The Fight for the European Marijuana Market
One market that, for whatever reason, tends to be overlooked is the European legal cannabis market.
Maybe it’s due to Canada legalizing marijuana in 2018 or the U.S. becoming an increasingly pro-pot country, but we often forget just how powerful the European cannabis market is. When it comes to marijuana legalization, the most bountiful market will be the European Union (EU).
The European cannabis market is set to dwarf the U.S. cannabis market by 2023. That’s because Europe has about 400 million more people than the U.S. and it’s well on its way toward legalizing pot. (Source: “European Cannabis Market Forecast Summary by Leading German Company AMP Chinook Tyee Industry,” MarketWatch, May 15, 2019.)
In the EU and Norway, 23 million people used cannabis in 2018. That accounts for almost seven percent of Europeans between the ages of 15 and 64.
In France, more than 700,000 people said they used cannabis daily. A huge portion of French adults, about 41%, used cannabis at least once.
Projections now have the European recreational marijuana market hitting €65.0 billion (nearly $72.0 billion) by 2028.
Considering that the current legal recreational marijuana market in Europe is zero as of today, that would be a lot of growth in under a decade. That kind of explosion in value will likely see many marijuana stocks soar.
And the growth is only getting started. The European cannabis sector grew more in 2018 than it did in the prior six years combined. (Source: Ibid.)
Medical marijuana use has spread across Europe as several countries legalized the drug for medicinal purposes over the past few years. It looks like that trend will continue in 2020.
On top of all that, we’re seeing more and more European marijuana stocks crop up that could lead to massive gains for investors.
One of the big benefits of the adoption of medical marijuana in European countries is the increased investment into the industry.
We saw about €500.0 million (about $551.0 million) worth of investment into European cannabis companies in 2018. A good chunk of that went toward medical marijuana companies.
Note that, in 2018, “Epidiolex” became the first cannabis-derived drug approved for prescription in the United States. It came from GW Pharmaceuticals PLC (NASDAQ:GWPH), a British company.
More and more European marijuana companies will be looking to innovate in this space, producing newer and better medicines from marijuana.
The U.S., meanwhile, has rolls and rolls of red tape making this sort of progress impossible at the moment, due to the fact that marijuana remains a Schedule I drug, a classification meaning it has no health benefits.
That is patently untrue, of course, but the law isn’t about what’s true or false; it’s about what it says on the books. And for now, the books say “no” to virtually any medical marijuana research in the United States.
That leaves a huge hole in the market that Europe can fill. Sure, Canadian marijuana companies can conduct all the research they want, but Canada is an extremely small market compared to the U.S. and Europe.
That’s precisely why so many Canadian pot companies aim to branch out globally. Establishing European and U.S. ties allows for increased aid when it comes to research and development.
In any case, finding a marijuana solution to, say, the opioid epidemic by providing a lower-risk pain medication would radically alter the value of the marijuana market.
And then there’s the millions of people waiting to legally get their hands on recreational marijuana. While we may be several years away from legal recreational pot in Europe, that doesn’t mean we can’t plan and invest for the inevitable.
As more and more countries legalize pot, surely other countries will follow.
And as we saw in 2019, it’s not only liberal or left-leaning jurisdictions that have been pushing for pot legalization; places like Utah and Poland, both rather conservative areas, now permit medical marijuana.
The argument for medical marijuana is only going to be made stronger by innovations that will be spurred on by European investment.
Meanwhile, the fight for recreational pot legalization is ongoing and is only going to end one way: the near-universal legalization of marijuana around the globe.
So the opportunity is there. Many cannabis stocks will pop up in the near future, looking to take advantage of the rapid growth in the European market.
In fact, there are already several ways to benefit from the growth in that market. The question is, what’s the best way to profit from the massive European cannabis market?
Best Cannabis Stocks
When it comes to choosing the best marijuana stocks as it relates to the European market, it’s important to remember a few things.
The first is, while Canadian pot stocks are going to have a potentially harder time accessing the European market compared to homegrown companies, that likely won’t prove to be an insurmountable barrier.
For instance, Aphria Inc (NYSE:APHA) and Aurora Cannabis Inc (NYSE:ACB), two of the larger players in the Canadian marijuana sector, are already involved in Germany. That country is the largest market within Europe, making it a juicy prize.
The benefit of going with larger, more established companies entering the European market is that they are, by their nature, more stable than startups. After all, they’ve already established recurring revenue at home and they have the cash and resources on hand to expand.
On the flip side, a lot of their potential for share-price growth has been spent. These stocks have already seen massive gains in the lead-up to Canadian marijuana legalization.
While the recent dip in the weed stock market has actually opened new paths toward growth, the gains will likely happen irrespective of the European market.
Of course, access to the EU market would absolutely help spur stock gains, but I see these stocks gaining in other ways. So, by the time the European markets become more fully open to marijuana, the stocks will have lost their ability to see truly jaw-dropping gains.
The other option, then, is startup marijuana stocks that operate in the European market.
One company that comes to mind is Isracann Biosciences Inc (OTCMKTS:ISCNF, CNSX:IPOT).
An Israeli company, this marijuana penny stock is looking to capitalize on the European market. Isracann hopes to lead the industry in monetizing what will eventually be the largest marijuana market on Earth.
While these types of plays (marijuana penny stocks and upstart companies looking to start fresh in the growing European market) definitely hold a ton of potential, they also hold a good deal of risk.
As with every other penny stock on the market, pot penny stocks are volatile. They’re even more so, I’d argue, due to the inherent volatility in the market.
Having said that, low-priced stocks with so much room to grow have been known to reap huge rewards for investors.
We’re left, then, with two paths toward potential gains as the European marijuana market opens up.
The first option is to invest in companies that are already in the market or operate abroad but are bound to expand into Europe. The second option is to put money into younger companies that are specifically designed to capitalize on the European market.
The first option is likely the less volatile, but it also contains less opportunity for massive growth. In other words, it’s the safer long-term strategy and is more suitable for people investing for, say, retirement.
On the other hand, if you’re after big swings and aren’t afraid of risk, then marijuana penny stocks that focus on the Euro market present a great opportunity (if things play out right).
Either way, the conclusion is clear: the European marijuana market is probably going to be huge in the near future.
The future of the global marijuana market is going to be decided in the coming years. Or, I should say, the timeline of the market’s progression will be decided; the future is already set in stone at this point.
Legal marijuana is going to grow into a hundred-billion-dollar industry, of that I have little doubt. The question is one of time. How fast can it reach its potential? If Europe stays the course, I’d say pretty darn fast.
In that case, investments in the European pot market could see huge payoffs down the line.