As the US cannabis industry faces uncertainty due to federal legalization being stalled, many companies are turning to Europe as a new market for growth. With more than 25 countries having some form of cannabis legalization or decriminalization, the EU is poised to become a $50 billion market if reform spreads across the continent.
California-based vaporizer hardware manufacturer Active, which generates over $100 million in annual revenue, has already expanded its business to the UK and Germany. The company’s CEO, Alex Kwon, believes that Europe could easily grow to 20% of its sales, and is currently negotiating a deal with an EU brand to further expand its European business.
The EU’s cannabis market is expected to grow 115% over the next three years, compared to 44% growth in the US. The lack of federal prohibition in the EU allows for easier transportation of products across borders, making it an attractive market for US companies.
Massachusetts-based Curaleaf is the largest US player in Europe, with a presence in the UK, Germany, Italy, Portugal, Spain, and the UK. The company’s international growth has dwarfed its US operation, with revenue growing 72% last year to $105 million.
Cookies, a cult weed brand, has also expanded internationally, selling cannabis in the UK, Germany, Israel, and Thailand, and is about to launch sales in Australia. The company’s president, Parker Berling, believes that the international sector is the fastest-growing part of the company.
London-based marijuana-focused private equity firm Artemis Growth Partners is also doubling down on Europe, with plans to invest up to $50 million more in the region. The firm’s cofounder, Will Muecke, believes that the EU is crushing it and sees an opportunity to invest in the region.
However, not everyone is bullish on Europe. Kristoffer Inton, an analyst from Morningstar, believes that the flood of interest from US and Canadian companies is not sustainable and that the market could eventually become oversaturated.
Despite the uncertainty, many US companies are betting on Europe as a new market for growth, with some seeing it as a potential $50 billion market that could eclipse the US. As the EU’s cannabis market continues to grow, it remains to be seen whether these companies will be able to capitalize on the opportunity.
