Italy’s Market Potential Persists Amid Regulatory Snafus

By Oliver Bennett, Special Contributor to New Frontier Data

In the past decade, Italy has been relatively receptive as a country both to recreational and medical cannabis as well as CBD products. It has a large reported population (20.%) of cannabis consumers; according to 2017 data from the European Monitoring Centre for Drugs and Drug Addiction, 20.7% of young adults claimed to be users, and according to the United Nations (U.N.) Office on Drugs and Crime it ranks 12th worldwide for overall cannabis use. As a country with a population over 60 million – fourth largest in Western Europe – it is among the largest markets in the EU. The growth potential is vast, and as a temperate Mediterranean country with a thriving agricultural sector the potential for domestic cultivation is strong.

Accordingly, the Italian cannabis industry in recent years has been optimistic, most visibly so regarding the combustible sector. After hemp cultivation became legal in 2016, it opened up a large market developed for ”cannabis light” – i.e., low-THC hemp-derived cannabis flower – and Italy became the second-largest European market, with hundreds of outlets that some commentators referred to as Italy’s ”cannabis mania”.

Italy has also been a strong market for CBD products, boasting a national market of €786 million – 11% of Italians surveyed by New Frontier Data had purchased CBD products – and huge growth projections for a CBD market potentially worth €1.29 billion by 2025.

Cannabis was legalised for medicinal purposes in 2013, and though only allowed to use Bedrocan from the Netherlands until 2017, the army-owned Institute of Pharmaceuticals in Florence subsequently cultivated medical cannabis for medicinal use, to be followed by the inauguration of a bidding process won by Aurora Cannabis in 2018 – the year when Italy became the second-largest European medical cannabis market.

This year, however, Italy was subject to a contradictory set of decrees  which appeared to be a setback as it confused many in the domestic industry. First, the Ministry of Health classified CBD as a narcotic, meaning that CBD extracts and oils became illegal as of last month, and Italian customs began to warn retailers not to sell CBD products. Another decree, from the Agriculture Ministry, stated that extractions from hemp flowers were to be classified as agricultural products for medicinal use.

The two apparently contradictory decrees threw the country’s cannabis policy into disarray. The contentious decision to brand CBD as a drug was said to contradict the World Health Organization (WHO)’s recommendations not to include CBD in narcotics tables, and it also stirred fear in Italy that it would draw business from the domestic Italian CBD market and into the hands of pharmaceutical companies. Most specifically, it reportedly may incentivize the Italian market’s launch of Epidiolex from GW Pharmaceuticals – while still leaving loopholes including the nebulous status of smokable hemp flowers.

Opposition to the inconsistency came reflexively from within the country, with each Federcanapa, the Italian Hemp Federation, the European Industrial Hemp Association (EIHA), and the parliamentary group for the legalization of cannabis (a lobby of more than 70 cross-party Italian politicians), decrying discrepancies among the decrees.

A legal challenge was expected, and Italy’s Health Minister Roberto Speranza has subsequently issued a decree reversing the decision, followed by the lifting of Italy’s customs warning to retailers. CBD will now be reevaluated in that light – though fears linger that the European Commission will concur with classifying CBD as a narcotic – and it again illustrates  a prevailing regulatory confusion in the cannabis sector, even among governmental bodies in the same country. Also, despite the apparent turnaround, concerns remain that as medical cannabis in Italy must be dispensed by pharmacies directly to the patient, the complexities associated with the process will continue to drive patients toward the illicit market in order to meet demand.

There is another, more optimistic take – that Italy’s thriving hemp flower market will act as a signpost and usher cannabis’ recognition as an agricultural commodity. Cultivation has been discussed in the country before; back in 2016, Italy’s parliament debated allowing cultivation of up to five plants for private consumption, and the creation of social cannabis groups consisting of up to 50 growers. However, the proposed law was opposed by some political parties and the Catholic Church, reminding that Italy’s cannabis industry yet faces the nation’s underlying institutional conservatism.

In that light, though, it is notable that during the 1940s Italy ranked among the world’s largest hemp producers, and that Italy’s hemp cultivation  dates back to the Romans. That all changed after World War II when postwar hemp production was banned, but it serves to illustrate how Italy has climatically and historically been favourable to cannabis sativa and its derivatives. As it proceeds to iron out its legislative inconsistencies, Italy might do well to take some cues from its past.