The European CBD market is expected to boom over the next few years and grow over 400% by 2023. The market was worth an estimated $318 million last year and is poised to bring in nearly $1.7 billion USD over the next four years, despite complex regulations and a lack of product availability and consumer awareness.
According to leading market intelligence firm Brightfield Group, the current lack of CBD product availability in Europe offers "a great opportunity for developed brands to enter and expand through Europe with far less competition that we're seeing in the US."
Companies like Aurora Cannabis (TSX:ACB) (NYSE:ACB), OrganiGram Holdings Inc. (TSXV:OGI) (NASDAQ:OGI), StillCanna Inc. (CSE:STIL) (OTCPK:SCNNF) and ICC International Cannabis Corp. (CSE:WRLD.U) (OTCPK:WLDCF) are already signing partnerships and acquiring assets in Europe to gain their share of its CBD market.
Canadian cannabis giant Aurora entered into the European CBD market in September 2018 when it acquired the continent's largest producer, processor, and supplier of certified organic hemp and hemp products, Agropro UAB.
StillCanna also gained its share of the European CBD market last year when it acquired Borganic Consulting, a deal that supplied the company with an anchor customer and joint venture partner, UK-based premium CBD retailer DragonFly Biosciences LLC. StillCanna has since acquired a number of CBD assets in Romania and Poland and has inked additional supply deals.
OrganiGram joined the European CBD market when it signed a $5 million deal with European hemp and CBD producer Eviana Health Corporation (CSE:EHC).
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Meanwhile, ICC International Cannabis has cultivation, extraction, formulation and distribution assets in Denmark, Poland, the UK, Switzerland, Germany, Bulgaria, Greece, Macedonia, Italy, and Portugal.
As regulations loosen throughout the European Union (EU), more cannabis companies will likely follow suit, although these early market movers definitely have the upper hand.
European CBD Regulations Remain Tricky to Navigate
At present, the European Commission classifies hemp and hemp extracts as "novel food"—food that hadn't been consumed to a significant degree by humans in the EU prior to May 15, 1997, when the first regulation on novel food was enforced. Being classified as a novel food means that any products that fit into this category must undergo a lengthy process to get approved.
To make matters worse, in February, the European Commission modified the definitions for cannabis sativa and CBD in the Novel Food Catalogue. The change meant that all CBD extracts, hemp-derived CBD products, and any other plants containing cannabinoids would be classified as a novel food and would, therefore, have a difficult time entering the EU market.
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Despite this, the European CBD market is getting a lot of support elsewhere. One example is the European Food Safety Authority (EFSA), which is considering allowing CBD to be used in food supplements with a daily intake up to 130 milligrams. The World Health Organization (WHO) has also recommended that CBD no longer be subject to international control, while the European Parliament voted on a resolution to help advance medical cannabis in the countries that form the European Union.
The UK is ahead of the game, having already classified CBD as a medicine in 2016, although products are subject to licensing. The UK and Austria are the largest markets in the European CBD space and are projected to reach $440.8 million and $137.4 million, respectively, by 2023. The UK and Austria won't be at the top for long, however, as Brightfield Group expects that Germany will take the top spot in the European CBD market in the next four years.
The UK's stance on CBD is good news for StillCanna and its JV partner DragonFly. It also bodes well for Marijuana Company of America, Inc. (OTCQB:MCOA), whose wholly owned subsidiary hempSMART Ltd. officially launched its industrial hemp-formulated CBD products in the UK in March.
It will be exciting to see how the European CBD market develops as regulations loosen across the EU. Investors will also want to keep an eye out for the EFSA's decision regarding CBD food supplements, as it will likely give the market a boost.
Featured Image: Pixabay
