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Exploring the adult-use cannabis market in Europe

Home » Exploring the adult-use cannabis market in Europe

Prohibition Partners European Cannabis Report: 7th Edition explores recent developments in the European cannabis market, summarising that commercial legalisation of adult-use cannabis in Europe is likely inevitable in the next five to ten years. 

2021 saw a number of positive developments for cannabis across Europe. Malta legalised home cultivation, and Germany, Luxembourg and Switzerland all announced progressive changes to cannabis legislation. 

Now, also having one of the highest numbers of medical cannabis patients, Germany is earmarked to be the biggest cannabis market outside of the US. With Denmark and Portugal also having cannabis legislation change on the horizon, and adult-use trials being carried out in the Netherlands and Switzerland, the future for Europe is looking green. 

Describing Europe’s cannabis market as having “multi-billion dollar potential”, the Prohibition Partners report identifies some of the business opportunities available as the markets develop. 

The German opportunity

With the announcement from Germany’s incoming coalition in December 2021 that it intends to legalise adult-use cannabis, the German market currently has a promising outlook. 

Noting that Germany is the single largest country in Europe in terms of economy and population, the report highlights the country has the largest opportunity for cannabis markets in the long term.

Read more: Curaleaf International on the growth of the European cannabis market

Analysis in the report shows that an estimates 3.6 million people in the country consume cannabis each year, with black market sales suspected to reach €3bn annually and the legal medical market sitting at €235m. Prohibition Partners states that it estimates legal recreational sales will begin in 2024 or 2025.

However, barriers still remain. The report reminds readers that the current agreement is not legally binding and that “the only real consequence for failure to deliver on the promise of legalisation is considerable reputational damage”. 

The report states: “No government in Europe, nor arguably in the world, has established national laws that allow for adult-use cannabis legalisation which have respected international conventions to the satisfaction of the INCB. 

“Given Germany’s position as a leader towards unity in Europe and further afield, it is likely that these obligations will present a particularly high barrier to legalisation for German regulators.”

Market sizing

The report points toward Switzerland as opening up the first sales of adult-use in Europe by the end of 2022. It highlights that the growth in this market will be directed by the number of trials that will be set up over the course of the forecast period, estimating an average of around one per year.

Read more: New Frontier Data report explores cannabis growth and market trends

Regarding the Netherlands, the report states that an important assumption is that the market will switch quickly to legal sales given coffeeshops are already the main point of access to cannabis for the majority of consumers.  

It states: “We project conservative growth, allowing for some spillover from neighbouring municipalities, and taking into account growth rates from early-stage markets in North America.” 

By 2026 it projects that sales for adult use will reach nearly €500,000 in the Netherlands by 2026, whilst reaching just €100,000 in Switzerland by this time.

Additionally, the report has split its sales projections for the legal adult-use market in Germany into three different scenarios. Under these, it estimates that sales will reach between €16,965 and €944,020 by 2026.

Europe’s outlook for Cannabis

Much of the current moves toward progressive legislation change are driven by a desire to move consumers away from the black market. With an estimated 25 million people consuming cannabis each year on the continent – a likely underestimation due to underreporting – the European cannabis market is estimated to be worth around €11.6bn.

With 7.6 per cent of the population consuming cannabis, it is no surprise that public opinion on cannabis generally favours allowing adult-use, with 23 per cent supporting full legalisation. 

The report states: “It can be expected that this number will increase as the results from North America, as well as the trials in Europe, provide further data on the safety and success of regulation there.”

It is noted that moving forward, business strategies for the market must be built around current legislations, watching as the legislative landscape adapts and evolves. The report suggests that the adult-use market is likely to be fragmented and feature small players initially, with later acquisitions from larger players later down the line.

It states: “…proof of concept and a clear path towards profitability will be far more important than in the past, as investors are keenly aware of the harm caused by premature expansion in North America. 

“Early movers have the opportunity now to establish relationships with business networks as well as regulators, to ensure they acquire the first licences or partner with those who do.”

To discover more about potential cannabis business opportunities in Europe, please visit the report by clicking here.

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