Tom Frank | CNBC
The shares of the German cannabis company SynBiotic surged on Thursday shortly after the new government pledged to legalize the drug.
Shares of the Munich-based company on the Frankfurt Stock Exchange rose 33% to 29 euros (33 dollars). The market capitalization of the company is now over 100 million euros.
An agreement was reached Wednesday between the center-left Social Democratic Party, the Greens and the Free Democratic Party that for the first time they would rule together in a tripartite coalition. The so-called traffic light coalition has agreed on plans to legalize the sale of cannabis for adult entertainment in licensed stores.
Under the leadership of Lars Müller, SynBiotic wants to use cannabis compounds to treat conditions such as chronic pain, stress and sleep problems. Cannabis has a number of negative side effects, depending on its strength, frequency and individual.
Tech investor Christian Angermeier told CNBC via email on Thursday that he owns 45% of SynBiotic.
“The largest speculator [of German cannabis legalization] is my cannabis platform company, SynBiotic, which is the only cannabis company registered in Germany and one of the largest overall, ”said Angermeier.
Ungermeier has invested in a company called ATAI, which is trying to develop drugs that can be used to treat mental disorders. ATAI shares have jumped 40% since their Wall Street debut in June, but they have dropped in value in half since then.
Alexander Galitsa, an analyst with investment bank Hauck and Aufhauser, wrote in a note to clients on Thursday that the German cannabis market is poised for “explosive growth” in the coming years.
Galitsa pointed to studies that show that legalizing cannabis could generate € 3.4 billion to € 4.7 billion in annual tax revenues, as well as about 27,000 new jobs.
“Obviously, this is great news for SynBiotic, which has already established a strong position in the European cannabinoid market, especially in Germany,” he said.
“With its pioneering advantage in Germany and its broad value chain coverage, SynBiotic is ideally positioned to capitalize on regulatory changes and establish itself as the European market leader,” added Galica.
Recreational cannabis use in Canada was legalized at the end of 2018 and has already exceeded € 2 billion in annual revenue, Galitsa said, before adding that significantly fewer people live in Canada.