Many See Europe – Not the US – as the Big Market in the Coming Decade
Monday Futurewatch – Four major Canadian cannabis companies announced quarterly results last week, but the future of those companies is perhaps the bigger story. All four are eyeing expansion into Europe where the market could grow to over $150 billion (CAD) by 2030. This is higher than the projected market in the United States, which one analyst pegged at about $75 billion (USD). Currently, the cannabis market in Europe is doubling in size every two years.
Aurora Cannabis Inc., for example, has 10 subsidiaries around the world – and five of them are in Europe. Pan-European company Aurora Europe will oversee operations in Germany, Denmark, Malta, Poland, and Italy. “The EU [is] going to be very, a very rich market for us,” chief corporate officer Cam Battley told analysts.
These types of global operations will likely be a network of integrated companies, which each specializing in niche markets. This is similar to tech-based companies like Xerox and Lockheed Martin, which conduct R&D at some facilities while others are sales and marketing. For example, Tilray Inc. is creating a global network of producers and marketers. “Tilray Portugal will focus on supplying the global medical market, primarily in the EU. Tilray Germany and Tilray Australia and New Zealand are similar in that they focus on importing products and on sales and marketing,” said CEO Brendan Kennedy.
Chronos Group Inc. and Canopy Growth Corp. also have expansion plans for the European cannabis market. “I think Europe is actually the most, or almost the most, exciting activity going on. So we’ve been busy in Germany,” said Canopy CEO Bruce Linton. “I think we’ve had about 1,000 pharmacies in Germany move our product and we’re now in the process of seeking approval for upgraded formats of the product. We have plants in the ground in a couple of countries in Europe already in greenhouses.”
Canadian Creating the Global Gold Standard of Cannabis Production
It’s clear that the Canadian cannabis market in itself will be relatively small. However, legalization of cannabis in Canada provides Canadian companies with a distinct advantage as the new world market grows. Early market experience, strict regulations, a large enough domestic market to launch a successful business, and legal ability to conduct medical research and strain experimentation will all contribute to Canada creating the Gold Standard of cannabis production.
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