This article was originally released on https://prohibitionpartners.com/2023/01/16/expert-interview-boris-moshkovits-co-founder-and-md-alephsana/?hss_channel=lcp-11208912
alephSana is a European pharmaceutical wholesale, distribution and marketing company, established in Berlin in 2019. Ever since, alephSana has been pursuing the mission to provide patients with targeted cannabinoid therapies. The company is enabling pharmacists and doctors to prescribe to and provide for patients in need of cannabis, such as dried flower, extracts, formulations and APIs, ensuring standardized pharmaceutical quality.
As a fully licensed wholesaler and well-established cannabis supplier, alephSana is dedicated to source its products of consistent high quality only from EU-GMP certified manufacturers from around the globe, including South Africa, New Zealand, Portugal, Denmark and Canada. In order to guarantee an individual and regular supply, giving pharmacists access to the ever-increasing range of alephSana’s high-quality cannabis products, as well as products of other leading producers via our exclusive online platform.
Their online platform also provides know-how, certificates and medical information. Furthermore, alephSana is a reliable partner for licensed manufacturers who are eager to export their cannabis products to Germany and Europe. As a thought-leader and medicinal cannabis pioneer alephSana continues to explore new markets, new products and new digital platforms for doctors, pharmacists and patients and is looking build further strategic partnerships globally. We interviewed Boris Moshkovits, Co-Founder and Managing Director of alephSana, for The Global Cannabis Report: 3rd Edition.
Germany continues to dominate much of the discourse surrounding cannabis in Europe, and this is reflected in the recent deals and investments made throughout the market. Is there a danger that expectations for the market could outpace reality?
In a highly regulated market, you are always dependent on legislation and actual regulatory framework. Currently, the legalisation of cannabis for adult-use in Germany is underway, without a guarantee that it will come to fruition. German lawmakers are presenting the case in Brussels, to convince the European authorities that the German approach is actually fighting drug abuse and strengthening protection of youth, and providing better quality control.
Of course, some start-ups will start betting on a quick legalisation; some will emphasise local cultivation; other companies will base their business case on building a platform or hub for imports from around the world.
As nobody knows for sure what the law will look like in the end, companies are investing in building brands and designing services and products that may never see the light of day. So, in a sense there is a high probability of over-promising and under-delivering on their part. At the same time, there are market aspects that are being neglected, and the right approach can outperform high business-plan expectations as well. For example, the medicinal cannabis market in Europe is growing steadily, even though it is being threatened by tighter prescription rules and a limited product range. These attacks are geared towards dried flower as a medicine. The German government insurance are examining how and what will be reimbursed. A stronger R&D approach can differentiate a company very well or a strong pharmaceutical marketing business can thrive in such an environment.
Personally, I’m focussed on building a pharmaceutical company which has a wide portfolio of therapy options and, at the same time, provides education to the medical community. As long as the full potential of the plant and the needs of the patient are the driver of the business.
Following a difficult year for cannabis investors, many are hoping the launch of Germany’s adult-use market could turn the tide. Do you think this is likely?
As I laid out, it will depend on the business cases of the startups, how they can best benefit a potential recreational market. We know from the Canadian rec-market that it took at least six months from having a regulatory framework to the opening of the first dispensaries. And then it took another couple of years for a consolidation of the market, where only a few companies are profitable now, while the rest are struggling with low prices, strict regulations and massive taxation.
Taking all of this into account, start-ups and their investors must make wise decisions on where in the value chain they want to position themselves. Investing in a full vertical integration may prove cost-intensive and not produce the expected return on investment. Copying the Canadian model will most likely not lead to the desired success stories. Rather, it looks like start-ups are rushing in the same direction of megalomaniac global dreams.
On the other hand, the German adult-use market will be a beacon for development in Europe, and the potential to build European brands is enormous once we have actual products and not only investment stories out. It is also important to point out that all European legalisation projects, like Luxembourg and Malta, are being stalled after the initial hype and hope.
