As the US cannabis market remains stalled due to federal legalization issues, entrepreneurs are turning to Europe for a new “green rush.” With more than 25 countries having some form of cannabis legalization or decriminalization, the EU is poised to become a $50 billion market, according to Whitney Economics.
Alex Kwon, CEO of California-based vaporizer hardware manufacturer Active, has seen a significant increase in sales to cannabis companies in the UK and Germany. “We started with a toe in the European market, but now we’re diving in,” Kwon said. Active’s revenue from European sales is expected to reach 20% of its total sales.
The EU’s cannabis market is expected to grow 115% over the next three years, compared to the US market’s 44% growth rate. The EU’s advantage lies in its ability to transport products across borders, whereas US companies are limited by state-by-state regulations.
Companies like Curaleaf, the largest US player in Europe, are expanding their operations in the EU. Curaleaf’s international revenue grew 72% last year, dwarfing its US operation. Cookies, a cult weed brand, is also expanding internationally, with sales in the UK, Germany, Israel, and Thailand.
Private equity firm Artemis Growth Partners is doubling down on Europe, investing $25 million in European companies since 2022. “Our European strategy is crushing it,” said Will Muecke, the firm’s cofounder.
However, not everyone is bullish on Europe. Analyst Kristoffer Inton from Morningstar warns that the influx of interest from US and Canadian companies may not be sustainable. “If everyone sees it as a Godsend, it’s probably going to not be a Godsend for anyone,” Inton said.
Despite the challenges, many believe that the EU’s cannabis market has the potential to eclipse the US market. “Europe is the battleground where cannabis is going to be won—it’s the gateway to the rest of the world,” said Kwon.
