European Cannabis: Key Takeaways from Global Cannabis Town Hall

By Noah Tomares, Research Analyst, New Frontier Data

Earlier this month, New Frontier Data presented an unprecedented global conference webinar, Global Cannabis Town  Hall: New Economic Realities, featuring a deep dive into the myriad market challenges manifested by the COVID-19 pandemic. During the daylong, seven-segment program, New Frontier Data’s Chief Knowledge Officer John Kagia was joined by various industry experts discussing the shifting conditions in global demand and potential impacts.

Per Europe specifically, Kagia noted New Frontier Data’s estimates of European consumers’ annually spending 62.8 billion Euros (USD $68.5 billion) on cannabis between the legal and illicit markets. That includes some 40 million regular consumers — representing approximately 6% of the adult population. More than one among three (37.6%) of European adults suffer from at least one condition that would qualify them for medicinal cannabis, representing about 320 million potential patients.

April has seen more than 70% of Europe under some form of lockdown order — accounting for nearly 500 million European citizens. Kagia noted how especially impactful stay-at-home orders have been for nations which had just begun to establish legal markets, or that were in the process of building their legal markets’ foundations (e.g., Germany, Italy, and Switzerland). He reasoned that the current crisis will likely result in a loss of momentum for those affected nations.

Arnaud Dumas de Rauly, CEO of The Blinc Group based in New York, noted how the pandemic has brought supply chain issues to the forefront of discussions. Since many companies rely on China-based suppliers for both vaping devices and raw materials, any lack of redundancies leaves businesses in jeopardy of critical disruptions in their supply chains.

Nick Pateras of Toronto-based Materia Ventures, and Stephen Malloy of PharmaRolly Holdings B.V. outside of Amsterdam, both noted how the supply of human capital was no less significant. They reminded that any facilities requiring experts to install equipment or maintain growth strategies could be rendered offline if placed under quarantine.

Boris Banas, cofounder and chief sales officer for CBDepot in the Czech Republic, discussed challenges associated with CBD’s novel food designation. A legislative change in January 2019 required that all extracts and cannabinoids — whether isolated or synthesized — be categorized as novel. Banas noted the lengthy review process and the uncertainty engendered when it comes to regulatory compliance.

Skirmantas Nikstele of Lithuania-based Aurora Hemp Europe mentioned that while its supply chain has not been disrupted, the company has seen revenue-expanding opportunities pass by unexplored. He also discussed the prospects of businesses weathering the crisis, and potential opportunities that may arise.

New Frontier Data’s Key Takeaways for Europe Amid the Pandemic:

  • Though European progress toward legalization and market activation will be disrupted in the near term, overall consumer demand for cannabis will remain unaffected.
  • Investors’ primary concerns include operating profitably, access to banking, and navigating industry regulations (e.g., the U.K.’s FSA Novel Food Designation).
  • Investors believe that cannabis will weather COVID-19 disruptions better than other sectors, and are particularly bullish about hemp/CBD and extraction processing.
  • Massive disruptions to Europe’s health-care system may lead governments to push for cost-containment measures, including consideration of medical cannabis as a lower-cost therapeutic option.
  • Interest in recreational legalization will grow amid an economic recession as governments seek new revenue sources.