Peter and I talk about the challenges facing the European cannabis ecosystem and the opportunities that lie ahead. Svenska Verde AB is a Swedish pharmaceutical & MedTech development company specializing in cannabinoid APIs.
(edited for publication)
Good afternoon, and welcome to another version of the CannaList Conversations. We have the pleasure of speaking with Peter Dolving, CEO of Svenska Verde. Can you tell us a bit about the company and what you’re working on?
We’re a product brand than anything else. This is a company developed to the point we’re at now over ten years. Our focus is all about pharmacy. And it’s all about clinically tried products tied with the drama of developing in a market surrounding cannabis.
So, these are medicinal products.
They are currently medicinal products, But there will also be cosmetics, wellness products, and food products. But those are still into the future several years.
Looking into the future, what excites you about the European market? I’m assuming that’s your target.
What is developing here and what’s evolving in the European market is entirely different from the US expansion of cannabis. And I think that it is going to do the job. But there’s a whole point, meaning that the world started approaching cannabis from a legal perspective after 2009. And with all the material coming in from the World Health Organization and the UN, it became apparent that we were still dealing with the problems that came out of having this crazy situation with the War on Drugs. It caused a terrible division in society. The polarity that caused political division. Further, it caused the extreme flight of capital from cannabis. And it’s unsustainable; it’s completely unsustainable.
Suppose you look further into the historical aspects of why these prohibitions were enacted and who was behind them. In that case, pharmaceutical companies are looking to protect their interests, and tobacco companies are looking to protect their interests. So when you look at the stigmatization of cannabis, you want to look at the players behind that.
I keep coming back to that because we’ve looked at the reasons for the stigmatization or the alienation of cannabis as a product. So that just a convergence of interest, realities that the needs are still there. And I think this is so important when looking at the differences between the US and European markets. In Europe, we took the data seriously. The German and Dutch authorities come for the furthest in taking a serious look at the issue from an engineering standpoint because that’s what you have to do. It is about engineering. And it’s not just about engineering a product; it is also about social engineering.
And in this regard, what the national platforms have made very clear to the international business community, is that these are the needs, and what we see needs to be done. So if you understand those needs and try to satisfy those actual needs, we can move forward. So that’s the message if you read what’s been going on with the UN and the WHO. So it’s an adult conversation. It’s a perfectly adult kind of attitude towards actually addressing this in in a good way here not to disrupt because, in Europe, we’re a little bit more cynical in some ways than they are in the US in some ways, where there’s plenty of criminal elements that are certainly making money from cannabis.
Instead of looking at it from a moral standpoint, we decided to look at the scientific facts. And the scientific facts have shown to a large degree; this business can be integrated into a functional and transparent business sector; it doesn’t need to be in a kind of gray zone. So for us as a company, that’s where we started. We started looking at needs, we were just me and my partner, Louise, and we just happened to be very good at finding things out.
So we got tiny little jobs here and there. Can you talk to the sheriff? Or go down to Jacksonville? Can you find out what the zoning rules for this county are? We need seeds over here. How do we find legal seeds, etc.? So depending on where you come in, for us, it was all about function. And as we launched the business, we were trying to understand if this was possible to do?
Is it possible to do an effective transition of this business? From what was the very raw kind of business in the American market, Around 2012-2014, they started to open up on the West Coast of the US. So what we found was that that yes, it was incredibly extremely raw and very simplistic, but at the time, a great opportunity. As the US business evolved, I think that the criticism from corporate-level actors is that everyone’s just running for the quick buck. No one’s interested in finding out what you need to do to put products on the market with a long lifespan and caring for the patient. Or the end-user.
We’ve seen the green rush, mainly around products like CBD, where people just ran to the market. There was no way of knowing what you were getting; there were no standards, there was no labeling or consistency in the labeling. And then when we went back and tested some of these products, many of them didn’t even contain CBD. So we need standards, and compliance, testing, and all that.
