The story of Purecan, the new acquisition of High Tide

On January 13th, 2025, High Tide Inc. announced the acquisition of a 51% stake in Purecan GmbH, a German cannabis company, for approximately €4.8 million. This acquisition represents a significant strategic step for High Tide as it makes a powerful entry into the German cannabis market. With Purecan’s established presence and High Tide’s industry expertise, the deal positions the company to become a leading force in Germany’s rapidly evolving cannabis sector in the coming years. But what is this german company, what do they do, etc…Here is the story of Purecan, the new acquisition of High Tide.

Their story

PureCan is a leading German company, founded in 2018, that specializes in the development and production of innovative solutions for the cannabis industry. Established with a vision to provide high-quality, pharmaceutical-grade cannabis products, the company quickly positioned itself as a key player in the European market. The company’s focus on regulatory compliance, quality control, and sustainability has allowed it to earn trust among stakeholders and establish itself as a pioneering force in the medical cannabis sector.

Over the years, PureCan has expanded its presence both within Germany and across Europe (interesting…), adapting to the fast-growing cannabis market by offering a range of services designed to meet the increasing demand for legal, high-quality cannabis products.

So, what do they do exactly?

PureCan specializes in the cultivation, extraction, and production of cannabis-based products. They focus heavily on providing solutions for the medical cannabis sector, producing a variety of cannabis oils, extracts, and other forms of medical cannabis for patients. The company also offers consulting services for businesses seeking to enter the cannabis market, particularly in Europe.

The company’s strict adherence to regulatory standards ensures that all its products meet the highest levels of safety, purity, and consistency. Their product portfolio includes products for various medical needs, ranging from pain management to anxiety and sleep disorders.

One of the company’s unique offerings is its focus on scientific research and innovation. PureCan is committed to advancing the medical use of cannabis through partnerships with research institutions and universities, contributing to the overall development of the cannabis industry.

So, how big are they?

PureCan is considered one of the most prominent cannabis companies in Germany and has made a significant impact in Europe. Although it is not as large as some North American giants in the cannabis industry (like High Tide), its influence within the European market is undeniable. The company has experienced steady growth, with operations spanning across cultivation, extraction, and the production of medical cannabis products.

According to High Tide, Purecan boasts a robust financial profile, with a revenue run rate of around €15 million as of December, alongside a gross margin of approximately 40% and an EBITDA margin of 29%.

The company is involved in multiple partnerships and collaborations within the medical field, further expanding its reach and influence. Its scale of operations includes state-of-the-art production facilities and a dedicated team of experts across the research, manufacturing, and regulatory fields, solidifying its role as a leading player in the European cannabis space.

Advantages and Moat

PureCan has built several key advantages that create a strong competitive moat in the cannabis industry and that will be very beneficial for High Tide:

1. Regulatory Expertise: The cannabis industry, particularly in Europe, is heavily regulated. PureCan’s deep understanding of the legal and regulatory frameworks allows it to navigate complex rules and operate efficiently in multiple markets. This expertise in regulatory compliance gives them a significant edge in Europe, where cannabis laws are more stringent than in many other regions.
2. Quality Control and Product Integrity: The company is committed to the highest standards of product quality. This includes full transparency regarding sourcing, extraction processes, and final product formulations. In a market where safety and product integrity are paramount, PureCan’s adherence to rigorous standards offers reassurance to customers and regulatory bodies alike.
3. Innovation and Research: Through its partnerships with academic institutions, PureCan is at the forefront of cannabis-related research. This focus on R&D enables the company to stay ahead of competitors and develop new, highly effective products tailored to the specific needs of the medical market.
4. Established Network and Market Presence: As one of the leading players in Germany and Europe, PureCan has already developed an extensive network of partners, suppliers, and customers. This established presence offers a solid foundation for future growth and expansion, providing a strategic advantage over new entrants in the market.

So, why I think High Tide made a great move by buying them

For a company like High Tide, which is looking to expand its presence and diversify its offerings in the global cannabis market, acquiring PureCan is a strategic move with several compelling benefits:

1. Access to the European Market: High Tide has made significant strides in North America, particularly in Canada, but expanding into Europe presents new growth opportunities. PureCan, with its strong position in the European cannabis market, would provide High Tide with a well-established foothold in one of the most regulated and potentially lucrative cannabis markets in the world.
2. Regulatory Expertise: The European cannabis landscape is highly regulated, with strict legal requirements. PureCan’s extensive knowledge of navigating these regulations would be invaluable to High Tide as it looks to expand its European operations. By acquiring PureCan, High Tide would gain a team with the expertise to accelerate market entry and ensure compliance with European regulations.
3. High-Quality Products and Research: PureCan’s commitment to quality and research aligns with High Tide’s reputation for offering premium products. By bringing PureCan’s research-driven, pharmaceutical-grade products under its umbrella, High Tide can strengthen its product offering in the medical cannabis sector, appealing to a broader range of consumers and patients seeking high-quality, reliable products.
4. Innovation and Expansion Opportunities: High Tide can leverage PureCan’s R&D capabilities to enhance its product development pipeline. As the cannabis market evolves, companies that innovate will lead the charge. PureCan’s focus on developing new cannabis-based therapies presents an opportunity for High Tide to tap into emerging markets and treatments.
5. Price: According to High Tide, the deal implies an enterprise value of €9.5 million, reflecting 3.0 times the annualized adjusted EBITDA for the six months ending December 31, 2024. The purchase price for the 51% stake acquired totals €4.8 million. So, in my opinion, It seems like High tide made a great deal!

Conclusion

PureCan represented an attractive acquisition target for companies looking to expand within the cannabis industry, particularly in the European market and High Tide managed to seize this opportunity. With its strong commitment to quality, regulatory expertise, and innovative approach to cannabis, PureCan will be a valuable addition to High Tide. For them, acquiring PureCan will serve as a catalyst for further expansion and long-term growth in the rapidly evolving global cannabis landscape.

So, this was The story of Purecan, the new acquisition of High Tide. Did you like it? Tell us!