I would like to see the rights that German patients have secured over the years and for which they fought so hard, defended. Patients deserve the right to consult a doctor, a right to high-quality product, the right to be able to have a medical discussion with a pharmacist, and ultimately, I believe, the right to reimbursed therapy.
If we then look at the UK, that is a market which is really moving forward. There has been a change of attitude among patients, government and doctors over the use of medicinal cannabis. The UK has become an important market for Linneo and we hope this trend can continue.
Equally important is the Israeli market. Per head of population, Israel is the largest medicinal cannabis market in the world. That is because they have many years of medical science and a society which is very accepting of medicinal cannabis as a treatment. They face intense competition, both domestic and international. We are active in Israel and continue to invest in this market to ensure a growing presence.
Competing in Israel obliges you to offer very high quality product, but also do it at a very competitive price. If you can make it in Israel, you can make it anywhere!
Many new countries which are beginning to understand how to regulate medicinal cannabis and some big markets that are now taking steps towards creating medicinal cannabis regulation. One of biggest of these is actually in our home market, Spain. The Spanish Parliament has approved the introduction of medicinal cannabis legislation. We are about to discover how regulation in Spain will look, but remain hopeful that it will enable patients in this country to finally gain access to medication in a regulated and controlled manner. Many other markets are also considering regulation, and over the next five years, we are excited by the growth potential of Europe. It’s going to be a place with different markets opening up, and where many more patients will gain access to medicinal cannabis. The projections are that by 2026, the medicinal cannabis market in Europe will be the largest in the world.
4.Is legalisation of adult-use going to change your strategy?
That’s a very complex question and it depends on what governments are going to do. The best analogy I can give you is Canada, where for a few years there was an established medicinal cannabis market, and then ultimately the government decided to allow adult use. In Canada, when the only way to access cannabis was through the medical sector, there was evidence that some were not really patients – pseudo-patients if you will. When recreational sales became legal, many pseudo-patients just found it easier to go to a shop and get their cannabis. This had a small impact in registered patient numbers, but this stabilised very quickly, and growth returned. In Germany, I believe the government will do the right thing for patients and continue doctor prescriptions and reimbursement. I believe that there is a large untapped potential for patients who get real benefit for their untreated conditions.
There is a great deal of work to be done in developing the medicinal cannabis segment. Inhaling a flower has its therapeutic value, as it is a very short-acting and effective way to get cannabinoids into your system. There are certain conditions like acute pain for which this is ideal. But if you look at a spectrum of different diseases that cannabis in theory can help to treat, there are lots of other presentations that are much more pharmaceutical, that need to be developed to better address patient needs: oils, tablets, sprays, micro dosing. That’s where we are heading. Linneo is actively developing products of this type.
5.How do you see yourselves expanding? Would you contemplate to build your own brand?
As a primary producer of material, our routes to expansion are clear. You can expand geographically and you can expand in the offering. And we want to do both! So geographically there will be a lot of new opportunities in Europe, and there are clearly new opportunities beyond Europe that we need to explore. And one day, I can’t tell you when, but one day we will be able to enter the big markets in North America. And then there is portfolio diversification. In terms of flowers, that means more varieties, more choice, being precise in the THC specs and the CBD specs, going into rare cannabinoids. And then on the industrial products, with our CMO partners, developing new, more innovative medical products for patients.
6.What are the biggest challenges that you are facing?
For Linneo, the biggest challenge is finding the mix between quality and efficiency that establishes our long-term profitability as we capture our growth opportunities. You need to understand what sort of a business you are, understanding the requirements of your customers and their patients, producing in such a way that you can meet quality and efficiency expectations.
Externally, it’s about being better than the competition, but also finding a way through the regulatory inconsistency around the world. I come from the pharma world where, at least in Europe, a lot of progress has been made by the European Medicines Agency towards having a standardized platform. This is far from the reality for medicinal cannabis. We spend a significant amount of time studying regulation country by country, understanding inconsistency between one rule and another, and then trying to get through all the paperwork to deliver medicinal cannabis to our customers. At some stage, the European Medicines Agency will need to standardise the rules for the benefit of everyone.
Spain is in theory a very suitable place to cultivate. But regulations are strict and tightly enforced. Coming from the pharma industry, I understand the value of strict regulations, as they ensure quality and serve the patient well. But the same strict interpretation needs to be applied everywhere. Regulatory inconsistencies create competitive advantages or disadvantages, which are not good for our business and, ultimately, not good for patients.
A version of this Q&A first appeared in Bryan, Garnier & Co’s European Cannabis report, available here