"Erratic" growth market - first German cannabis company wants to go public

It's an unusual move: The cannabis start-up Cantourage goes public just three years after it was founded. Cantourage has completed a private placement in which the company has been valued at around 100 million euros, according to the Handelsblatt, citing corporate circles.

In the coming days or weeks, "in November", as the company puts it, the company wants to be listed in the entry-level Scale segment on the Frankfurt stock market.

Cantourage founders Norman Ruchholtz, Florian Holzapfel, and Patrick Hoffman are no newcomers to the cannabis industry. With Pedanios, the trio set up one of the first European cannabis wholesalers in 2015 and sold it to Canadian top dog Aurora two years later. They continued their company as Aurora Deutschland GmbH before founding Cantourage in 2019.

The start-up now needs money to grow. But private equity or venture capital simply takes too long for him, says CEO Philip Schetter in the “Gründerszene” interview: “I know that from other rounds of financing: there are often long due diligence processes and lengthy valuation discussions.” Head of Aurora and took over as CEO of Cantourage in spring 2021.

The cannabis market in particular is “very dynamic” and “often develops by leaps and bounds”. Even though the government has presented key points for the legalization of cannabis, it is still not certain if and when so-called "recreational cannabis" will be allowed.

If the time comes, cannabis companies will need a lot of money quickly to survive in the market. "We therefore wanted to have another option to be able to raise money at short notice if it was necessary," says Schetter in an interview with "Gründerszene". He's worked in the market long enough to know that cannabis investment decisions almost always have to be made quickly.

Once Cantourage is listed on the Scale exchange, there would be different ways to raise capital and allow people to invest in the company, Schetter explains. With a listing in the scale segment, a distinction is made between public and non-public offers. Companies do not have to prepare a securities prospectus for non-public offerings - Cantourage takes this route.

Fresh capital was already flowing in the course of the private placement: "High-Net-Worth Individuals and Family Offices" participated, according to Schetter. However, he does not want to say who exactly these shareholders are.

He and his team want to use this money for a systematic expansion of production capacities and the development of new markets - the cannabis as a stimulant market - in different European countries. After all, Germany is not the only country discussing the subject of legalization.

So far, Cantourage has been limited to the medical cannabis space: the start-up distributes medicinal cannabis flowers, dronabinol (a THC compound), cannabis extracts and pharmaceutical CBD in Europe and the UK.

According to Schetter, Cantourage works with 38 growers in 17 countries, imports their cannabis and processes it into pharmaceutical products in Germany. Cantourage has also been running its own cannabis clinic in the UK since spring 2022.

Last year, the start-up from the Berlin suburb of Kleinmachnow achieved sales of over five million euros, this year the company is aiming to triple, according to a press release.

“According to estimates, the market for medical cannabis alone in Europe will grow to 7.7 billion euros by 2028. Any markets in which cannabis could be sold as a stimulant are many times larger," says Schetter. It is estimated that it is even 20 times larger.

If legalization comes, Cantourage can play directly. Not only thanks to the quickly available money from the capital market, but also because the start-up already has suitable products in its portfolio: "I assume that what we offer in the medical market could possibly also work in the leisure sector."

The dried flower - a core product of Cantourage - is popular, as shown by sales in countries such as the USA and Canada, where marijuana is already sold legally.

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