Eoin Keenan, Content Director, Prohibition Partners

Firms hoping to supply the burgeoning Italian market have just two weeks to respond to a tender after the country announced on Monday it wants 400kg of medical cannabis to be delivered over the next two years.

The Italian Ministry of Defence (MOD), which has the only licence to grow domestically and controls the country’s production, is inviting bids from firms until 3 July. The successful applicant will help to not only address Italy’s growing demand for medical cannabis but also to diversify away from Bedrocan, which supplied around 450kg in 2018 (around two-thirds of Italy’s supply).

The product requested is 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 with the target price on the contract set at €3 or €4 per gram depending on the strain. However, in line with the previous tender won in 2017 by Aurora/Pedanios, bids are expected to come in below this threshold.

GACP and GMP are expected at all relevant points of the supply chain, but it is understood the GMP standard for the 2017 bid was higher than that required in Monday’s announcement.

Firms have just one week to request more information from the MOD. Successful firms or consortiums will have two years from September 2019 to deliver the product; however, the small window available for submissions has rattled firms who believe they could otherwise fill the demand.

‘The bid was publicised today (Monday) and the extremely short deadline is causing discontent in the market. It is not known if this is open to change,’ an industry expert with knowledge of the tender told Prohibition Partners. ‘Given the interest in the market, an extension would be certain to increase competitive pressure.’

Italy is one of the largest European markets for medical cannabis and, with a population of 60 million, holds enormous potential for businesses looking to win a medical cannabis tender. In recent years, the Italian medical cannabis system has been struggling to meet patient demand, reported at over 20,000 patients in 2018.

In 2018 the army produced about 130kg of medical cannabis, some 70kg lower than its intended target. Additionally, imports from Bedrocan were supplemented by 100kg of dried flower imported from Canadian LP Aurora through its German subsidiary Pedanios.

In May, Antonio Medica, head of the military’s facility in Florence, told la Repubblica that production is expected to increase to 150kg in 2019, and 200kg in 2020, thanks to new funding provided by the latest budget, but investment remains an issue. The MOD has been mulling a deal with a private partner to ensure higher domestic supply within the base.

In addition to the military’s homegrown supply, this year the Dutch Office of Medicinal Cannabis agreed to supply Italy with a further 750kg of Bedrocan’s dried flower. It is understood that the MOD deemed this supply level insufficient to cater for Italy’s demand and therefore launched the recent medical cannabis tender to add a further 200 kg a year, for a total of 1,100kg of estimated supply in 2019.

Prohibition Partners consulting team continues to study the market and is available to discuss your needs at info@prohibitionpartners.com

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