The recent publication of Germany’s ‘key points paper’ showed that it was likely Germany will initially rely exclusively on domestically produced cannabis to supply its recreational market. What does this mean for businesses and the launch of the market?
The key point paper was drafted as a general layout for the future law of a recreational market that does not violate international treaties. Yet, the reality is, if you want to replace the anticipated 400 tons of the illicit market through legal products, you either must find workarounds for import or ramp up domestic cultivation. Still, alone, big production capacities will not be able to fight the legacy market. Currently, a myriad of businesses are launching dispensary-like franchise enterprises to distribute the product to the customers.
As we know from the difficult start in New York, a lack of points-of-sale can also lead to a frustrating business environment. So, only if Germany manages to avoid all mistakes of all existing legal markets and projects worldwide, it may turn out better. Otherwise, it will be like in any other new market, we will see consolidation of companies and business models that could only survive with the famous hockey-stick growth.
What impact do you think the launch of a recreational market will have on Germany’s expensive medical cannabis market, and what needs to be done to ensure it continues
At alephSana we understand the potential of the recreational market and yet focus on supplying pharmacies to give patients a choice of strains and extracts from around the world. Also, researching new modes of delivery and working on market access, marketing and distribution of innovative formulations carries enough potential for a successful business. As the recreational hype grows, the medical market matures and profits are rolling in. Those companies that have invested in know-how, team and processes will flourish. Some local assets will prove to be a burden and cost-intensive. We focus on building strategic partnerships with companies that have strength in sourcing and market access, or research and product development.
The launch of the recreational market may take away a certain patient-base that will buy from dispensaries. But only if the choices are equally international, well grown and well crafted. And while the dried flower share in the medical market will decrease eventually, new forms of medicines and formulations will take its place, as new patient groups are being introduced to the potential of cannabis.
alephSana is a knowledge-based company. We believe in empowering everybody, from doctor, pharmacist, and assistant, to patients and their caring friends and family, to better comprehend and communicate the full potential of phyto-cannabinoid therapies. With more acceptance, we will see increased prescriptions and eventually more patient data, which can help in creating the next generation of cannabis medicines.
With the prospect of adult-use encouraging a host of new businesses to enter the market, how can they hope to innovate and differentiate themselves in the cannabis market?
Of course, looking beyond the Atlantic Ocean to North America, European companies get euphoric with the prospect of a wide range of products that on this side of the pond are only seen in the black market. The first companies to present legal vapes, prerolls, edibles, or other consumer-friendly products will be able to gain consumer loyalty. The effects of the first mover will, however, fast evaporate as companies enter with products at scale and gain market share by price alone.
The biggest learning from the current Canadian market is ‘Most Bud for the buck’. Still, there are opportunities for new businesses that carefully examine the current situation, including the legacy market, and present choices to the consumer that are welcome, and not invent services that never had a place in the customer journey in the first place.
How do you plan to continue to set yourself apart from the growing number of competitors in the German market? What impact will the development of other European markets have on your approach?
From the beginning, alephSana has been a lean company, with digital processes and assets. We work decentrally, cloud-based with a global team and international strategic partnerships. Our main mission is to continue finding those partners that bring true value, smart funds and innovation to our eco-system. These partnerships range from seeking out the right investor, who understands our journey and who is interested in a sustainable success story, to working with data-driven companies and their services and products.
Germany holds a lot of promise, but as the legalisation movement ramps up and the stigmatisation for medical use diminishes, other European markets continue to grow and present new commercial potential. We are currently building bridges to all continents for sourcing and development, and with a sales focus on Europe. Besides Germany, we will expand our activities in Poland, the Czech Republic, Switzerland and the UK.
We understand the hurdles of the market and financial limitations and operate cost-effectively and cost-consciously. Aligning ourselves with other smart partners from around the globe will give us the edge to thrive in this challenging environment.
This interview was featured in The Global Cannabis Report: Third Edition, which provides an overview of the development of cannabis markets at the international level, and considers how they might develop in the near future. It also covers some of the most interesting and pertinent global trends in the industry.