Holland has played a special role in supporting cannabis development since the early 1990s, long before the green gold rush kicked off in 2018. From progressive regulations and a focus on health to a little-known produce farmer deciding to plant the first seeds to supply the medical cannabis space in the country, the Netherlands has had a special relationship with cannabis for a while.
Bedrocan has since grown into one of the biggest household names in the sector.
A history lesson in Dutch cannabis
Since the legalisation of recreational cannabis in Canada last year, the industry has swelled with entrepreneurs and investors eager to earn a slice of the profits. Few of these new entrants, however, are aware of the massive history that precedes them. Some historians have even recorded a cannabis strain used in textiles as far back as 10,000 years.
Instead of 8,000 B.C., one only needs to go back to 1972 to grasp the current mood.
‘It was in the 1960s and 1970s that the Dutch government began sorting drugs into two different categories’, said co-founder of Bedrocan Tjalling Erkelens in an interview with Strain Insider. This is because the Dutch government was taking a more reasonable approach to drugs, one which placed a high premium on citizen’s health more than anything else.
‘On the basis of scientific criteria, legislsation in the Netherlands distinguishes between drugs which present an unacceptable risk to health and cannabis products, the risks arising from which are considered less serious (i.e., between hard and soft drugs).’
The document continues by stating that the government’s role should be to be focused primarily on health interests. Such a position was incredibly liberal at the time. But it went hand in hand with an array of other policies that sought to maximise the benefits for all citizens.
First off, this could be seen in the government’s role to educate youth groups about drug use. Secondly, it meant allowing certain drug users access to social and medical assistance to minimise further harm. While still far from outright legalisation, Holland had created a highly-progressive climate in terms of drug laws.
It was in this climate that the seeds of Bedrocan began to germinate. Since 1984, the company has established itself as a family business specialising in the indoor cultivation of kitchen herbs and vegetables. At the same time, the specifics of Holland’s forward-thinking regulations still hadn’t been hashed out.
Cannabis seeds, for example, were not illegal in Holland in 1992.
‘They left the seed alone, basically,’ said Erkelens. ‘And we were already growing different herbs and produce, so we decided to start growing cannabis seeds indoors as well.’
Skip ahead a few years, and this serendipitous idea looks like sharp business acumen.
‘In 1997 or 1998, the Minister of Health became more aware of cannabinoids, and how the body produces them naturally’, said Erkelens. ‘It was used in palliative care for certain patients too. Eventually, the government wanted more research done on the subject.’
Holland then set up an explicit agency to monitor progress, called the Office of Medicinal Cannabis (OMC) in 2000. The OMC was responsible for ensuring that the correct controls were in place and that Holland was meticulously following all the United Nations treaties (UN) on drug use. But with all the regulatory apertures in place, facilities still needed high-quality cannabis to conduct their research.
Bedrocan was called upon for its first delivery to the University of Amsterdam. Erkelens’ company wasn’t alone though. The OMC commissioned a second grower to help meet the demand for these early experiments. This second grower was eventually pushed out, however, because it couldn’t standardise its growing processes.
Two distinct strategies for two distinct markets
Bedrocan has since made a name for itself as the market leader for producing batch-after-batch of pharmaceutical-grade cannabis. Erkelens stated that his company can assure, down to all available molecules, that every grow is the same each time.
It is now the sole supplier for the OMC, which has a monopoly over Dutch pharmacies as well as cannabis importation and exportation in and out of Holland.
As such, governments from all over the EU are eager to work with Bedrocan. In 2018 alone, more than 2,000 kilograms were exported to different European countries. Germany imported the most that year as it attempted to soothe demand needs following the legalisation of medical cannabis.
Italy has also been a major importer of Bedrocan products but, as of late, the Mediterranean country has opened its borders to diversify away from Bedrocan.
The Italian Ministry of Defense, the government body in charge of cannabis in the country, opened up a three-lot tender process in the summer. At that time, Aurora Deutschland, a subsidiary of the Canadian company, won all three lots to grow 400 kilograms over two years. Beyond these two EU countries, Erkelens reminded that the regulations throughout Europe are a ‘patchwork’.
As such, Bedrocan has only been expanding in proportion to regulated demand. This strategy stands in relative contrast to most Canadian companies, however. Groups like Aphria, Canopy Growth Corp., and Aurora have been expanding as much as possible so as to reduce the cost of their supply rather than meet demand.
Aphria CFO, Carl Merton, told Strain Insider that in European countries like Germany, ‘growers can’t be small’ in order to be profitable. This is not the case with Bedrocan and, according to Erkelens, it will remain this way moving into 2020. ‘You must focus on your core demographic’, he said. ‘And for us, that has always been medical patients looking for pain relief.’
This stark distinction came to a fore in a short-lived relationship between Canopy Crowth and Bedrocan Canada. In 2015, Canopy Growth announced a full-stock acquisition of the Bedrocan subsidiary. A year later Bedrocan International sold its remaining Canopy shares due to differences in ‘expressed future strategy’, according to a Bedrocan spokesperson at that time. Bedrocan added that:
‘It is Bedrocan International‘s strong belief that there should be a clear distinction between medicinal and recreational use of cannabis and that patient needs for safe and consistent cannabis is a priority.’
This differing vision can easily be seen in the various strategies pursued by each company. In developing its five strains, for instance, Erkelens explained that they were developed, one-by-one to meet specific patient demand. ‘We made our fourth strain, Bedica, based on patient response’, he said. ‘Users recognised a difference between our popular THC Sativa brand and the Indica strain. So we began growing this as well.’
For their part, Canopy Growth developed a liquid soft gel in 2018 which flopped as the market fit was still unclear. This lack of clarity cost the company record losses. With Cannabis 2.0 unfolding, and most cannabis stocks still on the downtrend, large Canadian companies are much less haphazard in rolling out their derivative products.
Bedrocan also differentiates itself from a research perspective. ‘We need more information regarding intake forms’, said Erkelens. ‘In Holland, we’re also looking into clinical studies on how cannabis can aid in opioid reduction for pain relief. We hope to supply this type of research with Bedrocan products.’
For all the hype that cannabis companies in North America have earned, few appear as settled and ingrained in their respective jurisdictions as Bedrocan. Erkelen’s firm has a rich history of working with regulators to achieve rational ends. These have been primarily serving citizen health, a thesis founded back in the 1970s.
And, as the rest of Europe wakes up to the benefits of cannabis, Bedrocan has readily met this demand via reasonable expansion and an assorted line of products. It may not announce the coming of the next green-gold rush, but its certainly good business.