"Navigating consolidation in the cannabis industry can be particularly challenging," says Tom Varga, CEO of Biortica Agrimed.
In an industry that once viewed acquisitions as a way to raise more money and increase a company's market capital it might seem at odds to head back to the past behaviour. However, economies of scale, synergies on costs duplicated in businesses and the ability to leverage high quality genetics, customer demand, capacity and cannabis capability in one of the fastest growing markets in the world actually makes sense.
"Biortica Agrimed is Australia's largest B2B grower of medicinal cannabis, and owner of Canada's Apollo Green, one of the largest cannabis genetics libraries in the world."
Biortica is undertaking a rapid expansion to meet the needs of contracted customers with the addition of 16,000 square metres of cultivation capacity.
"Our current focus is on completing glasshouses 2 and 8 here in Australia," he said, "as our original glasshouse 1 is fully sold through 2025. With all three facilities on line, that's a total of 20,000 square metres, or 25,000 kilograms of capacity and already we have demand for the majority of it."
"It's about ensuring quality and quantity of domestic supply first, and in parallel looking for expansion opportunities within Australia and internationally that deliver synergy and scale."
Founded in 2019 and having commenced cannabis cultivation in October 2020 it has been a meteoric rise to success for Biortica. With genetics, cultivation and downstream partners Biortica is offering a one-stop solution to cannabis brands and cultivators. The acquisition of Cannapacific, the site where glasshouse 8 is located, and Apollo Green provide an indication on the appetite for future mergers and acquisitions.
"Planned, strategic expansion and growing to build a resilient supply chain for patients whilst enhancing shareholding value are core to the Biortica journey."
"North America already serves our hub-and-spoke business model well," he said, "with genetics and breeding centralised with Apollo Green as the hub, supplying a global network of glasshouses facilitating our expansion, makes more sense than shipping finished product or flower around the world."
"We see Europe as a particularly exciting opportunity for us," said Mr Varga.
"We believe in leveraging synergies to create a stronger industry in every market where we participate and in every company that joins the Biortica family. However, we are upstream focused and rather than compete with our customers we see ourselves as the engine that provides the genetics and cultivation to their success," he said.
The business model is clearly different from the old cannabis days of buy everything and vertically integrate with little eye on value or shareholder returns. The performance of the company to date highlights a foundation of success that is underpinned by genetic choice, customer focus and competitive pricing. "Like any other industry that seems like a good pathway to success."
For more information:
Biortica Agrimed
www.biortica.com