This Cannabis Operator Combines Low Cost and High Quality to Penetrate New International Markets

New Cannabis Ventures

Exclusive Interview with FoliuMed Founder and CEO Oliver Zugel

When FoliuMed Founder and CEO Oliver Zugel spoke with New Cannabis Ventures in 2021, the company was just making initial inroads in the Australian market. Now, it has become the largest exporter of medical cannabis from Colombia to Australia. Zugel checked in to talk about the company’s operations, regulatory progress in key markets and the competitive landscape for the company.

Listen to the entire interview or read the summary below:

Strengthening the Team

FoliuMed has added R&D strength to its team with the addition of three full-time team members. Armin Prasch, PhD, has stepped in as Chief Science Officer, bringing more than 30 years of experience in the pharma business. He also brought two colleagues with him to the FoliuMed team: Yanitsa Miteva and Burkhard Schlütermann.

Members of the FoliuMed Management Team. From Left to Right: Armin Prasch, Diego Navarro and Oliver Zugel.

Colombian Market

During his last conversation with New Cannabis Ventures, Zugel discussed how FoliuMed differentiates itself in the cannabis space through its low cost of production. Recently, the Colombian market has had a positive regulatory change., finally beginning to allow regulated flower exports. Zugel anticipates that Colombia will emerge as a top supplier of cannabis for adult-use and medical markets.

Inside the Company’s Colombian Operations

German Market

The German market has made progress toward the legalization of adult-use. Zugel expects that regulatory shift could come to fruition within the next few years. With operations in Germany and the ability to export flower from Colombia, FoliuMed will be in a unique position, according to Zugel.

New Markets

FoliuMed currently has a strictly B2B distribution model, wholesaling product to pharmaceutical companies and cannabis companies. The U.S. remains lower on company’s priority list for the next 12 to 24 months. Zugel anticipates that when opportunities do arise they will be in the pharmaceutical side of the business.

But FoliuMed is exploring opportunities in other global markets as it doubles down in Germany and Australia. For example, the company is bullish on prospects in Brazil, which is one of the more regulated Latin American markets, according to Zugel. The FoliuMed team is also busily looking to establish partnerships in Israel.

Thus far, FoliuMed has pursued market expansion via joint ventures and partnerships, rather than M&A. For now, the company will continue to pursue the partnership model.

The Competition

As a B2B supplier, sometimes FoliuMed’s customers could be considered its competitors. One of the company’s largest customers is a medical cannabis producer in Australia. While both this customer and FoliuMed produce cannabis, the Australian company is buying from FoliuMed because it is less expensive to outsource.

Producers in other low-cost geographies, such as Greece or South Africa, are also FoliuMed’s competitors. While these competitors have the low-cost production, they tend not to have the finished product capacity. Producers in the Canadian market do have strength in terms of end products, but they have a higher cost basis. Each of these groups of competitors is missing one piece of the equation, according to Zugel.

Strategic Investors

Right now, FoliuMed has a very small number of outside investors in its capital structure, but it is at the point that bringing in more outside investment makes sense. The ability to export flower from Colombia and the move toward adult use in Germany will fuel significant growth for the company.

FoliuMed has been operating for approximately three years, and it has established a track record with a risk-reward profile that could be attractive to investors, according to Zugel. For example, the company lost less than half a million euros last year. FoliuMed is working with an investment bank to start fundraising.

The company is hoping to attract investors that bring strategic value to the table beyond money. FoliuMed is casting a pretty broad net, considering investors in the specialty pharma business, as well as traditional investment funds, high-net-worth individuals and family offices.

FoliuMed is looking to put capital to work in both the upstream and downstream areas of its business. The company is expanding capacity to meet demand. It is also looking at clinics and establishing a distribution footprint in markets of interest. Going public is not in the company’s immediate plans.

Growth Drivers

The company’s large shipment to the Australian market is an important milestone for the company and a key growth driver. Over the course of its time in business, FoliuMed has been focused on B2B operations. Over the next two to three years, the team will be looking to get into the B2C space. FoliuMed will also be developing the next generation of its soft gel products. Flower will also be an important growth driver. Over the past few years, its flower was largely used for extraction, but now, the company has the capability to export adult use flower. It will be changing the genetics, bud size and terpene profile of some its cultivation capacity to meet demand in that segment of its business.

The FoliuMed team is focused on growing at a steady pace that does not outstrip its available capital. Zugel expects that some of the largest opportunities for the company will emerge over the next three to five years.

Originally published at: