With federal cannabis legalization in the United States stalled, American cannabis companies are turning their attention to Europe, where regulatory conditions and tax structures appear more favorable. The European market is anticipated to grow substantially, potentially reaching $50 billion in annual sales as more countries adopt legalization measures.
Alex Kwon, CEO of California-based vaporizer manufacturer Active, has been expanding into the European market since 2021. Originally entering the UK, where medical marijuana was legalized in 2018, Active now generates over 5% of its revenue from European cannabis businesses. Kwon noted that his company is negotiating new deals that could elevate European sales to 20% of their total revenue, underscoring the potential for growth in this market.
Currently, the European cannabis market is relatively small, with expected sales of approximately $1.2 billion this year. However, projections indicate it could grow to $2.6 billion by 2028 and reach $6 billion within a decade. Germany, the European Union’s largest economy, had about $500 million in cannabis sales last year and is on track to approach $1 billion by 2025. Meanwhile, the UK, which operates independently from the EU post-Brexit, has a medical market valued at around $255 million.
Other countries in Europe are also making strides in cannabis reform. The Netherlands and Switzerland are testing recreational marijuana programs, while Poland and the Czech Republic have launched medical initiatives. Malta and Luxembourg currently allow adult-use cannabis, and France has proposed medical legalization measures.
In contrast to the U.S. market, where 38 states have some form of legalization, the European cannabis industry is still developing. The U.S. cannabis market, valued at $32 billion last year, is projected to grow to $46 billion by 2026, representing a growth rate of 44%. In comparison, the EU market is expected to grow at a rate of 115% during the same period. Additionally, U.S. cannabis companies face restrictions in transporting products across state lines, while European companies can cultivate cannabis in one country and distribute it across the continent.
Curaleaf, one of the largest U.S. cannabis operators, expanded into Europe in 2021 by acquiring Emmac Life Sciences for $286 million. This acquisition allows Curaleaf to tap into the European market, which has shown substantial growth. Curaleaf International generated $105 million in revenue last year, marking a 72% increase from the previous year, while its U.S. operations experienced a slight decline.
Will Muecke, co-founder of Artemis Growth Partners, a private equity firm focused on cannabis, stated that their investment strategy has shifted towards Europe. Since 2022, Artemis has invested about $25 million in European cannabis companies, and Muecke sees potential for further investment in the region.
Despite the optimism, some analysts caution against the influx of U.S. companies into Europe. Kristoffer Inton from Morningstar expressed concerns that the current interest might not be sustainable, suggesting that the market could face challenges similar to those experienced by Canadian companies post-legalization.
As the European cannabis market evolves, it presents both opportunities and risks for American companies seeking to capitalize on more favorable regulatory environments. With the potential for significant growth, many businesses are positioning themselves to benefit from the changes in Europe’s cannabis policies.
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