Italy launches urgent tender for the supply of 400 kg of medical cannabis: New opportunities for cannabis producers

For the second time, the Italian Ministry of Defence has launched an open tender for an urgent need of cannabis for therapeutic purposes by the Florence Pharmaceutical Chemical Plant. The estimated reference price of the tender is EUR 1,520,000 (net of VAT) for 400 kg, which represents an average of EUR 3.8 per gram. This tender represents a great opportunity for foreign investors to enter the Italian medical cannabis market, which was the second largest European medical cannabis market in 2018. Compliance with EU Good Manufacturing Practice (GMP) and Good Agricultural and Collection Practices (GACP) is required. Offers must be submitted by 3 July 2019 (10 AM) at the very latest.

The Pharmaceutical Chemical Plant of Florence is currently the only Italian plant authorised to produce cannabis-based products for medical use in Italy ("FM-2" and "FM-1"). Notwithstanding the increase of the national production of medical cannabis, it is still necessary to import cannabis from abroad to ensure the continuity of treatment of Italian patients under therapy. Importation of medical cannabis currently also has some limitations given that: (i) it is restricted to cannabis products supplied by the Dutch Office of Medicinal Cannabis (produced by Bedrocan); and (ii) import authorisations can be obtained only by public healthcare entities and have been issued so far only to six private wholesalers (but the Italian Ministry of Health does no longer intend to issue additional import authorisations for medical cannabis to private wholesalers).

At the beginning of last year, the Ministry of Defence launched a similar tender for the supply of a stock of medical cannabis (for a total of 100 kg) to the Florence Pharmaceutical Chemical Plant. This tender was awarded to a Canadian company (Aurora Cannabis Inc.) together with its German subsidiary (Aurora Deutschland GmbH), which offered an average of EUR 3.2 per gram.

In light of the above, this new tender also represents a great opportunity for Italian companies which could offer their support to participate in the tender process and enter into agreements with foreign companies that are allowed to cultivate and produce cannabis for therapeutic purposes, thus simplifying the bureaucratic processes for the submission of the offers and relevant documentation.

Please find below some further information on the tender:

Typology of medical cannabis and amount of supply

Bidders may submit their offers for a single batch or all of the following batches:

• dried cannabis flowers with high content of THC (320 kg);
• dried cannabis flowers with similar content of THC and CBD (40 kg);
• dried cannabis flowers with high content of CBD (40 kg).

The supply will presumably occur on a four-monthly basis up to the amount of 400 kg.

Participation requirements

The tender at stake is an open and accelerate tender (admissible in case of urgent needs) and is subject to the rules of Legislative Decree No. 50/2016 (the Italian Public Procurement Code or the Code).

To participate in the tender the bidders must declare to meet the following requirements:

• Moral and general requirements, among which, the absence of criminal convictions or anti-mafia measures, as required for the participation of all the Italian public tenders;
• Economic and financial requirements, i.e. information regarding the annual budget, including assets and liabilities and the specific turnover in the last three financial years (2016, 2017 and 2018) which must not be less than the amount of the batches for which the bidders intend to submit the offer;
• Technical requirements as further specified below.

Bidders may participate individually or even in group to meet the economic and technical requirements, provided that the moral and general requirements are met by all single companies associated in a group.

Based on our previous experience in similar tenders and given the challenging deadline for the submission of the offers, it would be advisable for non-EU companies interested in participating in the tender to seek the support of an Italian or EU based company to simplify the documentation to be submitted with the offers and the demonstration of the relevant requirements.

Focus on technical requirements

The main technical requirements to participate are the following:

• the pharmaceutical production of cannabis must be made exclusively using plants reproduced by agamic reproduction systems to ensure maximum uniformity and standardisation of the products obtained;
• starting material must be cultivated and harvested according to the Good Agricultural and Collection Practice (GAPC);
• starting material must not be treated with a pest control product (pesticides and /or fumigants);
• active substances must be manufactured by a licenced producer according to EU GMP Guidelines;
• the product must comply with the general monograph of the European Pharmacopoeia;
• if cultivated in a third country, the product must be imported in the EU by an authorised company responsible for conducting tests and batch certification of the imported products in the EU.

Further details on technical requirements are indicated in the Technical Specification, which is the only document of the tender available in English.

Compliance with the technical requirements is relevant to win the tender: Aurora Inc. and Aurora Deutschland GmbH’s EU GMP certifications were crucial in being successful in the previous tender launched by the Ministry of Defence at the beginning of 2018.

Deadline

Given the urgency, the deadline to bid is challenging. The bidders must submit their offers no later than:

• 2 July 2019 (10 AM) by mail; or
• 3 July 2019 (10 AM) in case of hand delivery.

Questions about the application process are accepted until 25 June. The decision on the award is scheduled for 25 July 2019 and the term for the signing of the contract for 20 September 2019.

The complete tender documentation, except for the Technical Specification listed above, is in Italian (available here).

We are available to support companies with any additional clarifications or further detail.

For further information on A&O’s cannabis practice, see our dedicated page here.