Perrigo, one of the world’s largest generic drug producers, is entering the CBD industry, reported by Business Insider.
The pharmaceutical giant purchased a 20 percent stake in Kazmira, a Colorado-based CBD manufacturer. Perrigo will pay $15 million when the deal closes, and $35 million more in the next 18 months.
In an interview with Business Insider, Murray Kessler, Perrigo’s CEO since 2018, said that the company has sought to transition from a healthcare company to a “self-care” one, and it has noticed how CBD is becoming popular among athletes and wellness influencers.
Describing the CBD industry as the “Wild West,” Kessler believes that the deal with Kazmira is an opportunity in the “$10 or $15 or $20 billion category,” which “don’t come along every day.”
In 2018, President Donald Trump made legal the production and sale of CBD products with less than 0.3 percent THC, but the Food and Drug Administration has not specifically allowed CBD in the sale of food products. Many cannabis companies rushed to the market, but often with heavy metals, harmful chemicals or no CBD at all in their products.
“One of the biggest things I heard from our customers was a lack of trust in the supply chain,” Kessler said. “There's the debate of, is this product reliable? Is it trusted? Or is it just a bunch of people mixing chemicals in their garage?”
To ensure the legality and quality of its prospective investment, Perrigo built a team to evaluate some CBD companies’ technology and products, and found Kazmira to receive a top score.
With a minority stake in Kazmira, Kessler said Perrigo will have reliable and high-quality CBD at hand, and then leverage its connections to sell the CBD products to big pharmacy chains and grocery stores.