SynBiotic makes pop weed legal as new German government pledges

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Tom Frank | CNBC

German Cannabis Company Shares synbiotic The boom rose on Thursday, soon after the incoming government promised to make the drug legal.

Shares of the Munich-based company rose 33% to 29 euros ($33) on the Frankfurt Stock Exchange. The company now has a market cap of over €100 million.

a deal done Wednesday between the centre-left Social Democratic Party, the Greens and the Free Democratic Party that will see them rule together in a three-way coalition for the first time. The so-called “traffic light” coalition agreed on a plan to legalize the sale of cannabis for the entertainment of adults in licensed stores.

Led by Lars Müller, SynBiotic seeks to harness cannabis compounds to treat conditions such as chronic pain, stress, and sleep problems. There are many negative side effects of cannabis depending on the strength, how often it is taken and the individual.

Tech investor Christian Engermeyer told CNBC via email on Thursday that he owns 45% of Synbiotic’s shares.

“biggest profiteer” [of German cannabis legalization] My cannabis platform company is Synbiotic, the only German listed cannabis company — and one of the largest in general,” Engermeier said.

Engermeyer has invested in a company called ATAI, which is trying to develop drugs that can be used to treat mental health conditions. Shares of ATAI soared 40% during its Wall Street debut in June, but have since halved their value.

Alexander Galitsa, an analyst at investment bank Hawke & Aufhauser, wrote in a note to clients on Thursday that the German cannabis market is poised for “explosive growth” in the coming years.

Galitsa pointed to studies that suggest cannabis legalization could generate between €3.4 billion and €4.7 billion in annual tax revenue, while also creating an estimated 27,000 new jobs.

“Obviously, this is great news for SynBiotic, which has already established a strong position in the European cannabinoid market, and in particular in Germany,” he said.

“Thanks to its first mover advantages in Germany and the broad coverage of the value chain, SynBiotic is ideally positioned to benefit from regulatory changes and establish itself as the European market leader,” Galitsa said.

Recreational use of cannabis in Canada was legalized in late 2018 and annual revenues have already exceeded 2 billion euros, Galitsa said, adding Canada is home to far fewer people than before.


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