What the U.S. Cannabis Industry Can Learn from Europe

Europe’s history with cannabis goes back hundreds of years, and it was originally welcomed into the west with open arms. Cannabis has deep roots in European culture, inspiring some of the greatest minds in history.

Famous masterpieces such as “La Comédie Humaine,” “Les Misérables,” and “The Count of Monte Cristo” were all written in so-called hashish clubs. Even Queen Victoria was a renowned cannabis user!

Only recently did the world’s views on cannabis change. But times are changing yet again, as 55% of Europeans support adult-use cannabis legalization.

The race for a legal cannabis market has already begun, with Germany, Switzerland, and the Netherlands leading the way. Let’s take a look at the growing cannabis movement in Europe.

The Evolving Landscape of Europe’s Cannabis Policy

Cannabis is classed as a controlled substance in Europe, and it can only be used for medicinal or scientific purposes. While it’s illegal on an EU level, it’s up to each member state to create and enforce cannabis laws. In many states, the police aren’t too strict when it comes to the personal use and possession of cannabis. It’s unlikely you’ll be charged for small amounts.

Fortunately, legalization is on the horizon as Germany has announced its plans to legalize adult-use cannabis by 2023! This is a big deal considering Germany has the largest economy in the EU, and other states will likely follow its lead. After all, we’re talking about €5 billion per year in potential tax revenue.

There’s still some concern about Germany breaking the UN convention on narcotic drugs with its plans for legalization. But this may help trigger reform in the agreement.

aerial view of ehningen germany

How Does the EU Cannabis Market Compare to the United States?

While Europe and the United States are similar with regulations on cannabis, there are a few key differences.

Medical cannabis is legal on an EU level, which means businesses don’t have to deal with prohibition and restrictions on cross-border commerce. There’s also a lot of competition in the EU market as you can easily sell into other states.

However, a big challenge for European businesses is dealing with the overlapping regulations on cannabis. Harmonization is needed for a legal market to be successful.

Cannabis as a Medicine

It’s estimated that 400 million Europeans have access to medical cannabis, which is more than the United States! In some EU countries, such as Germany, medical cannabis is even reimbursed by health insurance. This makes it more affordable and accessible for anyone that needs it.

Since cannabis is a prescription medicine, it follows the traditional pharmaceutical path and can only be dispensed by licensed pharmacists. There are regular check-ups with your doctor, which helps policymakers collect valuable patient data that can be used as evidence for legalization.

Thanks to this science-based approach, Europe is becoming a leader in medical cannabis research.

Licensing & Cultivation

In Europe, there isn’t a limit on the number of businesses that can obtain a cannabis license. While getting a cultivation license is pretty simple, the licensing process for extracting and manufacturing cannabis is far more complicated.

Anyone of legal age can apply for a cannabis license, and it’s popular to do so in Portugal as the climate is perfect for growing year-round. Labor is also cheaper in Portugal than in other EU states.

As cannabis follows a pharmaceutical path, you can get an import/export license from the local health minister to sell into other EU countries. While this creates competition, it also helps quality cultivators scale quickly.

In the United States, the lack of competition in limited license states may pose a big risk for cannabis businesses if (or when) federal legalization comes around. As soon as cannabis can be sold nationwide, the brands that succeeded in more competitive states will likely come out on top.

This is where the European model might work quite well: If each state focuses on the areas they’re best in (cultivation, manufacturing, distribution, etc.), it may help create brands that last in a national market.

CBD and Novel Foods Regulations

Europe has one of the most complex regulatory frameworks for CBD we’ve seen yet. But to keep things simple, here’s what you need to know about it:

CBD is legal in Europe, as long as it’s not intoxicating. What exactly that means is up for interpretation by each state.

The regulations for CBD products also vary state by state, with THC limits ranging anywhere from 0-1%. In 2020, the European Court of Justice (comparable to the U.S. supreme court) ruled that CBD shouldn’t be considered a narcotic. This ruling has helped relax restrictions in most states.

Although CBD is considered safe for consumption, there’s another big challenge that all EU CBD businesses must face: The Novel Foods Regulations.

Any ingredient that hasn’t commonly been consumed in Europe before 1997 is considered a “Novel Food.” As such, it needs to be authorized by the Food Standards Agency (FSA). And since CBD hasn’t been legal, there isn’t enough research on it to be approved by the FSA.

There are currently thousands of unauthorized CBD products being sold in Europe, but most countries aren’t very strict about it. And since people are buying and selling CBD anyways, the FSA added that you may sell CBD. You have to submit an application along with evidence (such as third-party test results) that the products are safe.

hundred dollar bills

The Bottom Line

Europe’s medical cannabis market is valued at $4.96 billion in 2022, and it’s expected to reach $13.37 billion by 2027. And that’s just medical cannabis. What could things look like once adult-use cannabis is legalized?

The United States can take inspiration from Europe’s medical cannabis system, as it creates equal opportunities for companies to sell cannabis. The system also allows for competition that will help drive quality and innovation for consumers. The main challenge for the EU cannabis industry will be creating harmonized cannabis regulations across all states.

If we can have a system that protects businesses and consumers, and is accessible to everyone, we’ll surely see cannabis thrive.