Increased Cannabis Demand in Europe Amidst COVID-19
By Noah Tomares, Research Analyst, New Frontier Data
In April, during the Global Cannabis Town Hall hosted by New Frontier Data, Chief Knowledge Officer John Kagia detailed how the European cannabis market serves an estimated 42.6 million people (5.9% of the population) throughout 28 European countries. Those regular consumers of cannabis will annually spend an estimated 62.7 billion euros (USD $68.5 billion) between both the regulated and unregulated markets.
Having recognized how the COVID-19 pandemic will hamper legalization efforts across Europe, with significant delays likely driving some consumers toward the unregulated market, a special report from the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) confirms some of the concerns.
Covering three active darknet drug markets from January to March 2020, the report identifies an increase in the number of sales of cannabis products among common purchase-weight categories (1 gram – 1 ounce). It appears that as concerns about COVID-19 grew and countries began initiating lockdown measures, consumers stocked up on cannabis products. The estimated value of cannabis products sold via Cannazon, a market devoted to cannabis products, reached approximately 4.3 million euros between January and March 2020, representing a volume of 1.6 metric tonnes.
Those figures are unsurprising; by comparison, a similar spike in sales was seen in the United States, as consumers apparently stocked up in anticipation of government-mandated sheltering in place. While dramatic early spikes subsequently flattened to a pattern of plateau, it may be instructive to note why consumers may be driven to stockpile cannabis products.
The most popular reasons cited by cannabis consumers for their purchases include relaxation, stress relief, and stress reduction. European CBD consumers likewise cited such reasons for consumption (e.g., pain management, relaxation, and stress relief). As consumers have now been in lockdown for months, both cannabis and CBD can be expected to remain in high demand among those seeking relief during lengthy relative isolation.
While alcohol is popularly advertised and commonly viewed as a social drug, a majority (52%) of cannabis consumers opt to consume independently. Noting such, cannabis consumption behaviors may not be substantially disrupted during prolonged social isolation, meaning that consumer demand for cannabis during the pandemic will likely persist unaffected.
Given the current economic and social uncertainty, cannabis may be viewed as a source of relative stability for investors as well as a potential source of additional revenue for countries which advance medical and recreational initiatives. Despite the recent incidents of increased unregulated market activity, some expect the pandemic ultimately to benefit legal markets.
As Mitch Baruchowitz, managing partner at NY-based Merida Capital, explained, “what we do know is that people who are going to be locked up in their houses would prefer cannabis to alcohol if they consume both as one of their vices.”
He added that “we’ve found out some fundamental things about cannabis: People will stock up if they feel like they might not have access to it. They’re deeply concerned about their access to good flower.” He said that their uncertainty has caused a shift away from illicit markets to legal dispensaries as consumers doubt whether an illicit dealer will be able to maintain supply or preferred products.
“I think that really does make it not just recession-proof,” Baruchowitz concluded, “but global-crisis-proof.”