How to Capitalize on Europe’s Cannabis Shortage
Ryan Allway
August 25th, 2020
News, Top News
The North American cannabis industry has become a multi-billion-dollar powerhouse over the past few years. Canadian licensed producers have become global leaders in the production and sale of cannabis flower and oil while the United States has become one of the largest end markets in the world following state-level legalization efforts.
In Europe, many countries have started to legalize medical cannabis, but the cultivation remains largely off limits. For example, Germany imports 40% of its total cannabis flower from the Dutch Office of Medicinal Cannabis (OMC) and most of the remaining supply of cannabis flower comes from Canadian licensed producers.
Let’s take a closer look at how these dynamics have created a cannabis shortage that could only get worse as the world recovers from COVID-19.
European Cannabis Demand
The COVID-19 pandemic hasn’t slowed down cannabis demand throughout Europe, according to New Frontier Data, with 42.6 million consumers spending an estimated $68.5 billion per year in regulated and unregulated markets. Not surprisingly, European consumers are seeking out cannabis for relaxation, stress relief and stress reduction during these uncertain times.
The long-term outlook for Europe is even better. Prohibition Partners expects the European cannabis industry to reach €123 billion by 2028, making it the world’s largest cannabis market by population and revenue potential. With over €500 million in investment and six countries introducing new legislation, the region is already well on its way to meeting these estimates.
Lack of Domestic Cultivation
Europe still imports most of its cannabis from The Netherlands and Canada. While Bedrocan of The Netherlands supplies most of Europe, four Canadian licensed producers have built up a presence in Europe through acquisitions and licenses, including Aurora Cannabis, Canopy Growth, Tilray and Aphria, and several others are in various stages.
There are some efforts to increase domestic supply with German production efforts underway and Italy’s announcement that it would triple the amount of medical cannabis it produces this year. Despite these efforts, most analysts expect that regional demand will far outweigh supply for the foreseeable future, forcing Europe to look elsewhere for products.
The shortfall in supply has led to many other nearby regions exploring cannabis cultivation. For example, Israel has a favorable climate for year-round cannabis cultivation and is located in close proximity to Europe. The country’s recent decision to permit medical cannabis exports has opened the door to supplying the European market.
Click here to learn more about investing in a cannabis company poised to supply the EU markets
Opportunities for Investors
There are several ways for investors to capitalize on Europe’s cannabis shortage and ongoing supply constraints. While large Canadian licensed producers with European assets are a natural choice, they are far from a pure-play and their performance is heavily dependent on domestic Canadian supply and demand dynamics.
Isracann Biosciences Inc. (CSE: IPOT) (OTC: ISCNF) is one of the few companies with near-term production and proximity to European end markets. Based in Israel, the company has an expected annual capacity of more than 23,000 kilograms from dried cannabis at its Cannisra farm with anticipated production costs of just $0.40 per gram—yielding attractive margins.
In addition, the company’s joint venture, Cannation Ltd., in the Hefer Valley region is nearing the completion of Phase I construction and already has offtake agreements with Focus Medical Herbs Ltd., an Israeli licensed producer. The property contains a 55,000 sq. ft. greenhouse that’s finished and awaiting final security inspection.
Click here to learn more about investing in a cannabis company poised to supply the EU markets
Looking Ahead
The European cannabis has experienced tremendous growth over the past few years as governments liberalize their policies and investors pour in capital. Despite efforts to boost domestic production, most experts agree that the region will be export dependent for the foreseeable future given the robust demand growth.
Isracann Biosciences Inc. (CSE: IPOT) (OTC: ISCNF) is well-positioned to capitalize on Europe’s cannabis shortages and long-term growth with its low-cost production, favorable climate and proximity to Europe. As it approaches commercialization, investors may want to take a closer look at the stock over the coming months.
For more information, visit the company’s website at www.isracann.com.
Click here to learn more about investing in Isracann Biosciences
Sources
https://mjbizdaily.com/germany-faces-potential-temporary-supply-shortage-of-cannabis-flower/
For more information, visit the company’s website at www.isracann.com.
Disclaimer
The above article is sponsored content. CannabisFN.com and CFN Media, have been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: https://cannabisfn.com/legal-disclaimer/
This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.
About Ryan Allway
Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.
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