Canada became only the second country to legalize recreational cannabis when it did so in October 2018, following the footsteps of Uruguay, which broke with the status quo in 2013. While the discussion on legalizing cannabis has been ongoing around the world for decades, that conversation has definitely been stepped up in recent years as other nations look to the example set by Canada and Uruguay.
Europe, traditionally known for its liberal attitudes, is a massive potential market for cannabis firms, given that the EU has a total population of over 500 million. It's very difficult to judge the true size of the European cannabis market, given that each EU member state will be left to themselves decide on the legality of marijuana, but some reports suggest that the market is primed and ready for harvest and could be worth as much as €123 billion by 2028.
With Canadian cannabis companies already set up for international dominance, given that they have been given a headstart into the legal market, many are betting big on future changes to legislation across the Atlantic. Here, we'll take a look at three Canadian pot stocks attempting to crack the European market before it even gets going.
Canopy Growth (TSX:WEED) (NYSE:CGC)
Viewed by many as the industry leader in Canada, Canopy is perhaps the most recognizable name in the cannabis game. Since its acquisition by Constellation Brands (NYSE:STZ), Canopy has made some pretty big investments in the European market. Last month, the company announced a $115 million USD plan to expand production in EU states over the next two years, including two new production facilities under its Spectrum Cannabis Europe division to be built in Italy, Greece, or Spain.
The company is close to completing construction on a facility in Denmark, and by 2020, the new infrastructure will allow Canopy to produce tons of cannabis every quarter, and expansion beyond that is “unlimited” because of the availability of land, according to its managing director in Europe, Pierre Debs. The company has also purchased Spectrum Therapeutics, a UK medicinal cannabis firm, which will also be the exclusive supplier to Luxembourg—the first EU nation with plans to legalize cannabis.
Aurora Cannabis (TSX:ACB) (NYSE:ACB)
As the world's second-largest cannabis company after Canopy Growth, Aurora Cannabis has also made some serious moves in Europe to ensure it keeps hot on the tails of its big industry rival. Aurora has an interest in 25 countries worldwide for export, research, or cultivation operations, and 14 of these are located in Europe. The company has three major production facilities across the water, one of which is in Portugal and is expected to produce 4,000 kilos per annum with phase 1 of development to be completed by Q3 2020.
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The other two, Aurora Nordic 1 and 2, are located in Denmark. These are both joint ventures with tomato producer Alfred Pedersen & Son that'll see existing greenhouses retrofitted for cannabis production, with Aurora 1 already licensed for production and capable of producing 8,000 kilos per year. Nordic 2 is the really eye-catching investment, and while it is awaiting licensing, it will produce a massive 120,000 kilos per year. Once these sites are fully functional, Aurora Cannabis should be the biggest single pot producer in Europe.
MediPharm Labs (TSX:LABS) (OTCQX:MEDIF)
MediPharm is a Toronto-based cannabis extraction firm that specializes in the production of purified, pharmaceutical-like cannabis oil and concentrates and advanced derivative products. The company is one of two leading extraction firms in cannabis, alongside Valens GroWorks (TSXV:VGW) (OTCQX:VGWCF), which are expected to gain massively with the 2.0 market in Canada. However, that has not stopped the firm from casting its eyes beyond these shorts, and despite having a far smaller market cap than Canopy and Aurora, MediPharm has equally big ambitions.
In September, the company entered the European market by signing a distribution deal with German medicinal firm ADREXpharma, becoming the first extraction-only company with a supply agreement for export to Germany. The deal will see MediPharm Labs supply the German market with a range of high-quality cannabis concentrate derivative products, including THC and CBD oil, for sale across 20,000 pharmacies in Germany.
The Takeaway
Complete recreational legalization across all of Europe could be years away, but there's no doubt that laws and attitudes are being relaxed in a way that suggests the opening of the European cannabis market is a question of when and not if. Medicinal sales are already on the rise, and with Luxembourg set to fully legalize pot, many of its neighbors and fellow member states may not be far behind. There are plenty more companies making moves in the continent other than the three above; let us know if any others have caught your eye!
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Featured Image: DepositPhotos © VadimVasenin
