19 September 2021
By Max Holloway
LYPHE Group co-founders Dean Friday and Jonathan Nadler talk to Business of Cannabis about UK and European cannabis markets, and the recent expansion into Switzerland
In a recent live stream, LYPHE Group co-founders Dean Friday and Jonathan Nadler talked Jay Rosenthal at Business of Cannabis Live about the UK and European medical cannabis markets, and what the future holds for LYPHE
Dean, can you give us an overview about what LYPHE Group is, and a quick look at the origins of the company.
Dean: Lyphe Group has been around since the third quarter of 2018. In quite simple terms we are the biggest medical cannabis business in the UK, by both patient numbers, revenues – any metric you like.
And our business is now on the march into the rest of Europe. We’ve set out into the Channel Islands, and now most recently, Switzerland. We’re about to announce another couple of ventures into some of the other bigger markets in Europe, namely Poland and Germany within the next few months.
LYPHE Group is a vertically integrated business, all the way through from importation, manufacturing, wholesale, and direct to patient pharmacy dispensing. We also have a clinic which facilitates stricter patient consultation services as well as specialising in cannabinoid therapies. We operate at the intersection of healthtech and medical cannabis, so we’re very much digitally enabled in all aspects. It’s a big feature of how we think, and the way in which we designed and built our business.
As an extension of that we consult to our patients entirely via telemedicine and our pharmacy is digital and very much operates in the tech space. I mentioned before we have about 60% of patients in the UK market, which is pretty phenomenal wherever you’re from. Our business is looking to activate more downstream than upstream which I guess is different from what a lot of viewers from North America might be familiar with.
You might have noticed that we don’t cultivate and it’s not an intention of ours to enter that space. We’re focused on building brands, specifically around a cannabis dispensing brand, the most recognised cannabis product brand and the cannabis clinics brands that were looking to make household names, which they clearly already very much are. That’s a key feature of our strategy in the UK, as well as in the rest of European markets that we’re addressing.
Jonathan, talking about your beginnings in 2018, were there other markets that you were looking at to see how medical cannabis and the tech of the industry worked and were you looking to mimic that?
“We’re building the features and functions for cannabis dispensing that no one else has ever built before, because they haven’t had to because it’s such an irregular drug to have in the market. We know we’re innovators in that sense, and it’s something we pride ourselves on”
Jonathan: We set out in 2018, laying the foundations for the industry here in the UK. There was absolutely nothing, it was barren land. We were the first business to come to market, the first ones to bring the product in, the first ones to see patients. Every other week, it was a new first for us.
When it comes to looking at how we build technologies and infrastructure for our ecosystem, we actually borrow from other industries more than we do from cannabis. We look at successful pharmacy online systems, we look at clinical functions that do particularly well in the UK and other parts of Europe. So we take the best bits from those verticals and adapt them for the cannabis market.
There’s so much regulation and compliance here (UK and Europe) that you really have to know inside out, if you don’t know that bit of it, you’re in serious trouble. So we’re extremely good at the compliance and regulation side of things and we’re able to take advantage of that IP that we have by building up the features and functions that can accommodate us against those regulations.
When it comes to other European markets, exactly the same goes – we’re building the features and functions for cannabis dispensing that no one else has ever built before, because they haven’t had to because it’s such an irregular drug to have in the market. We know we’re innovators in that sense, and it’s something we pride ourselves on.
We’ve actually just launched the Medical Advisory Board, and we have some really high powered people on there from places like Walgreens, who have spent the last 15/20 years of their careers building out software that works with the NHS here in the UK.
So we’re very rigorous when it comes to technologies, and we’re very innovative when it comes to technologies.
Because technology integration and regulatory compliance are the foundation of the company, has it changed since COVID? Has it changed how people are integrating with the technology as much as it has in North America? We’ve had lots of conversations around how people are using tech more regularly or more readily, more, more comfortably. It’s almost like we’ve expanded 10 years in 10 months. Have you seen the same thing on your platforms?