But I think one of the challenges is that the systems are in place to make this as complicated as possible, rather than supporting the growth of this industry. If you’re talking about Germany, look at the licensing in Germany; who got licenses? How does that support economic development? How does a bunch of Canadian companies get big licenses? We’re starting to see that change a little bit. But, the approach is wrong because they’re not looking at this from an economic development standpoint or job creation and taxation.
No, they’re looking for a quick profit. And realistically, you cannot enter a young market and set quick profit goals. So without that costing somewhere, that’s just basic.
I’m not even talking about that. I’m not even talking about the companies. I’m talking about the government and the legislation.
Absolutely. But here’s the difference; the approaches towards the product. If we look at Germany, we understand that this is a commodity. Its integral gray-zone used to be a commodity and needs to be probably a commodity. Somehow, find out a format where that works again because we have to have quality class systems. That’s just how it is. That’s how we do it with every other commodity; we need to do that.
But at the same time, there’s a big issue with people’s confusion and moral indignation. For politics, these are not the same things, and they should not be confused. In this case, one needs to look at the actual needs. And the difference between this and a product like this is essential because we’ve come across places where people in government have told us that they have perceived the product along the lines of alcohol and tobacco. And we said to them that that is not the reality because the data brought forth by the WHO in 2018 and then publicly published in 2019 specifies that this is a medical product. Everything about it is medicinal.
And the exciting part is not we still have this idea where we make these distinctions; they say there’s recreational use and medical use, but looking at the data, the data makes it pretty specific that all use is medical use. It varies by degree; of course, there’s a difference in therapeutic applications – a person who needs to relax on a Friday or Saturday night or someone who has chronic pain – but it is still a medical response that gives the non-chronic person symptom relief.
When we think of medicinal use, what we want is evidence-based information. We want to ensure that the product has gone through some form of trial and justifications for the claims being made. That the efficacy towards whatever problem is being addressed – whether it be pain management or cancer – that there have been studies. We know that, indeed, it does have this effect, we can expect these types of outcomes, and we understand the potential side effects. We want if it’s going to be a medicinal product for it to be evidence-based. And that is the only way that your doctor is going to prescribe it. Whether trials support the claims because this is one of the challenges that we’ve seen, time and again. I’m going to fall back to the CBD products. In the rush of making lots of money, companies made all kinds of outrageous claims about what CBD could do. According to the claims, it could pretty much do anything and everything, and yet, none of that’s been supported by any trials or any clinical data.
The reality is there is a difference between recreational and medicinal use because you need evidence if you go to market with a medicinal product.
I’m entirely in agreement. I think that this should be an incentive to put this, this whole thing, put your money where your mouth is. Some of these companies have seen a growth of 150 million dollars in less than six months. They have realized to be legit; you have to invest a few million dollars into clinical trials. And if you don’t do that, that’s a signal that you’re not actually out to disrupt the market; you’re just out there to main maintain an unstable situation and to continue to milk that unstable situation until there comes the point where you cannot milk it anymore. And this is what they’re; there are just four companies in the US doing this, mainly their purposes and strategic reasons.
Anyone who has any experience in drug development knows this is a slow, arduous process, which is tremendously expensive. Bringing a drug to market is ten years with a $2 billion price tag – to go through the different trials and go through the various stages. So this is the process you have to do if you’re going to develop a medicinal product and make medicinal claims – then you have to be in it for the long haul.
Yes. Seeing it for what it was like for us. I have a terrible back injury. Seeking relief, I got information about CBD. And it turned out that wow, this stuff worked for me, so cool. So I kind of hung around, and I figured I’d just see what this is. So, in early 2012-13, we looked at it and didn’t know how to format it. So, we focused on the grandma persona, who wants to go to the pharmacy and has a bad hip or something and is seeking pain relief because that’s ultimately where this needs to go. So just understanding the whole culture around it.
More than anything, it’s been an incredible ride to see how much the stigma around cannabis is a social drama, cultural drama. And also, I’d say somewhat psychos psychosocial bit of pathological because it’s holding on to lifestyle surrounding this product, which is merely a medical product; it’s no more dramatic than aspirin when it comes down to it. Aspirin can kill you. Cannabis won’t do that. So it’s less dramatic.
