CanG’s Passage Drives Up Global Cannabis Stock Prices, & Jazz Pharma Pays $7.5m To Settle Lawsuit Over GW Acquisition

Germany’s passage of CanG continues to drive up stock prices

Yesterday, the President of Bundesrat, Manuela Schwesig, signed Germany’s landmark CanG bill, meaning it is now all but certain to be brought into law on April 01.

This milestone follows the final passage of the bill through the Bundesrat on Friday (March 22), a development that has seen stock prices of companies with any operations in the region spike.

The latest peaks follow weeks of gains for German cannabis stocks, many of which have seen double and triple-digit percentage point gains since the start of the year off the back of CanG’s progress.

Vertically integrated German cannabis firm SynBiotic enjoyed another near-30% increase this week, building on significant progress over the past month.

The group, which owns significant stakes in companies spanning the hemp, CBD, medical, and ‘recreational’ markets, has now seen its stock price increase by over 300% since the start of the year.

Daniel Kruse, Managing Director of SynBiotic SE, said on Friday: “Today’s decision is a great success for the German cannabis market and for us as a group of companies. The law has a national and international signaling effect, promotes our existing business model and creates a practical framework for the future commercialisation of cannabis in Germany.”

Elsewhere, Cantourage also saw a near-20% increase this week, with its stock increasing by over 30% since the start of 2024.

Similarly, German-listed operator Cannovum Cannabis AG, which is now focused on serving the self-cultivation market, has seen an increase of nearly 50% this week, helping drive a 140% year-to-date boost.

The news had a far wider-reaching impact, however, with European firms Kanabo and IM Cannabis also enjoying a boon in share price as they touted their existing or upcoming operations in the market.

UK-based medical cannabis operator Kanabo received a 23% boost after its CEO Avihu Tamir informed investors that Germany is ‘anticipated to become a cornerstone market for Kanabo’.

Referencing the expected growth in the medical cannabis market amid CanG’s significant streamlining of the prescription process, Mr Tamir said: “With Germany poised to emerge as one of the world’s largest markets for medical cannabis, Kanabo anticipates significant growth opportunities within this evolving landscape. We are in negotiations with strategic distributors for Kanabo’s products that the directors believe should materialise in the future and the company will update the market in due course.”

Israeli cannabis operator IM Cannabis, which already has operations in the German market, was one of this week’s biggest gainers, rising 43%.

In a press release, IMC laid out its credentials in the region, suggesting its products were ‘#1 in sales per SKU within the German flower market’, and had the highest growth in the region.

Richard Balla, CEO of IMC Germany, said: “We have been working toward this moment for the last 4 years. We have the entire infrastructure in house. We are EU-GMP certified to repack bulk. We have an EU-GMP certified logistics center to store cannabis and are delivering IMC cannabis to any pharmacy in Germany within 24 hours.

“Our team has extensive cannabis as well as pharmaceutical experience. We have all the necessary supply agreements in place to support accelerated growth. We believe that we are well positioned and are looking forward to growing significantly as the German market evolves as a result of the new legislation.”

The statements came despite a recent declaration that IMC was planning to exit the cannabis industry earlier this month and sell off its remaining cannabis assets, which are thought to include its German operations.

Across the Atlantic, Canadian giant Canopy Growth, which owns German vaporiser firm Storz & Bickel and offers medical cannabis products through its Canopy Medical unit, saw its stock jump over 30% on the news.

This was mirrored by Tilray and Aurora, both of which have a significant foothold in the market.

GW Pharmaceuticals / Jazz Pharmaceuticals

GW Pharmaceuticals, which was purchased by Jazz Pharmaceuticals for $7.2bn in 2021, is set to pay $7.5m to settle a class action lawsuit challenging the acquisition.

Shareholders of GW launched a class action lawsuit against the company in 2021, alleging that they violated the Securities Exchange Act during the takeover negotiations.

They accused the company of disseminating a false and misleading Definitive Proxy Statement, a document used to solicit approval of the merger.

This statement was allegedly created using ‘unsound forecasting methodologies’ which resulted in an undervaluation of GW investors’ shares.

In 2020, GW was approached by Jazz for a merger. GW agreed, and the deal involved a high price in company shares and millions of dollars in bonuses for their executives, according to the plaintiffs.

To make sure the merger seemed fair, GW sought advice from financial advisors at Goldman Sachs and Centerview. However, the plaintiffs claimed that this advice was ‘deeply flawed’.

They alleged that GW’s CEO and management team deliberately gave lower projections of future earnings to the advisors, even though they didn’t really believe those numbers. These projections apparently made the company’s future earnings look worse than they actually expected.

The plaintiffs argue that this made it easier for the advisors to give the merger their approval, even though GW was doing well in its clinical trials. The plaintiffs therefore sued GW for deceptive practices under securities laws and called on the court to recognise their lawsuit as a class action and seek various damages and relief.