Although we’re only two years in, this decade has marked some seminal breakthroughs in global cannabis regulation. A further 11 U.S. states voted for recreational access to cannabis, bringing the total number to 21 states nationwide. Mexico’s supreme court declared cannabis prohibition unconstitutional in June 2021, and a year later, Thailand became the first Asian country to decriminalize cannabis.
Across the Atlantic and by this year’s close, most Europeans will live in countries granting access to medical cannabis products like dry flower and oil. As Europe’s most prominent medical market, Germany has upped the ante with Olaf Scholz’s government announcing plans to legalize recreational cannabis by 2024. Inspired by this move, Czechia recently echoed this with plans to coordinate decriminalization alongside their German neighbors. These developments mark a period of significant and exciting reform in the continent.
When Germany passes recreational laws, it will take over from Canada as the largest legal Cannabis market in the world. In the lead-up to this historical moment, we keep our eye firmly on Europe and explore how reforms in the region’s medical cannabis industry have preceded this breakthrough.
Cannabis Regulation In Europe
Europe’s history with medical cannabis stretches far back to the Victorian era of the 1800s. After traveling east to Syria and India, Jacques-Joseph Moreau, a French psychiatrist, and Sir William Brooke O’Shaughnessy, an Irish doctor, were both inspired to treat their patients with cannabis. The two are synonymous with bringing the therapeutic use of Cannabis sativa to western medicine.
Unfortunately, fast forward a century later, most of Europe had enforced strict laws prohibiting the cultivation, distribution, and sale of cannabis. What was once heralded as a “wonder drug” and even prescribed to Queen Victoria to alleviate her menstrual cramps quickly became an outlawed, stigmatized, and widely feared Schedule 1-equivalent narcotic.
Changes to European cannabis regulation began slowly by the late 1970s, with harm reduction experiments in Holland. The Dutch model of regulating cannabis restricted legal sales to licensed retail spaces, which became the country’s famous cannabis “coffee shops.”
In 1991, Spain introduced their version of private legal consumption through its cannabis social club model. This allowed the growth and distribution of cannabis among registered members of private non-profit organizations and differed from the Dutch model since it did not permit commercialization.
By the early 2000s and influenced by evidence showing these early harm-reduction strategies worked, the decriminalization wave continued and occurred in countries like Luxembourg, Belgium, and Portugal. Another significant victory for medical cannabis advocates happened in 2010 when the UK government approved Sativex, a cannabis-derived treatment for multiple sclerosis, which became the world’s first cannabis-based medicine to gain market approval. Even more momentously, in 2018, the same group released Epidiolex, an epilepsy treatment which became the first cannabis medicine approved by the FDA.
By then, the positive results from harm reduction trials and historic global approval for cannabis-derived therapies later developed into more widespread adoption of European medical laws. As a result, over 400 million Europeans now have legal access to medical cannabis in various forms, with dry flower and oil making up the bulk of prescriptions.
The EU Medical Cannabis Market
Fifteen European countries now have medical laws granting access to cannabis within the specified limits of international and EU law. Geographically speaking, Europe has 44 countries, although only 27 of these make up the European Union. Although not all European countries have medical cannabis laws, the 15 countries that allow commercial cultivation are expected to sell a combined estimate of $2.3 billion worth of cannabis by 2026.
Germany is the current EU market leader, and home to more than 100,000 registered medical cannabis patients. Since the start of its medical market in 2017, it steadily increased its imports to more than 20,566 kilograms of cannabis extracts and flower in 2021 alone.
Elsewhere, Poland is another fast-growing medical cannabis market but remains significantly behind Germany. The latest figures released by the Polish ministry of health showed 9,261 patients received prescriptions by September 2021. However, the country is also facing product shortages due to struggles with inefficient local regulation and lengthy approval processes.
Other countries like Denmark, France, Italy, and Ireland also recently launched pilot schemes to assess the demand, viability, and framework of a regulated medical cannabis market. Each country has their own rules governing patient access and its lists of approved cannabis products. The lack of a consistent approach homogenized European framework for mandating medical cannabis across the continent means progress in the field is slow and subject to product shortages due to inefficient regulation and the challenges of navigating a newly emerging legal landscape.
Historically, Holland has dominated the export of local European-grown cannabis and, until recently, was the area’s leading producer. Known globally for its world-class horticultural expertise, Dutch growers took advantage of their country’s early progressive model of regulation to excel as pioneers and experts in cannabis cultivation.
However, since 2019 Dutch exports have not risen significantly, and distributors, now faced with increasing options from local European suppliers, are sourcing their cannabis products elsewhere.
Due in part to its excellent climate, affordable local labor, and progressive government regulation, Portugal has established itself as a leading destination for North American operators looking to develop a European presence. It joins Holland and Denmark as one of the region’s largest cannabis producers, exporting 16 tons between 2016 and mid-2022.
In the first half of 2022 alone, Portuguese authorities reported 4.3 tons of exported product to countries apart from Germany, including Israel, the UK, and Spain.
Capitalizing on Portugal’s progressive commercial regulation, Canadian company Tilray and U.S. company Curaleaf have built facilities since the government granted cultivation licenses in 2018.
So far, 20 licenses for the cultivation and export of medical cannabis products have been given, although it is estimated this will grow to more than 100 companies in the next few years. If this happens, it will cement Portugal as Europe’s leading producer of medical cannabis.
European Imports And Market Size
For years Canada and Holland were the two largest producers and exporters of medical cannabis destined for European shores. Canadian producer Tilray and Dutch producer Bedrocan took advantage of having some of the first medical cannabis licenses granted in their respective countries to develop leading production systems and to release the first products with medical cannabis authorization.