It’s been stigmatized for years, which won’t change overnight.
Definitely nor. But I think what we see in Europe is a bit romanticized. So the de-romanticizing should be the focus – deflating it a little bit. And I think that’s good. I think one of the things that I see that I believe to be good about the German and the Dutch governments discuss that there’s actual awareness of the fact that we need to work as an entire European market to bring down prices on biomaterial in such a way that, that it correlates with the black market. And if we don’t do that, we’re all in agreement that we will lose the call to the black market, its effect. And again, this is a true open understanding; this is something that we all know this, it’s a fact not everyone is not in agreement on this every some people are still they’re in strategies where they’re considering, well, maybe we’ll just max this as long as we can. And considering the way the European market is, and no one can go alone. That’s not how Europe works. So you have to be one step at a time and very diplomatic about everything because no one walks alone.
I don’t think anyone is going to argue against that. If you price it at a point where it’s just ridiculous, of course, people are going to continue to go to the black market. But there are other challenges. If you look at Germany, many different jurisdictions have different rules for CBD and cannabis. It’s not even a German market; there are individual markets within Germany that aren’t consistent. What you can do in Berlin is different than what you can do in Munich. So they haven’t even resolved that. We don’t have that consistency. We don’t have that alignment, and then you multiply that by 28 Member States. It is a tough challenge to overcome because we can’t even manage it in a single country like Germany.
No, what we’ve done is we’ve gone down to the basics, and you just address the issue for what it is medical compounds, pharmacology. And we’ve done the deep dive into the pharmacology into the drug, regular regulatory, just the framework. And that’s how we built everything. So that’s how the products that we’re now developing for the market, they’re not going to be on the market for at least four years. Maybe we’re lucky; perhaps they’re nice. We believe it’s realistic with four years. And that’s just from what we have understood that well, this is the Is this how the regulatory reality has addressed the issue? And it says,
I applaud you for going that route because that’s the way we need to go. But in the meantime, we have other entrants in the market who aren’t so concerned about that. For example, have you run into Delta- 8 and Kratom? I tend to bring that up all the time. But, these people have found a workaround and are just willing to exploit that for a quick buck.
The same is going to happen here. There are always going to be nefarious business models. Some succeed, and some don’t. Some business models are built to fail quickly and maximize the profit you make during that time window. It’s up to everyone how they develop their own companies and the people who get involved with that. We pursue a model that tries to destigmatize the plant as we’re trying to create credibility and standards.
Those other players who aren’t so concerned about all that, are they tainting the market? Because they’re bringing in questionable products.
Suppose we look at it from a conflict perspective, yes. In that case, one could say that it’s tainting the market. But, on the other hand, if you look at it from a process kind of perspective, kind of, I don’t know dynamic capitalist sort of perspective, that it’s not so much hurting the market, as simply doing what that group of entrepreneurs always do in any new market.
History also shows that most of them will be gone within ten years; that’s just a historical fact. And the companies that survive to see ten years of longevity will be a couple of those companies that will survive and adapt their business model to a more legitimate business model. And, and it’ll be the companies who have more of a long view based on the long-term build-up coming from where they came from.
I would say that this is like the third or fourth generation of a legal, modern segment regarding cannabis. Here’s an example: what we do with this company matters for all these other little companies because we bring value to their business. And we can help people get better at what they do. And we can help people maneuver in the landscape, excel, and understand the market for what it is.
And honestly, if you care about your market, you want to get involved in it. You want to get to know as many people as you can in it and try to see what it is. Because if you see a market for what it is, you understand that this is a fantastic opportunity you’ve been given; you’re part of something truly extraordinary. Now, sure you can run a business from a very capitalist point of view. But, in the end, that usually never really works out.
