Europe is a key region for the medical cannabis industry with strong potential for global scalability and multiple investment opportunities. Sales in medical cannabis are increasing drastically year over the year. Europe has a population of more than 500 million, high per-capita gross domestic product (GDP) and health-insurance coverage for medical cannabis treatments in several countries, therefore is seen by many in the industry, as having the potential to be a larger market than the U.S. and Canada combined in long-term, according to Marijuana Business Daily daily news source.
For 2019, it is estimated that total sales of medical cannabis in Europe ranged from 230€ M and 250€ M ($251 M-$273 M), with the markup of pharmacies included in these numbers.
Germany constitutes the largest European market for medical cannabis with sales in 2019 estimated to be 173€ M. Italy follows with retail value estimated at 20€ M, then comes Austria, the Netherlands and Switzerland with sales of just above 10 million euros apiece and Denmark with total sales of 7€ M.
It is encouraging the fact that sales of insurance-covered cannabis in Germany grew 67% in 2019 over 2018 with the 51% of total cannabis reimbursements deriving from flower sales.
In Germany 6,500 kilograms of flower were imported to be dispensed to patients in pharmacies, which are more than double of the 3,000 kilograms imported in 2018.
In Italy 861 kilograms of flower were used in 2019, where Medical cannabis flower and other full-spectrum products are available at the market.
Netherlands exported 3,370 kilograms of flower for pharmacy dispensing in other EU countries and 580 kilograms sold in domestic sales.
Main Suppliers per Country
Most of the countries are aiming to supply Germany, currently Aurora Cannabis, Canopy Growth and Cronos Group in Canada are exporting flower to Germany. Tilray and Wayland Group being the sole domestic suppliers.
Netherlands have an agreement with Germany, to supply 2,500 kilograms per year for 2019 and 2020.
In Italy, the second largest market, the suppliers remained unchanged with Bedrocan from Netherlands with equity of more than 80% of the sold flower and Aurora who is supplier of the Italian army.
Netherlands remains the export powerhouse of Europe and has a more mature domestic market than any of its neighbors. Bedrocan is currently the only medical cannabis grower in the Netherlands, selling exclusively to the OMC. The OMC has an ongoing application process for a maximum of two suppliers.
In Denmark several licenses for domestic production have been issued but as of today companies haven’t exported or supplies domestic patients. CannTrust exports to Stenocare which imports to Denmark the only full-spectrum oil available in the market, but in 2019 had to be interrupted because of regulatory misconduct by CannTrust.
Wholesale Prices – forecasts
In general, the prices for the flower are expected to decrease. In 2019, the average price at which the German government said it would buy future harvests from the domestic producers is 2.3 euros per gram of flower. Imported flower is still in a higher price, but in early 2020, pharmacists and insurers in the country have entered into a new agreement that is expected to compress margins across the supply chain. The price at which pharmacies bought the full-spectrum extracts from wholesalers during 2019 was in the range of 100-200 euros per unit. Retail price was much higher because of the roughly 100% markup applied by pharmacists until early 2020. The import price for medical cannabis flower is expected to be between 4 euros and 7 euros per gram, depending on a variety of factors. It is also expected that the average wholesale prices will decrease to less than 10 euros per gram in the coming months.
The price at which Aurora offered its flower in Italy was 1.73 euros per gram.
In the Netherlands, the government fixed the price of its ongoing tender at 2.35 euros per gram. The OMC typically sells cannabis flower for between 5.40 and 5.80 euros per gram plus value-added tax (VAT).
Concluding the European Medical Cannabis Market is a fast-growing market with high potential for investment opportunities in medical cannabis production facilities and probably in the long term it will outgrow the US and Canadian Market, assuming that the EU develops a consistent legal framework for all European countries concerning Medical Cannabis.
Additionally it is foretasted that the necessary legislative frames allowing the use of medical cannabis will be passed in France and other countries, within the next 2 years, increasing the market development potential.
Greece, compared to other European countries, is considered an optimum destination for investments of medical cannabis production, as it offers a favorable legislation, an optimum climatic conditions, well-trained scientific staff, and is a member of the European Union, a fact that facilitates exports at ease.
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