By Catarina Demony and Rafael Marchante

CANTANHEDE, Portugal (Reuters) - Famous for its roasted suckling pig and wines, the Portuguese city of Cantanhede now hosts the country's first medical cannabis production farm - a budding European hub of efforts to meet growing demand for the flowering herb.

Portugal's California-like weather caught the eye of Canada-based Tilray as its CEO Brendan Kennedy roved around Europe from 2015 to 2017 in search of the perfect spot for a new production site.

Kennedy said Portugal had the ideal climate for cannabis cultivation and the country's young, educated workforce and its major agricultural sector were further attractions.

Covering 2.4 hectares (5.9 acres) in a biotechnology park just outside Cantanhede, Tilray's site was given the green light by Portugal's regulator Infarmed in 2017. The company then rushed to import its first baby plants and recently reported its first two successful cannabis harvests.Kennedy opened the site to visitors for the first time at a ribbon-cutting ceremony on Wednesday.

"Some of our competitors are located in Denmark and northern Germany, where there isn't that much sun - so we think we can produce a more environmentally-friendly product here," he told Reuters.

Portugal also offers tariff-free entry to the rest of the European Union, a market Tilray wants to explore further at a time when an increasing number of governments are legalising medical marijuana.

FROM PROHIBITION TO LEGALISATION

"The paradigm is shifting from prohibition to legalisation," Kennedy said, with demand for the product growing. "I'm fairly optimistic that over the next two years we will see every country in Europe legalising it."

Last year Portugal's parliament approved a bill to legalise marijuana-based medicines, following in the footsteps of EU countries such as Italy and Germany as well as Canada and parts of the United States. Britain made a similar move in July 2018.

Tilray's 20-million-euro (17.27 million pounds) facility includes indoor, outdoor and greenhouse cultivation sites, as well as research labs, processing, packaging and distribution sites for medical cannabis and cannabinoid-derived products.

Tilray supplies medical cannabis products with CBD and THC to patients in a number of countries, through subsidiaries in Australia, Canada, Germany and Latin American, and through agreements with pharmaceutical distributors.

Earlier this year, the European Parliament called for an EU-wide policy on medical cannabis and properly funded scientific research.

"We are at point where almost every doctor around the world recognises the medical benefits of cannabis," Kennedy said.

The World Health Organization has stated that several studies have demonstrated cannabinoids provide therapeutic effects for nausea and vomiting in the advanced stages of illnesses such as cancer and AIDS.

Moreover, a handful of regulated pharmaceuticals use chemicals derived from cannabis, such as GW Pharmaceuticals' Sativex which is approved for treating symptoms of multiple sclerosis.

BOOST EXPORTS

From Canada, where Tilray has six facilities, the company already sells medical cannabis products to 13 countries. Portugal will help Tilray boost exports further, Kennedy said.

"Our business plan for this facility is focused on exporting products from Portugal to other countries around the world."

In Europe, Tilray products are already available in Germany, Croatia, Cyprus and the Czech Republic but it expects to start exporting to the United Kingdom - and potentially to France, Italy and Greece - in the next 12 months.

Kennedy said Tilray hopes this summer to expand exports to countries such as South Africa, Australia and New Zealand.

According to analysis firm Prohibition Partners, the EU cannabis market will be worth 123 billion euros by 2028.

Kennedy did not confirm how much medical marijuana Tilray plans to produce.

(Reporting by Catarina Demony and Rafael Marchante; Editing by Mark Heinrich)

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