Italy: Aurora wins contract to supply 400 kilos of medical cannabis

The Italian government announced on Monday that it had entrusted part of the country's medical cannabis supply to the Canadian company Aurora. Aurora won all three lots of products on offer, and will supply Italy with 400 kilos of therapeutic cannabis in the next two years.

Italy was Europe's second-largest medical cannabis market in 2018, with sales totaling around 600 kilos, and 900 kilos in 2019. With the country opening up access to medical cannabis for a wider range of conditions in 2018, it was necessary to buy from private producers, The Italian army was unable to supply the necessary quantities.

5 companies had originally applied for the contract: Canopy Growth, Medicinal Organics Cannabis Australia, Tilray, Wayland, and Aurora. Italy had indicated that the main award criterionl would be the lowest price offered for each individual lot. To win this market, the Canadian company had to make concessions. Aurora will sell a gram of cannabis for an average of €1.73, which will severely limit its ability to generate margins on its production.

Aurora will sell its first batch of 320 kilos of flowers at a discount of 56% on the tender (for €569,600), and its second batch of 40 kilos at a similar discount of 57%, for €51,600. The third 40-kilo lot will also be sold at a discount of 41% on the tender, for €70,800.

In addition to the production supplied by Aurora, Italy had entrusted its Ministry of Defense with part of the country's supply. The Stabilimento Chimico Farmaceutico Militare, based in Florence, currently produces 150 kilos of therapeutic cannabis a year, apparently poor quality.

Aurora is well established on the European market by charging relatively low prices compared to its rivals. At the beginning of 2018, the company had already won part of the Italian production, for a total of 100 kilos at 3.20€ per gram. It has also won a 20-kilo contract in Luxembourg in April 2019, for €50,000, or €2.5 per gram. Aurora is also present in Germany through its subsidiary Aurora Deutschland, which supplies the country's pharmacies.