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Cannabis Industry News 26/08/2019

Aurora wins race for Italian medical cannabis tender

Article source: prohibitionpartners.com

Aurora Deutschland is on the brink of landing a government contract to supply medical cannabis to the Italian government, after the other three firms left in the running were eliminated over paperwork errors.

A note issued by the Italian Ministry of Defence (MoD) on Monday (July 15) said Tilray Portugal, Canopy Growth Germany, and Medicinal Organic Cannabis Australia, failed to meet the compliance criteria within the tight timeframe.

The MoD surprised the market in June by announcing a two-week open tender to supply medicinal cannabis, as it sought to address a shortfall in production at the Florence Pharmaceutical Chemical Plant.

The plant, situated on military land, has the only licence to grow domestically and controls the country’s production, but its output has repeatedly failed to hit government targets.

After a one-week assessment period Aurora Deutschland, the German subsidiary of Alberta-based Aurora Cannabis, was the sole applicant to make it through to the final bid assessment phase.

The initial estimated value of the tender was €1.52 million for 400kg, representing an average cost of €3.80 per gram. However, the proposed submission will set the price between €1.29 and €1.78 per gram depending on the product.

The product requested was dried cannabis flower, whole or milled, in three lots: 320kg of high THC content, 40kg of a CBD/THC split product, and 40kg of high CBD content. The MoD wants the supply to be delivered every four months.

According to the MoD, the state will pay the following prices for the supply of Aurora’s cannabis:

  • €1.78 per gram for 320 kilograms of high-THC flower, representing a 55.5% discount on the original proposed price.
  • €1.29 per gram for 40 kilograms of THC/CBD-balanced flower, representing a 57% discount on the original proposed price.
  • €1.77 per gram for the third lot of 40 kilograms of high-CBD flower, representing a 41% discount on the original proposed price.

In grading their submissions, the Ministry said:

  • Canopy Growth failed to satisfy requirements for the microbiological testing of products.
  • Tilray submitted parts of its application after the closing of the tender window and also failed to provide adequate documentation necessary to supply active substances.
  • Medicinal Organic Cannabis Australia, on the other hand, did not submit the relevant paperwork.

Existing relationship

Aurora has roots in Italy, having won a contract to supply the MoD in 2018. It supplied 100kg of dried flower imported from Canada through its German subsidiary Pedanios.

Italy is a major European market for medical cannabis and with a population of 60 million, holds serious potential for businesses looking to expand. In recent years, the country’s medical cannabis system has not satisfied demand, resulting in a waiting list of around 20,000 patients in 2018.

Italy has been importing products from Bedrocan to fill demand, but feels restricted by the products supplied by the Dutch Office of Medicinal Cannabis, and is increasing domestic production to pare back its reliance on the Netherlands.

The Italian Ministry of Health has also said it will not issue additional import authorisations for medical cannabis to private wholesalers.

One final step

In passing Aurora’s application, the MoD said the company had correctly clarified and stated that the packaging is carried out in Canada, so the need for an EU-Good Manufacturing Practices (EU-GMP) packaging certification is waived.

Before Aurora gain approval, however, the bid will be scrutinised again, as the discount given on the tender may be deemed excessive under Italian law. Under Article 32 of Italy’s Code of Public Contracts, the current approval is not final, only provisional, until the government is satisfied, and the Ministry signs the contract.

The four firms did not respond to a request for comment.

For more information on the Italian cannabis market, download The European Cannabis Report™ 4th Edition now, for free.

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