Europe’s Medical Cannabis Markets: The Next Frontier

As the North American cannabis markets mature and become saturated with competing licensed producers, Europe’s early-stage cannabis market may represent the next frontier for pioneering companies looking to break into the industry. 

Home to more than 740 million people, Europe has twice the population size of Canada and the US combined. Arcview Market Research and BDS Analytics have both forecasted that government-subsidized healthcare spending will make Europe one of the world’s largest medical cannabis markets. For now, hemp and medical marijuana dominate the European landscape.

Europe is a prime market for CBD products

Countries across Europe are opening up their minds, their laws and their wallets to cannabis. While the legal status of cannabis is varied across Europe, many governments are taking a progressive approach. That began in 2003 with the legalization of medical cannabis in the Netherlands. Today, medical cannabis is now legal in 22 countries in Europe, with six EU member states announcing legislation in the first half of 2018.

 This INNspired Article is brought to you by:

CROP Infrastructure Corp. (CSE:CROP, OTC:CRXPF) is a publicly traded Canadian corporation enabling licensed cannabis producers to achieve sector growth by providing capital for the acquisition of land, real estate, branding and infrastructure for their operations.Send me an Investor Kit

“Governments can now estimate the significant social, health and economic benefits that come from cannabis legalization,” said a recent Prohibition Partners report. Yet, many of these newly emerging markets lack enough licensed producers to meet demand, thereby offering up opportunities for North American cannabis companies.

More and more governments are approving the legal sale and distribution of non-psychoactive CBD “cannabidiol” products, and this market represents the best point of entry into Europe’s hemp sector. CBD has the potential to be a broad-spectrum pharmaceutical, meaning it can be used to treat a wide variety of diseases and patients are using an increasing number of CBD infused products. Companies with these products in their portfolios have greater potential to enter as many geographic markets as possible, including Europe.

“Currently in Europe, countries like Malta, Spain, Macedonia, and several others can grow cannabis medicinally providing it isn’t being sold domestically. There is already a thriving export market to supply countries like Germany and the UK with high THC medicinal cannabis,” Michael Yorke, CEO of CROP Infrastructure (CSE:CROP,OTCMKTS:CRXPF), told INN.

“The CBD and hemp market, however, is much larger as it can be distributed and sold throughout nearly all of Europe providing it is sub 0.3 percent THC content. Companies with large operations and extraction facilities in countries like Italy have a substantial opportunity to supply this growing market and be ideally positioned when recreational laws come to pass.”

Germany: Europe’s largest medical cannabis market

Germany legalized cannabis for medical use in early 2017. With a population of more than 80 million, and a strong public health insurance system that offers full coverage for cannabis patients, it is Europe’s most important medical cannabis market. Germany’s position as a top business and economic leader in the European Union also bodes well for the country’s emerging marijuana sector.

Germany is currently conducting a tender round for the country’s first cannabis cultivation licenses and expects to award those licenses in 2019. The tender calls for 10,400 kilograms of medical cannabis to be grown domestically over four years.

The strong demand outlook for cannabis alongside a shortage of domestic supply has attracted the attention of Canadian companies such as Canopy Growth, Cronos Group (TSXV:CRON,NASDAQ:CRON) and Aurora Cannabis (TSX:ACB).

Canopy Growth bought German-based MedCann in November 2016, providing the company’s Tweed-branded cannabis products access to German pharmacies. Through its subsidiary Spektrum Cannabis GmbH, Canopy Growth said that by the end of 2018 it expects to be importing up to 200kg of dried cannabis flower monthly into Germany.

Aurora’s merger with CanniMed Therapeutics bought the company access to the European cannabis market with assets in Italy, Denmark and Germany. The company’s Berlin-based subsidiary Pedanios recently signed a distribution deal for a new cannabis brand with Heinrich Klenk GmbH, whose products are carried in over 25,000 pharmacies throughout Germany and Europe.

Cronos Group has a five-year exclusive agreement with Germany-based Pohl-Boskamp to distribute Cronos’ Peace Naturals branded cannabis products to more than 12,000 pharmacies across Germany.

Italy’s emerging cannabis sector: Billion-dollar sales potential

After Germany, Italy is expected to become Europe’s second largest cannabis market, according to both Arcview and BDS Analytics research, with a projected $1.2 billion in sales by 2027. Italy legalized medical cannabis in 2013, before many of Europe’s other legal marijuana countries.

Domestic medical cannabis cultivation in Italy was originally controlled by the country’s Ministry of Defense, however rising demand pushed the government to look for commercial supply partners. Aurora Cannabis, through its subsidiary Pedanios, inked a deal with the Italian government in early 2018 which earned the company a license to supply medical cannabis to the Italian market.

Aphria gained access to the Italian medical cannabis market in the spring of 2018 with the company’s $425 million acquisition of Nuuvera (now Aphria International), which holds one of the only seven licenses to import medical cannabis into the country. Aphria International’s CEO Lorne Abony said the Italian market has the potential to be “$9 billion larger than the combination of the recreational and medical markets in Canada.”

Italy is a prime entry point for Europe’s market for CBD products. CROP has secured a foothold in this space through its joint venture with Xhemplar, which owns one of three licensed extraction and processing facilities in the country. Through this joint venture there are now approximately 600,000 healthy hemp plants on the 25-acre property. The plants are expected to be harvested in October and will be sold as biomass or processed into CBD isolate.

The resulting products from the Italy harvests will be sold into international CBD markets under the Xhemplar, Tiffany CBD and Hempire Italia brands. The company also holds the Italian rights to a global cannabis-infused topicals product line through its partnership with Yield Growth Corp.

“Europe is at a turning point. We now recognize the medical benefits of cannabis and rather than stand by and continue to see European countries import from across the world, we will hire locally and train locally to provide European buyers the means to obtain medicine which has become a global phenomenon and replacement for traditional opioids as it pertains to pain management and numerous ailments,” said XHemplar Chairman Andrea Castiglione.

The next frontier for cannabis

Yes, Canada’s coming recreational legalization represents an opportunity, however, the opportunity is in a maturing market with a smaller demographic. Analysts believe there are much bigger gains to be had in Europe’s early-stage cannabis markets. “Canada is only so big a market — Germany and Italy combined have four to five times the population of Canada,” according to Khurram Malik, a cannabis industry analyst at Jacob Capital Management Inc.

“If you want to be one of the survivors of the oversupply that will take place in Canada in say 2020 or beyond, you have to stake your claim now in early stage markets.” With so many densely concentrated economies and favorable cannabis and CBD legislative momentum, the European markets are set to become one of the largest opportunities of our lifetime.

This INNspired article is sponsored by CROP Infrastructure (CSE:CROP,OTCMKTS:CRXPF). This article was written according to INN editorial standards to educate investors. 

The post Europe’s Medical Cannabis Markets: The Next Frontier appeared first on Investing News Network.


Leave A Reply

Your email address will not be published.