The European cannabis market is ripe for the picking, with a population of over 740 million people, and Canadian cannabis companies are keen to gain a foothold.
Of course, moving into this market doesn’t come without its challenges. At present, all of the legal European cannabis markets apart from the Netherlands and Luxembourg are focused on medical marijuana.
Countries that allow medical marijuana require it to be sold in pharmacies to patients with a doctor’s prescription. What's more, many of them need doctors to specify the strain they are prescribing, making it near-impossible for patients to experiment with different strains.
However, these laws have already begun to loosen across the EU. And thanks to national legalization, Canadian cannabis companies have been able to go public, raise capital and are now looking to expand into Europe.
“No one else is really positioned like [Canadian firms] are, capital-wise and opportunity-wise,” said Brightfield Group research manager Jamie Schau.
Leading the charge is Germany, which has allowed medical cannabis for two years. Domestic production has yet to take off, meaning most of the cannabis in Germany comes from Canada.
Canada’s largest cannabis company Canopy Growth Corp. (TSX:WEED) (NYSE:CGC) recently gained its share of the German market by acquiring C3 Cannabinoid Compound Company. C3 was founded in 2014 by Bionorica SE, one of the world’s leading herbal medicine producers.
Aurora Cannabis Inc (NYSE:ACB) is also moving into German territory after gaining approval from the German Federal Institute for Drugs and Medical Devices (BfArM) to construct a state-of-the-art indoor cannabis production facility.
Ontario-based Aphria Inc (NYSE:APHA) has secured licenses to grow medical cannabis in Germany, as well. The company is building an 8,000 square meter indoor grow facility to grow three BfArM-approved strains of medical cannabis.
Aleafia Health (TSX:ALEF) also entered the German medical marijuana market recently, through a joint venture with German pharmaceutical wholesaler Acnos Pharma GmbH.
Medical Marijuana in the EU
As mentioned, Germany legalized medical marijuana two years ago. Since then several other European countries have followed suit.
Poland joined the legalization movement in November 2017 after politician Piotr Krzysztof Liroy-Marzec managed to gain enough support to pass legislation. However, it took a while for anything to come of it.
In fact, it wasn’t until October 2018 that the Polish Ministry of Health granted approval to Aurora Cannabis to ship medical marijuana to Poland.
The Greek government also legalized medical cannabis in 2017 and then, in March 2018, the nation lifted a ban on growing and producing cannabis. Now the government there has approved 26 licenses to grow cannabis for medical purposes in hopes of revitalizing its economy and attracting international investors, particularly Canadian companies.
Other EU nations that have approved marijuana for medical use include Italy, Portugal, Croatia, and the United Kingdom.
The European Parliament jumped on board in February 2019 with a vote on the resolution to advance medical cannabis in the European Union. The non-binding resolution seeks to incentivize European countries to increase access to medical cannabis and to prioritize scientific research and clinical studies.
While the passage of this resolution doesn’t change international marijuana laws, it is a testament to the growing acceptance of cannabis as a medicine and a desire to provide greater access to patients in need.
The European CBD Market
The European CBD market has also been gaining traction in recent months. In fact, the market is expected to boom in the next few years to reach $1.7 billion USD by 2023.
Of those countries within the EU, the UK and Austria are the largest markets in the European CBD space and are expected to reach $440.8 million and $137.4 million, respectively, by 2023.
Like medical marijuana, several Canadian cannabis companies are already working to gain their share of the growing CBD market.
One of which is StillCanna (OTC:SCNNF), which gained its foothold in Europe’s CBD market in 2018 when it acquired Borganic Consulting. The deal provided the company with an anchor customer and joint venture partner, UK-based DragonFly Biosciences LLC.
StillCanna and DragonFly just reached the final stages of the licensing process for its JV project, the ORIGIN extraction facility in Romania. Once approved, the company expects full production within the fourth quarter of this year.
StillCanna also acquired Olimax, a leading European CBD cultivator based in Poland. The vertically-integrated fully-licensed company offers over 20 years of experience in farming hemp, has a fully-developed product line and a proprietary EU-certified high-CBD hemp strain.
In August, StillCanna began the first harvest of its 1,500 hectare crop in Poland, utilizing its patented harvesting technology.
Another Canadian cannabis company that has joined the European CBD market is OrganiGram Holdings (TSXV:OGI) (NASDAQ:OGI). In October 2018, the company invested in Serbian-based hemp and CBD producer, Eviana Health Corp. (CSE:EHC).
Eviana harvested 310 metric tonnes of harvested hemp in 2017 and 2018 and has a 40,000 square foot processing facility in Serbia, as well as a 22,000 square foot pharma-grade leased facility in Belgrade.
Vancouver-based globally-focused ICC International Cannabis Corp. (CSE:WRLD.U) (OTCPK:WLDCF) also has a growing presence in Europe. In fact, the company holds cultivation, extraction, formulation and distribution assets in Denmark, Poland, the UK, Macedonia, Italy, Germany, Bulgaria, Switzerland, Greece, and Portugal.
ICC produced 50,000 kilograms of CBD isolate in 2019, has over 2,700 cannabis strains, and has a European distribution network of 80,000 retail outlets and pharmacies.
Recreational Cannabis in the EU
When it comes to recreational cannabis, not one European country has legalized marijuana use in this form. However, that is about to change.
Luxembourg announced earlier this month that it plans to unveil draft legislation and become the first European country to legalize recreational cannabis. The Western European country, which is home to roughly 600,000 people, has already legalized medical cannabis and decriminalized the possession of small amounts of marijuana for recreational use.
Luxembourg’s health minister Etienne Schneider hopes that other EU countries will follow in its footsteps, although he expects it will take at least two years for legalization to happen in Luxembourg.
Whether or not Germany will also move to legalize recreational cannabis is also on the table thanks to the popularity of the Green party, who have long-favored regulated cannabis legalization.
It will be interesting to see how the Green Party will influence lawmakers moving forward. It will also be exciting to see which Canadian cannabis companies will prevail in the European cannabis and CBD markets.