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Canopy And Alcaliber: Combining Cannabis And Morphine

Cornerstone Investments profile picture
Cornerstone Investments


  • Canopy is reported to be pursuing Spanish firm Alcaliber.
  • Alcaliber is a global leader in narcotic drug industry and was granted license for medical cannabis in Spain.
  • We think Alcaliber is a good fit and Canopy is well-positioned.

Earlier this week, several news outlets reported that Canopy (TWMJF) is in the race to acquire Spanish firm Alcaliber SA. According to Bloomberg, Canopy is competing against U.K. health-care investor GHO Capital and Spanish investment firm Alantra Partners SA. What's the relationship between Canopy and Alcaliber and reasons why a deal would make sense for Canopy?

Alcaliber Overview

Founded in 1973, Alcaliber supplies narcotic raw materials based on the cultivation of the opium poppy and poppy straw, as well as the extraction of alkaloids. Based on the Bloomberg report, Alcaliber is majority owned by Spanish billionaire Juan Abello’s investment fund Torreal SA. French drugmaker Sanofi also holds a 40% stake in Alcaliber.

Leaders in the production of Morphine and Thebaine.

According to its website, in 2014 Alcaliber was the largest world producer of Morphine, accounting for 27% of global production, as well as 18% of Thebaine. The history of the company can be summarized as:

  • 1933 - “Laboratorios Abelló” first applies to import 400kg of Opium considering the foundational chart of the Spanish narcotics Industry.
  • 1968 - Spain begins using CPS as starting material to produce alkaloids.
  • 1971 - “Laboratorios Abelló” is given the authorization to test fields within Spain to obtain Morphine from poppy straw.
  • 1973 - Alcaliber, S.A. was established with the aim of guaranteeing the supply of Narcotic Raw Materials through poppy cultivation in Spain (Papaver somniferum) and its subsequent extraction of their alkaloids into Concentrate of Poppy Straw
  • 1974 - Spanish Ministry of Health authorizes Alcaliber to conduct the “cultivation and production of opium poppy extracts, and to export the surplus production”.
  • 2006 - Alcaliber set up a new production plant that enhanced and complemented the existing one in terms of quality and quantity.
  • 2008 - The Drug Enforcement Administration ("DEA") included Spain among the countries authorized to export Narcotic

This article was written by

Cornerstone Investments profile picture
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Comments (24)

falainwest profile picture
Just saw this today "Canopy Growth also wishes to clarify that, contrary to certain speculation, the Company is not in negotiations to acquire Alcaliber"
Cornerstone Investments profile picture
Thanks, saw that too. For everyone's benefit, the link is below. Oh well, we tried, could be a good thing that they are staying focused!

mykie profile picture
My understanding is they are in contention with (how many ?) others and may or may not end up acquiring.

True? Or are they already working out the deal between themselves?
Cornerstone Investments profile picture
We won't know how the sale process is going but would expect there to be contenders for this asset along with Canopy. However, given its strategic partnership with Alcaliber, we think they are well-positioned should they decide to pursue this asset.
GOOD NEWS! Everyone has their own vices, why not let Canopy Growth fill them all.
If Canopy Growth acquires Alcalibers and get on the Nasdaq, along with recreational close to the same, what a trifecta that would be.
Pman701 profile picture
Just hope if they do purchase that they don't over pay like Aurora did for it's recent purchase of Cannimed.
Moats and Income profile picture
Don’t forget Constellation has some say in this decision...bottom line in this new industry is scale or be acquired...$5-$10B market caps are chump change to big alcohol, big pharma, big tobacco...
10 Mar. 2018
What I see is this: A company with a huge international presence, over 1.5 BILLION square feet of grow operations and the workforce that goes with it, the ability to produce extracts on an industrial scale from 2 factories.

Who is to say that Brucey doesn't turn poppy fields in to cannabis fields? Spain has the perfect weather for growing both weed and industrial hemp. Extracts claim the highest margins in the biz. Oh wait, we have two giant factories with the highest production values around?? And we are licensed to export to 67 countries??

How can this be considered anything but a mega-huge win?
mykie profile picture
The big risk is management for Canopy loses their focus but then, if I didn't have confidence in their management, I wouldn't be an investor.

I'm with 3 Pete on this. Looks like a terrific move that will be accretive and offer lots of future opportunities.
Dale_Napier profile picture
A very interesting article, but I would like to see some discussion about how the two companies' markets are not convergent, and how it distracts Canopy from its core mission.
Cornerstone Investments profile picture
It's a good question and one that is probably better answered by the management. Expect Bruce having a lot to say about the future direction of Canopy if the deal is announced. We think one thing to keep in mind is that Alcaliber is a mature business that doesn't require much attention at the moment, which means Canopy can still focus on domestic market until it is ready to turn to other global opps.
Canopy is not just a “pot stock”. People seem to overlook the bigger that Canopy is also a bonafide pharmaceutical company in its own right. So this can easily fit within Canopy’s umbrella...or should I say...canopy. Once again you have brought us an insightful article. Much appreciated!
newfruit profile picture
Maybe they spin off the narcotics division?

Then again, they are not currently selling recreational marijuana, only medical, so pharma is kind of Canopy's thing.
I'm with Thotdoc. Of course i see the strategic sense from an internal POV. But I think it will play badly with many folks who love cannabis. It does for me. Seems like its turning into Big Tobacco or Big Pharma. Not my cup of tea.
Moonfever profile picture
Cheers good sir, spot on thoughts u have!
250 mil buys a lot of 🐠
thotdoc profile picture
Blending of 2-stories...our product is not really a narcotic and is good for you and our product is the real narcotic.

Not so sure how well those blend in perception.

I think Canopy has enough fish to fry...but what do I know :-)
Moonfever profile picture
that was my thought, well it harm their image long term compared to the other stable big players that don't touch that kind thing... if they pull the trigger it will be interesting to see how people/investors/NGOs react.
My take from this article is either the sky is falling or things are falling into place from above. The things , I am referring too , is very abstract since the news on which this article is based is very new, and negotiable.

The fact that there is a deal in the process reaffirms the cause and effect of the bigger socialism concern of Better Health and Longevity.
Relatively unknown as a cannabis company check out what ARNA is doing. Stock is still relatively cheap with a great future.
I think ARNA was around 2.00 at the beginning of 2017. Came a long way. On a nice steady climb.
Dan in Mexico profile picture
Thank you for this article and for your excellent reporting of the nascent cannabis industry.

I know that you are waiting for your price on Canopy. Do you plan on taking a position before Canopy lists on the Nasdaq? You may not get your price now that that news is out.
Cornerstone Investments profile picture
Dan, we adhere to our view. Listing should not change the fundamental value of the company and won't be a reason for us to buy.
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