Perrigo is entering the cannabidiol (CBD) market through a minority equity investment and distribution partnership with a Colorado supplier.
The Dublin-based drugmaker — which has its North American headquarters in Allegan — said it is entering the CBD market through a strategic investment in and long-term supply agreement with Watkins, Colorado-based Kazmira, a leading supplier of hemp-based CBD products free of tetrahydrocannabinol (THC), the main psychoactive compound in cannabis.
Perrigo will acquire an about 20% equity stake in Kazmira for $50 million with $15 million paid upon close of the transaction and the balance within 18 months.
“Science-based natural products are one of Perrigo’s five core growth pillars, and THC-free CBD products fit perfectly into our self-care strategy,” said Murray Kessler, president and CEO of Perrigo.
“Until now, this emerging industry has lacked the regulatory expertise necessary to bring a trusted supply of CBD to market. … We believe that Kazmira’s deep understanding of CBD science, combined with Perrigo’s regulatory expertise and investment, allows us to lead the industry through the next phase of development of rigorous quality standards and proactive engagement with regulators.”
Perrigo’s minority equity investment initiates the first phase of the partnership, in which the two companies will collaborate to scale up Kazmira’s facilities and laboratories to produce THC-free CBD from industrial hemp.
In the second phase of the partnership, Perrigo will work to launch THC-free hemp-based CBD products in a number of global markets while leveraging its supply agreement with Kazmira, which is exclusive for the U.S. store brand market.
“Consumers and retail customers want CBD products, and we believe they deserve a reliable source of broad-spectrum, THC-free CBD they can depend on,” Kessler said. “Whether it is the specific concentration of CBD or a THC-free claim, consumers must be able to trust statements made on the label of a product, and we believe Perrigo can provide this to the marketplace.
“We are excited to partner with the team at Kazmira, who shares our passion for developing a science-based, regulatory approach to unlock the full potential of this emerging industry. This collaboration offers a great opportunity to enhance profitable growth for our shareholders over the long term.”
Kazmira co-CEOs Dr. Priyanka Sharma and Pulak Sharma said they are “proud” to partner with Perrigo.
“As we continue to grow our business, we look forward to leveraging Perrigo’s regulatory and manufacturing expertise in concert with Kazmira’s proprietary technology for large-scale biomass processing and our established reputation for producing and marketing the highest quality THC-free CBD products,” they said.