Dean: We designed our business to be digitally enabled, it was always our goal to have our business as much online and in the cloud as you possibly could. But it wasn’t entirely permitted by the regulations back in 2019. Now, with the onset of COVID, there were some regulatory changes and tweaks that were introduced and we were just perfectly positioned to take advantage of that.
We built our business to adapt and to work in the regulatory environment we saw ahead of us, but we certainly were very much digitally enabled right from the outset.
And look, now that you’ve pointed it out, that’s really the secret of success, because we’ve been able to build and scale and to manage and navigate that regulatory environment through the use of technology – and in doing so capture such a significant share of the market.
Jonathan, can you talk a little bit about the frameworks in Europe, and where do you expect them to be going and talk a little bit about the recent expansion into Switzerland as well?
“Before we know it people in North America will say, “Wow, what’s happened in Europe? It’s got almost as big as the US”. I believe that there are statisticians reporting that by the end of 2025, it might even be bigger than the US from a medical perspective.”
Jonathan: If you look at Europe, the population here is pretty much double North America. It sets out like an MSO structure would be to accommodate the North American market, in that you have lots of European markets bottled up next to each other and the regulations are already different from place to place.
Clearly Germany is a standout leader across Europe when it comes to medical cannabis. There’s apparently around 120,000 patients, and 9 tonnes of flour last year. You’re probably looking at 20 tonnes this year, and the other markets around the outside are really starting to find ways to catch up.
For example, in Switzerland, you’re seeing changes in the way of prescribing which will take it from a market that has had maybe 3-4000 patients today, to probably somewhere in the region of 100,000 by the end of next year, or maybe early the year after. That’s a significant jump in patient numbers and where we’re looking to really capitalise.
We’re very happy in these nascent markets where there’s very few players and people don’t really understand the regulation and compliance. We like the fact that we can move into places like Switzerland, which we did only a week or so back with the opening of our Swiss office. We’re able to take advantage of our existing ecosystem using the blueprint that we spent so many painstaking days working on here in the UK to get right to give us a 60% market share, and assess how we can flex it in these other European markets very quickly.
We’ve had people on the ground in places like Switzerland, for almost a year, really analysing the nuances of how the market is going to open so that we can build our software to accommodate that market – what it’s going to be like in a year’s time from now? and how can we trade off it today?
And that’s going to be mirrored across the whole of Europe. Before we know it people in North America will say, “Wow, what’s happened in Europe? It’s got almost as big as the US”. I believe that there are statisticians reporting that by the end of 2025, it might even be bigger than the US from a medical perspective.
Are you seeing people use the rollout pathway that they saw in Germany for example, or are people wanting to change it, make it better? Is there a learning curve in Europe and European jurisdictions? And are they getting better at it?
“We’ll always point that out as being a key part of our approach, and really the best approach in these European markets is you need to be really thoughtful, and really consider the ‘go to market’ strategy.”
Dean: I guess the first move in a lot of these European markets that had the critical mass, the capital, and the supply chain, where a lot of the big Canadians went in all guns blazing, buying assets, without really a sophisticated, ‘go to market’ strategy, or a clear idea in terms of regulatory frameworks in each market and, and how best to navigate them.
And we’ll always point that out as being a key part of our approach, and really the best approach in these European markets is you need to be really thoughtful, and really consider the ‘go to market’ strategy.
There’s a European framework that overarches everything, and then each country is very different – all the way through from clinical consultation, to the way in which a pharmacy can be owned, can prescribe, how product can be delivered etc and so on. There’s, again, very different approaches in each of these European states. So that industry knowledge and that sophisticated ‘go to market’ strategy, as we’ve touched on a number of times already, is really key.
Is it accelerating? And are people learning from their mistakes? Yes, I think so. People are going to come in with different approaches, and are probably going to target more narrower ends of the spectrum with perhaps different approaches and targeting different ends of the value chain.
Everyone’s going to be learning and looking at the competitors that exist at the moment and pick out what they can. So you’d expect that things will improve pretty shortly. But the one big learning we’ve seen is that the all guns blazing approach hasn’t really hasn’t worked. And you’ve got to be more thoughtful. It’s not about who has the most money wins in these particular markets.
Watch the full interview with Dean and Jonathan here: