Failed Deliveries Could Cost Canadian LPs €14.7 Million

Failed Deliveries Could Cost Canadian LPs €14.7 Million

Germany’s leading independent cannabis distributor has filed a claim in Ontario courts seeking damages against two Canadian producers for failure to deliver on “numerous binding purchase orders.

According to the statement of claim filed with the Superior Court of Justice in Ontario, Cannamedical Pharma is seeking significant damages against Aurora Cannabis Inc. and MedReleaf Corp. for failure to deliver on a promised 100 kilograms of cannabis products per month.

In May of 2018, MedReleaf announced the monthly supply agreement with Cannamedical, touting the deal as a way to “significantly [improve] the predictability and security of drug delivery to the German market.”

MedReleaf went on to be acquired by Aurora in a $3.2 billion CAD deal in July. The same month, MedReleaf strain Stellio made its German debut.

While an initial order of 33 kilograms of cannabis was delivered, a second order for 23 kilograms of product was reportedly sold to another customer and no replacement product was made available.

The Canadian LP failed to deliver on two subsequent purchase orders (amounting to 126 kilograms of cannabis) submitted for August and September despite assurances that future batches were earmarked for the German market.

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The suit, seeking €14.7 million in damages, claims that “MedReleaf’s cannabis products are unique and propriety to MedReleaf and Cannamedical cannot obtain them elsewhere.”

In Germany, where medical cannabis was legalized in the spring of 2017, cannabis can only be obtained through pharmacies with a doctor’s prescription for a specific strain of cannabis.

Cannamedical claims that it assisted MedReleaf in “obtaining the required regulatory approvals to supply medical cannabis products in Germany” as well as devoted resources to educating doctors and promoting MedReleaf products to its pharmacy customers.

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According to court documents, MedReleaf terminated its supply agreement with Cannamedical on the same day that the September shipment was due. The soured relationship has since sparked a recall of Stellio from Cannamedical’s network of 1,800 pharmacies in Germany.

Aurora did not respond to Leafly’s request for comment by the time of publication. The case is slated to go before the courts on December 14.