In 2019, the year after Canada legalized cannabis, it exported 4,370 kg of dried flower product, providing Germany with 52% of its imported flower. That same year, Holland exported 3,549 kg, providing much of the remaining German supply. In 2021 Aurora’s Danish facility threw its hat into the ring and effectively matched Holland’s exports that year by delivering 3,726 kg to Germany.
Since medical cannabis sales and imports began in Germany in 2016 and 2017, the market’s steady growth has shown no signs of stopping. Sales to pharmacies increased by 43% in 2021, with the average reimbursed prescription price coming in at an eye-watering $16 per gram. International producers are looking to supply part of this lucrative demand and are paying close attention to how medical markets are expanding in other European nations.
As this expansion in Europe takes place, increases in foreign production in places like Portugal, Australia, and South Africa have loosened Canada’s grip on the medical cannabis market. Demand for Canadian flower has fallen sharply, while demand for Dutch cannabis has stabilized.
To stay competitive in Europe’s emerging legal cannabis landscape, North American producers like Tilray, Aurora, and Canopy have chosen to establish local European supply chains and have set up extensive production facilities. Alongside U.S.-based Curaleaf, these companies are estimated to hold combined European assets worth US$620 million.
Despite progress in medical cannabis regulation, Europe’s patient numbers pale compared to the estimated 3.6 million medical cannabis patients in the U.S. Currently, only around 340,000 patients legally access cannabis via prescription. Even in the 15 countries with access to medical cannabis, many patients struggle for access due to a combination of bureaucratic or economic hurdles.
Access schemes vary between countries, but most European regulators offer treatment as part of existing healthcare systems. This means that all medical cannabis prescribed in Europe is under strict control and must meet the high standards of manufacture that govern other prescribed pharmaceutical treatments. However, navigating the bureaucracies associated with a nascent industry has weakened supply chains, hindered educational outreach designed to onboard new patients, and delayed patient access.
These guidelines, known as Good Manufacturing Practice (EU GMP), ensure a high degree of safety through an elevated level of quality control and medical supervision. They also present significant hurdles for releasing new products to the medical market. This means product approval and production and distribution licenses are subject to significant delays that vary between countries.
Ben Jackson works for a GMP-certified licensed producer in Portugal that was one of the first in the country to export dried flower to Germany. On the challenges of achieving compliance and growing pharmaceutical-grade cannabis, he told us, “The level of documentation and stringent specifications required to release non-irradiated high THC products to the German market is a continuous challenge clearly emphasized by the small number of facilities who can supply this kind of product to the market. It takes a lot of work to produce EU GMP-compliant medical cannabis. Still, through these stringent standards and regulations, we can provide medical patients with a safe and chemically consistent supply.”
The difficulty for producers and distributors to operate in the pharmaceutical field often leads to the limited availability of products. In addition, patients often face product shortages and inflated prices because of this ineffective supply chain regulation. Some countries like Poland and Holland also implement production tenders, the limit of which presents further difficulties for new producers looking to enter the field.
With the demand for medical cannabis estimated to grow and Germany already estimated a local demand of 400 tonnes annually, the need for improved regulation that streamlines patient access and meets their demand for cannabis products is urgent.
All Eyes On Germany
Despite having the most significant medical market in Europe and soon potentially the most extensive recreational market in the world, the road to cannabis legalization in Germany is riddled with legal obstacles.
International and European drug conventions that apply to the control of substances, including cannabis, stipulate that, as an EU member state, Germany must criminalize cannabis consumption unless within the accepted limits of prescribed medical use and licensed research purposes.
This means that if it wants to move forward with legalization, Germany must navigate complying with European law so that all future reform is legitimate. Apart from this, it also must ensure reform can be locally implemented while being politically viable. This is no mean feat, as illustrated by Uruguay, which took four years to go from legalization to its first commercial sales.
Although there are many reasons to celebrate, cannabis industry analysts echo the warning that changing the law is only part of the way to victory, with the actual test beginning in its implementation.
Marguerite Arnold is a journalist, consultant, and entrepreneur based in Germany. Discussing the opportunities and hurdles that Germany faces as it moves towards recreational reform, she says, “In Germany right now, the government is crafting recreational reform legislation that must be approved not only domestically but at the EU level. Such a change would then have to be implemented country by country. Then there is cross-border trade. The bottom line is that even if Germany legalizes in 2024, it will easily take a decade to normalize across the continent. It’s complicated, but it is now in the process of proceeding, which is exciting.”
Looking To The Future
Many in Europe’s industry are excited about the domino effect they predict in the region’s cannabis markets over the next few years. The most hyped actors draw parallels between Europe now and the U.S. in 2012 when Colorado and Washington became the first states to legalize recreational cannabis.
Fueling this narrative are countries like Switzerland, which announced the start of their recreational trials in 2022, and the Netherlands, which also revealed plans to experiment with legalization in 2023. They join Germany, Czechia, and Luxembourg on the list of countries taking the most progressive steps towards decriminalization.
Aside from predicted harm reduction implications, economically speaking, European-wide reform is also expected to be lucrative. For example, an estimated $364 million of medical cannabis was sold in Europe in 2022; a figure experts forecast could reach more than $2.3 billion in 2026.
As more countries grant licenses permitting commercial cultivation, countries like Portugal, Malta, and Macedonia are emerging as local European production hubs and ramping up operations to meet growing demand. As a result, the future looks bleak for Canadian exports to Europe, which have continued to drop since 2020.
Undoubtedly, it is a thrilling time for Europeans, who have lived their whole lives in countries with strict regulatory landscapes prohibiting medical and recreational cannabis. However, over a decade later, although the legislative procedures governing cannabis regulation are still unclear, Europeans are finally emerging to a future of widespread and overdue progressive cannabis reform.