Informed by the North American marketplace, CBD in Europe has experienced growth as cannabis is embraced around the world.
The emergence of CBD in Europe could be informed by lessons taken from the North American marketplace.
Driven by the increasing amount of jurisdictions that have legalized the sale of cannabis, the explosion of the CBD market across North America has spawned a number of subsectors within the industry including nutritional foods, topical products, sports supplements, and more. Driven by the increased amount of legal research and development regarding cannabidiol and its potential remedial effects, the CBD market in the United States grew to reach US$1.9 billion according to BDS Analytics.
With lower regulatory hurdles to clear than psychoactive cannabis, CBD product sales have grown at a faster rate than overall dispensary sales, indicating the potential for cannabidiol as its own major industry. “We’re witnessing CBD maturing from a cannabis sub-category into a full-blown industry of its own,” said Roy Bingham, Co-Founder and CEO of BDS Analytics. While the growth of the CBD market and its many applications have come with regulatory complications, early breakthroughs in North America have the potential to inform emerging cannabidiol markets around the world. Following a similar trajectory, CBD in Europe has already grown to become its own major industry.
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Regulating CBD in Europe
Home to more than 740 million people, Europe has twice the population size of Canada and the US combined. The legal status of psychoactive cannabis varies across Europe, but cannabidiol has proven to be more easily accepted across the continent. Products containing CBD are currently considered a “novel food” under European Union regulations. Novel foods in the European Union are recognized as foods that had not been used for human consumption to a significant extent before May 15th, 1997. While CBD’s novel food status could pose challenges to the European CBD market, analysts at Brightfield Group estimated the industry reached $318 million in 2018.
“CBD is just starting to take hold in Europe, with both product availability and consumer awareness still quite limited. This is a great opportunity for developed brands to enter and expand through Europe with far less competition than we’re seeing in the US,” said Brightfield Managing Director Bethany Gomez. “With the Novel Foods Act, it is a challenging legal environment to operate in, but impending regulatory changes are likely to smooth the way for significant mid-term growth.”
Medical cannabis and CBD in Europe
As shown by the early proliferation of the North American CBD market, the remedial benefits of cannabidiol can be applied to a variety of existing products including cosmetics, nutritional foods and beverages. While these products have shown significant potential, the unique wide-ranging applications of cannabidiol can pose a variety of challenges to regulators and businesses.
From the perspective of cannabis companies, the various designations can have a significant impact on how CBD in Europe is defined and regulated. “The CBD industry, like any consumer market, is subject to a range of generic regulations governing food, cosmetics and medicines, and the end product category determines the rules by which those products can be produced, distributed and marketed,” said a 2019 report on CBD in the UK written by the Centre for Medicinal Cannabis.
While the unregulated nature of the UK CBD market could pose early challenges for the industry, the market has already reached a total of $374 million in 2019 according to Nate Erskine, the head market analyst at CBD-Intel. In pursuit of the emerging opportunity in the United Kingdom, a number of cannabis companies have begun to make inroads in the country’s medical cannabis and cannabidiol industries. In 2019 cannabis titans Canopy Growth Corp’s (TSX:WEED,NYSE:CGC) pharmaceutical business, Spectrum Therapeutics, received the first UK license for a storage and distribution facility dedicated to medical cannabis. The company is working to serve new medical cannabis patients in the UK.
Targeting the UK CBD industry, medical cannabis investment company World High Life (OTCQB:WRHLF,AQSE:LIFE) acquired Love Hemp, a leading provider of CBD-based products in the United Kingdom, in 2019. “Our mandate was to find the innovators positioned where the Canopy’s of the world were 5-7 years ago. Most importantly, we were looking for leaders who were passionate about the industry and their business, people who had a vision and were seeking both capital and expertise to realize that vision. With Tony Calamita and Tom Rowlands, founders of Love Hemp, we met all of our criteria for success,” said World High Life CEO David Stadnyk.
Love Hemp offers CBD-based oils, edibles, cosmetics and vaporizer products that are distributed in over 2000 retail locations across the United Kingdom, including stores such as Ocado, Holland & Barrett, WH Smith and the company’s online retailer, CBDOilsUK. Love Hemp recently announced it had increased its online sales by 39 percent month-over-month since January of 2020 and is now in the process of negotiation with some of the UK’s largest retailers for potential product listings in September 2020.
Following in the footsteps of the North American market, many European authorities have prioritized cannabidiol and medical cannabis over the recreational use of THC. While regulatory questions left to be answered could pose challenges for both businesses and governments, companies capable of establishing a foothold in these nascent markets could benefit from a first-mover advantage in the European cannabis space.
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