Europe: The Cannabis Industry’s Next Emerging Market
September 19th, 2019
App, Exclusive, News, Top News
The global cannabis industry is projected to reach $66.3 billion by 2025, according to Grand View Research, representing a 23.9 percent compound annual growth rate. While North America has become a market leader, European markets are quickly catching up with their own liberalized laws. The market for health and wellness products, such as cannabidiol (CBD) and medical cannabis, is already established with public healthcare coverage in many countries.
Let’s take a closer look at Europe’s massive growth potential and companies that are operating in the region, including XPhyto Therapeutics Corp. (CSE: XPHY) (FSE: 4XT), which is focused on medical cannabis in emerging European markets.
Europe’s Massive Potential
Europe could become the world’s largest legal cannabis market over the next five years with double the population of North America. Six countries have already introduced cannabis legislation covering the growth, sale or consumption of cannabis. Germany, Italy, France, Spain, the UK and the Netherlands are all focused on introducing or expanding medical cannabis programs, which could open the door to a €2.3 trillion healthcare market.
More than €500 million has been invested into Europe’s cannabis industry through February 2019 and Prohibition Partners estimates that the market could be worth €123 billion by 2028. Insurance companies in Israel, Germany, Denmark and Italy are already covering medical cannabis prescriptions and these coverages could become a basic requirement for any public healthcare policy in the future, especially as the number of supported conditions grows.
Europe could also become a leader in the research and development of cannabinoid medications. With supportive laws at a federal and regional level, Europe is better equipped to study cannabis than the United States, where the DEA and FDA have hampered research efforts. Public healthcare coverage could also lead to a much larger medical cannabis market than North America where prescriptions must be paid out-of-pocket.
Investing in Europe’s Industry
Investors interested in capitalizing on Europe’s nascent cannabis industry should look to medical cannabis companies since most legislation is focused on medical cannabis and CBD products. Luxembourg is the only country that has promised to introduce an adult-use market before 2023. While Germany, Denmark, Malta, Greece and Italy have all discussed the possibility of doing so, these prospects are distant at the moment.
XPhyto Therapeutics Corp. (CSE: XPHY) is a science-based company focused on formulation, clinical validation and emerging European markets. The company’s 100% owned German subsidiary, Pflanzenextrakte GmbH, has already received a unique German cannabis cultivation and extraction license for scientific purposes, while management is pursuing other opportunities for cultivation, processing, manufacturing, import and distribution.
In mid-August, the company announced an exclusive cannabis research and development agreement with the department of biochemistry at the Technical University of Munich. Under the agreement, researchers will identify and assess novel R&D approaches to utilize cannabinoids, terpenes, terpenoids, polyphenols and flavonoids. Promising targets will advance through clinical studies and pursue joint research and commercialization.
Shortly after, the company entered into a definitive share purchase agreement with Vektor Pharma TF GmbH, a German narcotics manufacturer, along with an equipment purchase agreement with an affiliated company to purchase thin film drug delivery manufacturing equipment. The move provides the company with everything from clinical trial expertise to drug manufacturing capabilities, along with German cannabis and narcotics import licenses. The Vektor transaction was successfully closed in mid-September.
The company’s Canadian business consists of certified cannabis analytical testing and extraction/formulation services. These businesses enable it to act as a third-party analytical testing for licensed producers, wholesalers, distributors and law enforcement, while the in-house production of pharma-grade cannabis could power modern clinical research and the development of proprietary medical cannabis formulas.
XPhyto Therapeutics Corp. (CSE: XPHY) (FSE: 4XT) represents a unique opportunity to capitalize on Europe’s burgeoning cannabis industry. With a German cultivation license in hand, the company is uniquely positioned to become a market leader in the research and development of cannabinoid-based medications across Europe. Investors may want to keep an eye on the stock as it positions itself to capitalize on these opportunities.
For more information, visit www.xphyto.com or download their investor presentation.
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