Cannabis Investor Alert: Europe's Opportunity Amidst Illicit Market Challenges - Are You Buying Or Selling The Hype?

This article was originally published on Cannabis.net and appears here with permission.

Cannabis businesses are taking note across the Atlantic, where the grass appears greener. As the global cannabis business matures, Europe is emerging as a top location for entrepreneurs seeking to thrive in this thriving market. With its ever-changing legislative landscape and tremendous untapped potential, Europe presents a unique opportunity for cannabis growth and expansion.

In 2023 alone, the European cannabis market is estimated to be worth $8.47 billion, and projections suggest this figure could soar beyond $15 billion by 2027. These numbers highlight the continent's unique potential and make it an attractive and highly lucrative prospect for innovative cannabis businesses. Entrepreneurs with ambition and foresight will have Europe at the forefront as they seek to tap into this new wave of growth and innovation.

See also: Europe's First Adult-Use Cannabis Dispensaries: Switzerland Greenlights Experimental Sales Project

The United States and Canada have traditionally been the go-to choices for many cannabis ventures. However, to advocate for Europe as the actual land of opportunity in the cannabis industry may be a go-to headline, but there is one big problem with thinking European cannabis will make investors tons of money.  As Cannabis.net pointed out in a previous article called, "With a Gun to My Head Here is One Cannabis Idea to Go Long on and One Cannabis Idea to Go Short On?", while Europe may turn out to the biggest cannabis market in the world, legalization will also create the biggest illicit or black market in the world. With its promising market conditions, Europe is poised to become the focal point for ambitious entrepreneurs looking to make their mark in this exciting and rapidly expanding field.  Those entrepreneurs may be looking to create higher margins by joining the illicit market as opposed to the legal market.

As the article points out:

Go Short

This one may surprise you and goes against some of the brightest minds in the industry, but if I had to pick a short, I am going to short EU weed.  What?  That massive market?  Don’t you read your own stuff on Cannabis.net saying the European cannabis market could be the biggest weed market on earth?

If you think the US black market is a problem and decimating the legal industry at every turn, considering you can get edibles on the black market for $0.07 on the $1.00 compared to the legal market, the EU version of this will be 10x worse.

Europe will face much bigger problems with black and illegal markets than the US or Canada for a few reasons.  One, the 27-country union very rarely can agree on anything, let alone enforcement of anything. Two, you have members who are very “rich” like Germany and Switzerland, and members that are dirt poor, like ex-Soviet Union countries like Romania and Belarus.  Hence, there is a natural incentive for the “poor” countries to cheat and try and make more money since they can’t compete with the Germany’s and Poland’s of the EU.

That is not to mention the poor countries of Northern Africa that sit in beautiful geographic regions to grow cannabis.  Go check out where Tunisia, Libya, Algeria, Morocco, Sudan, Niger, and Chad sit on the climate zone map.  They also have massive access to Europe to a variety of routes such as land, water, and air.  If you think immigrants were a problem for Europe, wait until you see cannabis coming in by land, sea, and air.

Europe also has thousands of miles of borders by land and sea with a variety of poor countries.  Basically, access points to Europe are 10x more abundant than the US and Mexican border. 

History would pay a roll as well, if you followed the Euro crisis of a few years ago, it was Germany setting the rules and everyone else had to follow.  There is ill will toward the northern, prosperous EU countries compared to the less productive southern European countries. It will be German legalization versus everyone else once cannabis gets rolling in the EU.  The financial incentives to cheat and use the black market will be overwhelming for the residents of dirt-poor countries. The incentive to “do as Germany says” will fall on deaf ears regarding cannabis enforcement if every town mayor, immigration officer, and police chief if getting their share of the action. 

Yes, the EU will be a massive cannabis market, but will also be susceptible to the largest illicit market on the planet.  The EU having poor members and being surrounded by poor countries will help create high-volume “weed corridors” for shipping and selling illegal cannabis.

Think California only x10.  Instead of an ocean on one side of California, what would it look like if you put Haiti, Costa Rica, the Dominican Republic, and Brazil next to California as borders instead of the Pacific Ocean?  That is pretty much what the EU is looking at as they try to create a unified cannabis industry with rules and enforcement.

Making money in cannabis is a long game, sit tight, and watch legalization and import/export numbers from around the world to get a feel on who will win and who will lose in the international weed game.

