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The State of Europe’s Cannabis Industry

Marguerite Arnold

June 27th, 2017

Policy, Top News

Amsterdam-May 1: Red light district (Wallen) at night with famous theatre Casa Rosso on the left hand side on May 1,2015 in Amsterdam, the Netherlands.

The cannabis industry in Europe is entering an interesting time. In some respects it is similar to the U.S. state market circa 2010. In other ways, however, the market is already different. Political plus market forces are already creating different hybrids here. There is no EU-wide reform. For now, as a result, then, individual states are proceeding as they want to. The result is not only getting increasingly interesting, but may push the overall issue as a whole much faster now that it is not only Holland who is the flag-bearer of the marijuana industry globally.

So what does this mean for the industry?

A Professionalizing, Permitted Industry Is Taking Root

Germany has completely changed the ball game on this front, no matter how many problems the nascent medical program has already run into. No matter how slowly the vertical gets going, however, just this development is going to change the tone of the complete EU market one way or the other. As of June 28, the next round of successful 10 applicants for medical grow licenses will be announced by the German government. Those companies and coalitions will be absolutely on the front lines of the conversation and a few of them already are.

It is not yet clear how aggressive these companies will be here in trying to force open an obvious market faster than is apparently in the cards now. In Canada, one licensed producer has already financed a patient lawsuit against an intransigent insurer. In Germany, so far, patients have sued the government and their insurance companies. However the “industry” such as it is, has not gotten involved in this kind of activity yet. It may not decide to engage that way here. There has yet to be even the formation of a pan German yet alone European professional, non-profit trade association group.

However these producers undoubtedly will have a large impact on the emerging European market. Companies from around the world, from Uruguay to Israel, alone or partnered with German enterprises signed up for the most recent tender bid opportunity in Germany for a reason. It is not just the highly valuable German medical market on the table, even if that is the focus immediately. It is already immediately obvious that those in the game from the start of the German market will have a base of operations here if not influence that does not exist, yet, anywhere in the EU.

Other Players

That is not to say that there was not a professional cannabis industry here before Germany decided to change the law earlier this year. There are already medical producers in Europe, in both the UK and the Netherlands – who also include the established pharmaceutical industry. Spain and Holland’s industries have been developing along the cutting edges of legalization legislation. While the grow industry specifically is still legally “grey” from a commercial perspective, individual businesses in Spain for example are starting to hit the edges of regulation along with that legalization. Many of them are already well established and most if not many are legit in their own highly focussed niche markets. And all make money promoting reform. This includes assessory companies, lighter companies, bong companies and a long, long list of others.

The Dutch seed companies themselves represent a powerful and influential piece of the niche – particularly because it is their innovative strains that are showing up in commercial rec markets globally. They are also doing a great deal, mostly individually, to forward educational efforts, strain diversity, and even raise funds for research.

In the immediate term, no matter what market you are operating in, however, official and sanctioned cannabis cultivation and manufacture has definitely begun to kick up the industry if not conversation a notch. This impacts all kinds of equipment manufacturers and processors – starting on the industrial end.  This is not just to support home grow experiments where cannabis is illicit for any reason. These are also supply chains that support the semi-professionalizing industry in Spain and growers in the Netherlands.

Add into this mix distributors of every kind of equipment needed under the sun. Even now, there are enough players in this market – from larger entities to still more mom and pops, to fill a professional Expo hall in Berlin. Headshops here may not still have a realistic hope of applying to sell weed anytime soon, but every decent sized town in Germany has at least one – and usually flavours on a theme.

A subset of this conversation is of course already developing. Is a Spanish grower or a Dutch breeder really “the industry?”

That really depends on who you ask. On one level, the answer is absolutely yes. On another, there is clearly a new dividing line forming here between licensed and unlicensed entities. What that license is – whether it is a grow, import, manufacture or distribution permit – does not seem to matter. The process of applying and qualifying for the same is a professionalization course in itself. And there are those who will go this path and those who will not.

Because Europe will be dominated so much by its first medical focus, it is also the people and entities that establish themselves in this licensed medical environment who will have a clear upper hand in just about every other discussion going forward.

Europe’s Industry Is Leaving Behind Mom and Pops

The hopes that many, particularly patients expressed just a few months ago, was that Germany had the potential to be a new Colorado. That was never seriously in the cards. The honours locally, in fact, may go to Switzerland on that score. The “tax and regulate” movement has gotten a huge bump in the arm thanks to the rise in popularity of both low THC pot and the proliferation of legal places to buy it.

However reform here is making an impact across the continent. Even in Spain, which appears to be trying to emulate the Dutch model, things are definitely professionalizing as legalization efforts may give local authorities more control over licensing, production and taxation. This in turn, will formalize the Spanish growing scene. While this may not be a national system (as is likely to happen in Holland) both country’s industries are moving up the scale.

It is not Kansas anymore. That said, there are plenty who would argue it never was.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Marguerite Arnold

Marguerite Arnold is a veteran investigative and markets journalist, American expat and author. She has covered the cannabis industry from Germany for the last six years. Her book, Green: The First Year of Modern American Cannabis Reform about the American market in 2014 has just been republished as she is writing the sequel about Europe and the global revolution this year. Green II: Spreading Like Kudzu will be published in 2020. She is also a noted technologist and entrepreneur. Her blockchain-based digital prescription platform MedPayRx was just shortlisted by the German Ministry of Health as one of the "Top 20" use cases for blockchain in healthcare.

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