According to a new estimate, the European cannabis market could rise against all odds at a compound annual growth rate (CAGR) of 67.4 percent to 3.2 billion euros ($3.75 billion) by 2025.
This comes as a surprise, given that the regulatory and functional landscape in Europe is equally as fragmented as it is in North America. Another crucial data point linking both regions: the illicit market is a competitive factor. According to Europol, cannabis spending totals €9 billion per year, with more consumers than ever before home-growing cannabis strains from head shops and online retailers such as Zamnesia. However, things are moving on the legal side of the business — it appears that medicinal cannabis is still gaining traction, and it is only getting stronger. According to market intelligence firm Prohibition Partners, roughly €354 million in unauthorized medical cannabis will be sold in Europe in 2022, with this figure predicted to climb to around €2.3 billion by 2026.
Germany’s anticipated legislation is also encouraging investment in the sector. According to Prohibition Partners’ European Cannabis Report: 6th Edition, 60,000 Europeans obtained access to cannabis medications for the first time in 2020, bringing the total to 185,000 patients. According to the report’s estimations, Europe’s medical cannabis market will reach 406 million euros by 2021, representing a 75 percent increase over 2020.
Because of progressive legislation and a large, increasingly affluent population, Germany is Europe’s leading medicinal cannabis consumer. It will account for more than half of the European market by 2024 and be worth over 840 million euros. As a result, medical cannabis imports into the German market climbed by 37% last year, totaling 9.3 tonnes of product. By 2025, countries like France and the United Kingdom will have developed patient access to medical cannabis, and populous European nations such as these will account for a sizable share of the European market.
If rules continue to evolve as expected, the UK medical cannabis market might grow faster than any other country in Europe by 2025. Because adult-use cannabis is still illegal in Europe, the demand for legal cannabis products in Europe is primarily medicinal. However, this equilibrium is projected to shift over the next four years as additional countries consider legalizing recreational-use cannabis. According to Prohibition Partners’ analysis, numerous European countries, including the Netherlands, Switzerland, and Germany, could legalize adult-use cannabis by 2025. As a result, adult-use cannabis sales might be valued at more than 500 million euros by 2025.
This medical and regulated adult-use cannabis evolution will contribute to exponential growth over the following four years. The European cannabis market is estimated to be worth 3.2 billion euros by 2025. “Europe is beginning to realize its potential as the world’s leading cannabis market,” said Stephen Murphy, co-founder, and CEO of Prohibition Partners. Since the first edition of The European Cannabis Report was published four years ago, enormous progress has been made for patient access and cannabis education. We are only at the very start of our journey of cannabis in Europe, but there is irrefutable momentum towards becoming the world’s largest cannabis market, it is only a matter of time.”
A report author and analyst at Prohibition Partners, Conor O’Brien, stated, “The European medical cannabis market is beginning to blossom. While competition is heating up for producers and suppliers of medical cannabis in Europe, many opportunities are still open for businesses to embed themselves in niches of the value chain before the market becomes more established.”
Germany’s anticipated legislation also encourages investment and mergers and acquisitions. “Our belief is that M&A will be front of mind for all legal cannabis operators. The difference in Europe is that there is opportunity for non-cannabis players to potentially get strategic and attempt to enter the market through an integration of cannabis as a CPG [consumer packaged good] or pharmaceutical-grade option,” said Todd Harrison, founding partner at CB1 Capital Management.
The fact that medicinal cannabis is not illegal at the federal level in the EU is also favorable for producers and operators. It allows enterprises to sell their goods across borders legally. “This means that you can produce cannabis, for example, in Portugal, and sell to any EU country as long as you have export/import licenses. Hence, cross-border commerce in Europe is relatively fluid, meaning companies can scale relatively quickly if they know what they’re doing,” said David Bonnier, founding partner at Enexis AB.
The path to success for cannabis in Europe is lengthy, but the plant is gaining unstoppable momentum as it continues to dictate market trends across the continent.