Europe's potential in the cannabis industry reaches towering heights like the Eiffel Tower. It's high time for cannabis businesses to embrace this promising continent fully. The diverse legal landscape and ever-evolving regulatory environment create a fertile ground for substantial growth, but that growth will be 2x higher for the illegal market as well.

Moreover, the relatively untapped market presents an alluring alternative to the saturated North American scene. Let's delve into why Europe stands as the perfect playground for ambitious cannabis entrepreneurs who decide to go legit or illicit in their attempts to join the industry.

A Solid Foundation In Europe

The United States boasts several states where cannabis has been legalized, yet it grapples with federal-level illegality, leading to a complex and uncertain banking landscape. This dichotomy has presented considerable challenges for cannabis enterprises, forcing them to navigate cautiously through federal regulations, resulting in a heavy reliance on cash transactions and limited access to loans and financial services.

In contrast, the European Union has taken a more progressive stance, enacting policies that actively cater to the banking requirements of the cannabis industry. By providing a well-established and accommodating financial framework, European cannabis businesses have enjoyed a more stable platform for growth and expansion. This advantageous environment has encouraged innovation, investment, and entrepreneurial ventures within the EU's cannabis sector.

Europe Offers Huge Consumer Base

Europe stands out as a lucrative market with its staggering population of over 740 million people, presenting an unparalleled consumer base ready to be harnessed. In contrast, the combined populations of the United States and Canada hover around 360 million, underscoring Europe's vast opportunity for businesses in the cannabis industry. As more European countries progressively legalize or decriminalize cannabis, the potential for market expansion becomes even more promising.

The evolving attitudes toward cannabis in various European nations allow businesses to tap into new markets, driving innovation and entrepreneurial ventures. This changing regulatory landscape fosters an environment conducive to promoting cannabis-related enterprises and attracting substantial investments.

Moreover, the diverse cultures and economies across the continent present a unique and exciting challenge for industry players, prompting tailored strategies and approaches to cater to the preferences and demands of European consumers.

Strategic Location For Import And Export

Europe's central geographic location and its extensive network of well-established trade routes have positioned it as a hub for cannabis import and export, offering unparalleled opportunities for businesses in the industry. As cannabis regulations continue to evolve across the continent, Europe has emerged as a pivotal player, connecting global markets in Africa, Asia, and the Middle East.

The strategic advantage of being a central cannabis trading hub grants European companies access to a vast and diverse customer base, fueling international collaborations and partnerships. This unique position has proven to be a desirable asset that U.S.-based companies can only envision from afar. The legal complexities and federal restrictions surrounding cannabis in the United States have hindered its businesses' ability to fully capitalize on international trade opportunities in the same way European enterprises can.

By capitalizing on its prime location, Europe can facilitate the seamless movement of cannabis products across borders while adhering to evolving regulatory frameworks. This interconnectedness fosters a thriving global cannabis market and presents European companies with a significant competitive edge in the ever-expanding cannabis industry. As the trade landscape evolves, Europe's influence will likely grow, reinforcing its status as a central force in the international cannabis trade arena.

Diverse Market Landscape

The cannabis landscape in Europe offers a rich tapestry of opportunities, ranging from the iconic coffee shops in Amsterdam to the progressive medical cannabis clinics in Germany and beyond. This dynamic range of market structures and regulatory frameworks creates a fertile ground for businesses to customize their strategies and cater to specific niches within the continent's diverse consumer base.

As the cannabis industry in Europe continues to mature and evolve, forward-thinking entrepreneurs are presented with a golden chance to establish targeted brands that deeply resonate with the region's multifaceted cultures.

Each country's unique approach to cannabis presents distinct challenges and prospects for market entry and expansion. Adapting to the varying legal landscapes, cultural preferences, and consumer behaviors allows businesses to carve out their niches and establish a strong foothold in specific European markets.

Conclusion

Europe provides a distinct and promising landscape for cannabis entrepreneurs. With its continuously evolving regulations, diverse market conditions, and strategic geographical position, the continent holds a vast reservoir of untapped potential. If you're a cannabis entrepreneur with ambitious goals, it might be the perfect time to consider venturing into Europe's promising opportunities.  If you are an investor, "buyer beware" as you will be competing with weak borders and poor countries surrounding the "golden goose" continent.