Marijuana’s hazy legal status in Europe has made cannabis strictly a niche industry until now. Tolerated though not strictly allowed in many countries, and of course traditionally associated with drop-outs, the drug hasn’t featured in too many mainstream economic forecasts.
Now that’s all changing, and changing fast. A report released this year by London-based Prohibition Partners predicts the European cannabis market will reach €123 billion by 2028.
The company, which was founded in 2017 with a mission to open the international cannabis industry through reliable data and intelligence, forecasts that €58 billion of that will be for medical use, while €65 billion will be for increasingly legal recreational use, as well as the enduring not-so legal side.
Prohibition Partners confidently projects Europe will be the world’s largest cannabis market over the next five years, as regulators accept that this complex plant has many more uses than its place in our cultural life tends to suggest.
The cannabis sativa plant contains more than 100 different types of compounds that are believed to have medicinal value. They have been touted as treatments for a variety of ailments from childhood epilepsy, multiple sclerosis, the nausea associated with chemotherapy, chronic pain, migraines and sleep disorders.
Extracts known as cannabidiols, which can act as a mild relaxant but without the associated euphoria induced by fellow cannabis compound tetrahydrocannabinol, are also being used in the wellness industry, incorporated into tonic drinks, body oils, supplements and even lip balm.
Canada blazed a trail, making cannabis fully legal both for recreational and medicinal purposes in 2018, creating a whole new industry of companies researching, licensing, growing and financing marijuana- related ventures. In Canada, cannabis industry sales are projected to be higher than liquor and wine in 2019, Prohibition Partners says.
In the US, where medical marijuana is legal in 33 states and its use as a recreational drug is allowed in ten, the cannabis industry is expected to outpace manufacturing job creation by 2020. With one eye across the Atlantic, policymakers in an increasing number of European countries are now opening up their markets. In 2018 alone, six countries advanced legislation to make medicinal marijuana available; some form of medical cannabis is now legal in 23 European countries and a further 12 are decriminalising its use.
As a result, the growth of the European cannabis market is, er, on fire. In the last 12 months alone, the European cannabis industry has grown more than in the last six years, spawning a wide array of startups. For example, Ananda Developments and Sativa Investments are both listed on the London Stock Exchange with a mission to invest in cannabis-related companies.
Outside the medical market, cannabis is also creating a buzz in the food and drinks industry, where giants such as Constellation Brands, the maker of Corona beer, and Molson Coors are eyeing its potential. Constellation Brands is so convinced that it invested $4 billion in Canopy Growth, Canada’s largest medical cannabis company.
While industry gets excited over the heady possibilities, there are still hurdles to overcome. The term legalisation is often overstating the case, with the use of cannabis prescribed only for a highly restricted number of conditions in many countries. Then there is the question of adequate supply and access, with just a few insurance providers agreeing to cover the costs of medical marijuana.
To achieve its full potential, industry experts want a harmonised approach and that may come as early as this year. In January, the director general of the World Health Organisation, wrote to the United Nations with the recommendation that cannabis be re-classified under its international drug control framework to make it easier to trade the drug for medical and scientific research.
The European Union so far has been lagging in providing guidance, though the European Parliament took a step forward in February, passing a resolution on the use of cannabis in medicine. While not legally binding, the vote is expected to stir the European Commission into regulatory action. When that comes, there’s little doubt that EU-wide legislation would light a fire under an already hot market.