Not so much that it’s from the capitalist perspective, because if you invest in your company and build a company over time, so that you can last for a long time, that’s capitalistic, that’s fine. These are people who are trying to turn a quick buck. They are, at best, working loopholes in the system that they’ve managed to figure out. What this comes down to, and you talked about this a little earlier, is if grandma goes in and wants to buy a pain-relief product. This is her first experience. If she realizes a questionable product is now available because of some loophole – that hasn’t been tested and has no standards applied to it, that the labeling is wrong or misleading, especially when it comes to medical claims – she will take that information and say, Oh, look, this is a bad industry because look what they’ve done to me. We are trying to destigmatize the industry and say this is a legitimate medical product with legitimate medical needs. I would push back; they’re not capitalists; they’re simply opportunistic.
I agree. I completely agree. That’s really where it’s at – that is where we’re lands. Why we do what we do. I want my family, my friends to be comfortable and safe – it’s that simple. I’ve traveled for about 30 years. About 150 travel days a year with my previous job. My family’s not in some village up in the north of Sweden. And that’s it. My family happens to be global after that amount of time. And, working around the world like this, this is a question of organization. Someone asked me, why don’t we go? We’ll say, what about the cartels? What about all these drug cartels, etc. These cartels in these large, so-called criminal companies are corporations; they’re corporations; it’s a side of capitalism. I’m not saying it’s a great side, but it is a side!
But the government needs to take a leading role to fix that.
The governments can’t try to tax it to death, so it becomes outpriced; there needs to be some form of social equity so that people can get into the industry without having to invest millions. One of the problems with the industry is that it is an expensive industry to get into. That eliminates who can participate. And, the cartels have plenty of money – they can participate. So, we need to look at social equity programs from an economic development perspective. Why are we not supporting smaller entrepreneurs and small and startup companies? So that we can legitimize this industry and produce a reasonably priced product that is safe. So that folks don’t have to revert to the black market.
But the thing is, it doesn’t need to be a black market; there’s no place for it anymore. It causes social destabilization; it’s not good. And quite frankly, it is merely a product. And it is a product that is when you look at it, it comes off initially as kind of a commodity, but when you look at the realities, we have 200 million people daily, consume this product. People will consume daily regardless of what consequences they may face. That’s a sign of an intrinsic product. That’s a product that means more to these people than the risk of punishment and even losing; maybe health is life. So this is not rational; it can’t be stopped by legislation; it needs to be instead cared for and opened up.
But the challenge related to the black market is even in areas where there is adult-use beyond medicinal; there’s adult-use. So you’d say, Oh, well, it’s an open market, people should now be able to go to legitimate places, but what does the legitimate market look like if there’s a tax applied – a luxury tax or a sin tax applied at 30%? Or there are all kinds of other things that make it difficult for it to compete. So for the cartels to go away, you have to offer competing products by making them affordable.
Yeah, absolutely. It’d be like to be if you’re going to be completely open about it, the only way to make the cartels go away if you would have that as a goal would be to invite them, that would be the only way to integrate fully and to get rid of the problem that exists surrounding these products. And to do that, well, the only thing that stands in the way for that is knowledge. It sounds kind of rough, but over these years, the people we’ve sat down and talked to even with people in the criminal side of the business just to understand how they work and what their reality is.
It’s very much a question of knowledge framework and understanding of how you even start a business. How does even tax regulation work? What benefits a large part of the people who have resigned within the gray and the black markets? They’re locked out. They build, and this is what the entire deal with, with stop making the whole idea about that leave no one behind program the sustainability agenda, the ideas surrounding the agenda 2030, etc., is what this is all about because we’re looking at what has happened is that cannabis regulation and attitudes have become so toxic, that they are separating society in a way that’s kind of right on the verge to what Nazis were doing. We don’t see that because people have their jobs, and then we have our safety and security; we live our lives nicely.
But not everyone has that reality; we’re talking about maybe 10% of the entire population, who are directly affected by this in a way where detrimentally under minds their capacity for having a good quality of life—everything from getting access to education to earning a living wage. Even start a company. You can’t even get a loan in many countries if you do not have that education or criminal record. So it’s a whole situation that has just undermined social function and has done a number on democracy. So it’s a lot bigger than cannabis.
