As CBD Market Grows, Retailers Seek Footholds in European Cannabis Markets
By Oliver Bennett, Special Contributor for New Frontier Data
Europe’s cannabis market is less mature than in the U.S. and Canada, dispensaries and outlets increasingly emerging in newly legalised territories have become one of the biggest and most exciting business trends of the past decade.
What might Europe learn from the other side of the Atlantic? After all, while the U.S. industry has suffered from legal ambiguities stemming from a nationwide regulatory patchwork between federal and state laws, Europe has had opportunity to create a more unified industry, with growing numbers of pan-European organisations like the European Industrial Hemp Association (EIHA), the newly founded European Cannabis Advocacy Network (ECAN), and the European Union (EU) itself, which covers 28 of Europe’s 44 countries (the latter including Russia and assorted microstates).
Nevertheless, the European cannabis landscape, too, remains quite fragmented. Yet even with the depredations of COVID-19 disrupting the continental and global economies , there is much yet to attract investors, including demand from more than 740 million people in Europe and throughout three key markets – medical, lifestyle retail, and recreational – that are still chronically unfulfilled, with the third of those being largely illicit for the near future.
All carry high stakes: Overall, Europe’s total regular consumers of cannabis are projected to spend 62.7 billion euros (USD $68.5 billion) this year (between both the total European regulated and unregulated markets). The USD $55 billion EU cannabis market alone serves an estimated 42.6 million people (5.9% of the population) throughout its 28 countries.
Also, Europe has shown a great proclivity for CBD; as New Frontier Data shares in the EU CBD Consumer Report: 2019 Overview, 46% of Europeans view CBD favourably, with up to 77% of those surveyed believing that CBD should be accessible in some way.
Still, obstacles remain to be overcome regarding cannabis delivery in Europe. The dispensary model used in the U.S. and Canada has not been taken up, so medical cannabis tends to be delivered through pharmacies – as well as through social clubs in countries including Spain and Portugal and on the grey and illicit markets. Recreational cannabis is sold through a limited and compromised group of outlets, including coffeeshops in the Netherlands and a few other decriminalised places such as Freetown Christiania in Copenhagen, those aforementioned social clubs of Barcelona (and elsewhere in Spain), and with some low-CBD combustible retail in Italy and elsewhere.
While some in the U.S. have looked to the Dutch coffeeshop model as an exemplar of craft-brewery-style “experience” retail (such as splicing of cannabis lounges with attached dispensaries), a few coffee shops in Europe have looked to the North American model for inspiration; a few years ago, the Boerejongens chain in the Netherlands started to offer a more chic environment in which to enjoy a cannabis and seed bank operation in a setting compared to an Apple Store’s in its styling.
In its various forms, CBD in Europe has largely been sold into lifestyle markets, and while most CBD retail remains online there is a significant boutique-style market aesthetic, (particularly in the wellness and nutraceutical realms). Even there, complex labelling requirements and a bewildering plethora of brands has led to a rise of curated CBD selectors such as Handpicked CBD emphasising and promoting brands featuring certain benefits (i.e., being organic and pesticide-free).
Other kinds of retail experience have also started to grow in Europe. Since May, Barcelona — primed due to its liberal laws and cannabis clubs — has had a branch of Cookies, the lifestyle and cannabis brand from North America, with (singly named) cofounder and CEO Berner explaining how “We picked Spain as our first store overseas… Barcelona has been a place that cannabis consumers from all over the world gather and we thought it was a must to open a flagship clothing store.” Though cannabis-themed, it does not sell the drug in-store; Berner expressed hopes to start a branded cannabis club in the city, indicating intent to move into the recreational sector.
There is delivery innovation in Europe, too. In Prague, capital of the Czech Republic, vending machines with cannabis products have recently been located selling CBD oils, tinctures, cosmetics, hemp and edibles, along with a wide range of cold cannabis, hemp, and CBD drinks. The move has been predicated on a market in which half of all Czechs support legalisation, and shows a willingness to try new ideas. Beyond easing the load on shops, vending machines also offer anonymity, with compliance factors like age-verification being worked upon.
While the CBD retail industry is still struggling with the European Novel Food Regulation, it has had a fairly positive run in the continent, with CBD boutique settings in many big cities, and a presence among high street stores, multiples and online. In the medical cannabis space, there has been some emulation of the North American market, with investment in companies like Love Hemp offering CBD-based oils, edibles, cosmetics, and vaporizers in U.K. retail locations (including Holland & Barrett and WH Smith). The march to find contiguity across cannabis markets in Europe has not been easy, but as the pace picks up, retailers among the continent may be on firmer footing than those in the U.S.