State of The Global Cannabis Industry — Fall 2020

Many headwinds have swept the still establishing industry globally — but a new stronger basis for the vertical is being built in Europe as well as around the globe

Photo Credit: Add Weed, Unsplash

Covid is not the only story of 2020, but it will certainly be one of the bigger ones. How the pandemic affected the cannabis industry is still a tale in the making, but as of the third quarter of the year, the shake if not flame outs, reorgs and new sprouts in the air are undeniable. Globally. Even if not caused (directly) by the Pandemic, but other swirling realities, including the regulatory environment and supply chain stability.

Here is a basic overview of what is happening on the ground — with a few trend forecasts along the way.

General Overview

There are several major developments that will start to really develop a commoditized market globally.

The first is that there is now a relatively stable “reference” if not options price for the German market — which in turn will set the stage for other developments just about everywhere. However in the short term it means that:

A. The automatic market if not options price for cannabis in Germany has now been set by the terms of the federal cultivation bid (namely between €1.87 and €2.30 a gram to the one distributor who has now won the right to distribute the same). This is now the set price for “box” (not greenhouse) grown flower that everyone else has to beat — and with imports from somewhere else.

B. The wholesale prices for greenhouse grown and “pre GMP” GAP/GACP flower are also starting to drop. In Europe, smarter distributors are pressing back on growers with prices about half the price of GMP flower as described above. Especially as reimbursement rates from insurers, depending on what German state you live in range from €8–9.50 euros per gram (to the pharmacy). The days of horrendously overpriced product hitting the German medical market are over. Dropping the cost of cannabinoid-based meds further is going to depend on normalizing supply chains — but that is also clearly in play. Even at €12–15 per gram, pharmacy-sold cannabis is clocking in as just above street prices and about twice the price of homegrown coming from the patient collectives across the country.

Photo Credit: Shane Rounce, Unsplash

C. Global producers — including now from the U.S., which is a new development as of this year, are starting to connect with distributors in the German and UK market who are also driving down the cost of high quality hemp — and for multiple purposes.

D. The UK market will absolutely drive the “hemp” if not CBD discussion across Europe as will developments across the EU. Germany is far from out of the count, and events in Luxembourg, Holland and Denmark if not Switzerland beyond that, are absolutely pointing to an ongoing debate about cannabis for the next years to come. This is of course on top of the reality, no matter and especially if the WHO does in fact recommend to move L. Cannabis Sativa to a Schedule II drug, and even more so if they finally deschedule hemp and “CBD.”

Canada

Photo Credit: Jeff W, Unsplash

The bloom is off the cannarose from this part of the world. The larger initial market leaders are pretty much mired down in obligations and infrastructure reorganizations as well as transitioning from their more tumultuous glory days of flying the leader boards of stock if not cannabis news to dealing with a more mature market.

Raising money on the public markets for overhyped valuations that denied reality, sales issues, supply chain problems and changing regs led to many stock holders losing their shirts unless they were arbitraging short term risk in the market.

These days the big news outside of corporate reorgs is that those who managed to snag valuable concessions (see the German bid for starters) are now beginning to commoditize and streamline their business to meet the business at hand.

The U.S.

Photo Credit: Pot Head Coffee, Unsplash

It is a state market and is likely to stay that way for a long time to come.

That said, the 2018 Farm Bill changed the equation on the hemp side of the world, both domestically and even internationally. National reform, however, will take a back seat to the 2020 Election, and is way back on a political agenda nationally in a country which is very unsure of who its next president, if not shape of its democratic identity at present.

Europe

Things have not all been smooth sailing here, but on the strictly medical front, the steady uptick of German publicly insured patients tells its own story.

Photo Credit: Jacalyn Beales, Unsplash

Germany is still the most developed cannabis economy in Europe (and that is before its own domestically produced flower and other product hits the shelves). Yet many patients are still left out of the equation, even as domestic numbers hit 60,000 — that is roughly 20k patients a year since formal market inception, which tracks decently against other “emerging” cannabis economies, including Canada historically.

Beyond Germany, however and things are still fairly messy. In Spain, regulators have already turned down what is rumoured to be north of 200 GMP applications (made by Canadian companies) because they do not want the licenses resold (much as is about to start happening on the German side of the border when it comes to specialty narcotic distribution licenses). There are also, depending on who you get the information from, between four and six actual GMP licenses that have been issued, even if most are becoming pass-throughs for other companies (which is happening with at least one Columbian and one Canadian company).

That said, with the strange Spanish Cannabis Club law itself heading to European Human Rights Court in Strasbourg, and the entire applecart becoming altogether too unwieldy, particularly after Covid, look for some interesting developments here in the next few years.

Full cannabis reform is now on the table within the next 12–18 months in the EU, no matter what the European Commission wants to do about its misadventures in the world of CBD and hemp.

The UK

Brexit is, predictably throwing everything into a regulatory heap, as intended, and as a result, the market here will develop fairly quickly now, particularly on the hemp front.

The Food Safety Authority (FSA) will come down on the issue in a way that seems to be far more “traditional” than the disaster in Europe at present. The question is how will cash strapped Britons afford either the recreational or medical supplies on offer? Especially in such cash-strapped times?

Israel and The Middle East

Despite some early advances in the world of exports, the biggest action in Israel these days is the news of Canadian and American imports flowing into the country and for medical use.

Photo Credit: David E. Ragusa, Unsplash

While recreational reform will be slow here, don’t count it out. In the meantime, Israeli medical and other expertise will continue flowing if not influencing the industry globally and from a variety of angles.

Israel is still the only “Middle Eastern” country which has jumped on the bandwagon of cannabinoids. The topic is still widely off the agenda across the Arab world (death penalties for minor possession is a strong deterrent indeed) but this too is likely to start changing, particularly after global regulations morph the plant into, literally a different kettle of fish.

Africa and Asia

The plant is clearly on the agenda if not in the ground across Africa. South Africa is just one side of the story.

Exports to other places started happening this year (see Israel), and not just to Europe. A sleeping giant indeed, if one can beat the cost of capital and other issues that surround all developing country GMP and organic food development projects. South African producers are already in the German and UK market.

Photo Credit: Ryan Lange, Unsplash

In New Zealand, where the topic of recreational reform is on the agenda for the October general election, recreational reform is unlikely to pass — putting the discussion, generally, firmly into the Kiwi medical basket until further notice.

The Australians are moving forward with their own medical program as well as scouring the global market for export opportunities.

China and India remain the two biggest countries where more formal cannabis reform has yet to develop, but don’t count either out as the entire enchilada plugs forward into the new decade.

All in all, a very intriguing fall, with promises of more to come.

Medical is finally establishing itself globally, and just about everything else that comes with that is also moving, regionally.

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Ongoing reporting from the field about the evolving world of cannabinoids

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Marguerite Arnold

Marguerite Arnold

Marguerite has covered the legal cannabis industry internationally from Germany for over six years and is the author of several books plus a Cannatech geek

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