And let’s go back to Europe; one of my beliefs is that we need one of the big countries to embrace this, and I think we’re looking at Germany. Do you believe that once Germany fully embraces this, whether it be adult-use or medicinal, what have you, that the other countries in the EU will start to come on board?
I have no idea. I honestly don’t know right now; I wish I did. But, I, the way I see it, I think that Germany’s going to pick up the torch and lead the way. I believe that within five years, we will be in a position where people will be able to grow maybe three or four plants themselves, and I think there probably be some regulation for artists, and they’ll grow on a small scale. And I think there will be provisions set up around and a framework set up around any commercial product, just the way they’re doing it now; I honestly believe that very much.
With the extremely high costs and the complications that have been around, it has been there to mitigate it going too fast. And I think that you will find most of these products in pharmacies, German pharmacies in about five years, just there’ll be special pharmacies. There’s a couple of companies working with that right now. And they’ll be in all well-sorted pharmacies. But, I also believe there will be more artists and shops in some states, we can buy some special brands made under other provisions.
Yeah, we’ve talked about that like the craft beer model – where if you are a consumer and you want to have an organically grown product, you can seek that out. It won’t be mass-produced products; it won’t be a medicinal product because none of that would qualify for the GMP. But, as you said, there’ll be artisanal avenues if I want something locally grown or organically grown. So I think that will exist. But, unfortunately, I think that will be a relatively small percentage of the overall market.
It seems like the European medical agency is setting its foot down in regards to specialty CBD. And they’ve said that, well, we want synthetic CBDs. You’re going to be putting these out into the pharmacies. And so there, this is instead of yet; we will see how this all plays out. Five years ago, unthinkable in the cannabis industry. And now the discussion is different. We’re seeing a new discussion that does take the patient. But, finally, as the first interest the first person of interest in the whole issue, it’s been the business talking about how the business could make money, rather than density, to how can we solve the needs and realities and the unmet needs. Of the patients? And who are the patients? What are the actual needs?
I think, more than anything that that has been a big deal. And in Germany, there has been over the last since 2015; a mountain is coming of studies out there. And this, this, this leads on, as well see, everything kind of opens up new, new venues, and kind of, we see that all right, there’s enough, there’s enough material here to support a next-level clinical study, or right over here with this one, we see that, okay, so there’s, there’s enough indication here too, to pull this one through. So because it’s all about statistical relevance, and it is the same thing when you’re working with developing any kind of another drug. It’s a question of holding on to type regiments in how you make and shape your product. So this is very much to do with understanding legal and understanding pharmacology.
And this is something we can’t do this alone, coming from direct from saying, count or college is, oh, I got this idea, I’m going to start a cannabis company, it takes a lot more than that. And this is the reason why we’re seeing so many Ivy League CEOs coming up in these kinds of companies because it is that type of understanding of the corporate landscape that you need to have. So, yeah,
We talk about that all the time. Where you can have a great idea, but what comes down to it is can you execute. And execution is about can you raise money. Do the investors believe you have a track record that would substantiate giving you a couple of million dollars to try? So, many times what happens is we’ll see the R&D types come out of academia. But, still, they’ve never taken a product to market or branded a product. They have great ideas, and we’re not discounting those ideas.
But the reality is, they’re not going to build companies because they don’t have the experience. So you need, as you suggested, business people who’ve been there, done that maybe in other fields, or another industry, but at least, somebody who’s bought a product to market, someone who knows how to raise venture capital and equity and understands what all that means.
It’s not just about having an excellent idea, and like, oh, I’m going to start a company. Because you need to fund it, which is a lot of work, you need to understand how to take a product to market; evaluate and position your company in the market. So it’s more than a good idea.
Again, this is something I feel good about. I think we’re a couple of companies now that have done this, this detective work of figuring all these complex things out. We will be needing all these great people working with us. And we’re going to have to teach them what we’ve learned. And then as we do this, also, there’s going to be new companies and new ambition and new talent going to be showing up and say like, Well, okay, we well, we’ll learn, we’ll just let us into your, and we’ll do it, and that’s yes. I’m pretty happy about I just kind of cool that, that this, this group of companies have kind of taken its a different direction than then the Canadians and the North Americans, I think, I mean,
My response would be that we need to provide an ecosystem that supports these types of companies. Because that ecosystem doesn’t exist currently in that format, because the folks that want to enter this market legitimately, the only way to enter these markets, the legitimate way is to be a big player because then you have the bandwidth and the capital to look for five years down the road. The average entrepreneur cannot self-fund, and I’m sure you can attest to this how difficult that is to self-fund for ten years.
So we need to create an ecosystem and a landscape for these opportunities for different people to survive the startup process.
Absolutely. I think we’re building a market. I don’t think a market is something that – boom, suddenly, there’s a market, and then it’s there. My experience is that the market is something that is a constant. And if you enter the market, regardless of what you’re bringing to that market, you’re going to be in for change for as long as you will be in that market because market means change. It does. That’s its volatility. But, it brings capital, it brings ideas, it brings innovation, fierce possibilities.
But, it’s supposed to be open to everyone, not just a few players that have enough money.
I agree. 100%. Yeah. And I think that’s, that’s, that’s kind of what why I like being able to step into this thing like this, because when we first started, ten years ago, it wasn’t a position where, where people would say, well, that’s impossible. After all, it’s so much work. And thank God, we had done the large-scale structural work with stuff that we’d done before. So we didn’t know looking for impossible, it looked like, well, that’s a lot of work. It’s taken about two years longer than I thought it all, and I was talking about Yeah, to two years longer than I did.
But actually, it’s that it wouldn’t have been possible, if we wouldn’t have worked internationally, with developing and bringing products to market, and understanding the whole product journey, the whole process. Because without that, you can’t possibly make a strong analysis of what cannabis is business because it looks initially too abstract. Because there’s so much, like I said, so much cultural and social drama going on around it, that is diffused.
Also, the thing, which is confusing is when people think about the cannabis business, they believe, especially on the legal side, they think about the dispensary. There are just so much more layers to the industry. Because any industry means that you have service providers who support the distributors, you have extractors; you have growers. So I mean, this is, I’m sorry, I’m saying this as many times as I have it, this is an ecosystem, right?
Yes, it is.
So when people think about the industry, what they think about is the seller, but there’s so much more that we need to support. Yes, for all that to happen. I think the next step is how do we move to continue to move this forward? And especially how to create opportunities so that people can enter this business legitimately, yes, and move forward.
Brains. I’m not kidding around. We need the smartest people in this business. If, if you’re watching this in you from any of the larger universities and you’re looking at a business degree, thank you for watching. Yes, and thank you, just this is you’re in the right place. Pursue it; we need organized, intelligent people with an understanding that this is a legitimate market. And the more good people we get here, the better this business will develop because it comes down to it.
It originates with some fantastic people worldwide, sure there are some other people as well, but the core of what became the, even the criminal side is on the more excellent side of things. In reality, when one goes out into the bush and says hi to people, this speaks well for the entire business. At the core, it’s about wanting other people. Well, anyone you’ve met with, we’ve met you in the US, South America in our in your upside in Europe with web worked with this product, be it legal or illegal most of them are nice people. The one thing that needs we need more of is education. So smart people, come on, it’s fun. It’s a good place, nice people. So
We very much appreciate your insights and spending time with us today. If folks want to learn more about what you’re doing, where can they find you?
They can find the old, very ugly homepage at Svenska Verde AB. With a little bit of luck in a couple of weeks, there will be a better presentation.
Well, we look forward to that. But, again, we appreciate your time very much. And we look for great things, and hopefully, we can have this discussion again in about one or two years, and we can see how far we’ve gone.
Absolutely. I appreciate it. I’m looking forward to talking to you again; this has been a great conversation. I very much appreciate it.
CannaList Conversations with Peter Dolving, CEO of Svenska Verde
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