Note from the editor: This article first appeared on Forbes.com.
Canada’s relatively young cannabis market has created domestic opportunities for thousands of startups and entrepreneurs, but as more countries follow its lead and soften their stance on the plant, some industry professionals are playing the odds in Europe.
The size of the market, projected to be worth €1.5 billion by 2023, isn’t the only thing that makes Europe attractive. Although regulatory frameworks in European countries don’t all mirror one another, a common thread ties the vast majority together: hemp-derived CBD is treated as a legal product separate from cannabis, a major difference from Canadian regulations, and one many believe should be amended.
While motives for pursuing business in different countries might differ from one person to the next—some might see new opportunity in younger markets while others might be prohibited from entering the legal industry due to their history in the black market—Canadians seem to agree that their government could learn a thing or two from Europe.
Medical Cannabis In Germany
Deepak Anand is the cofounder and CEO of Materia Ventures, a pharmaceutical company and medical cannabis wholesaler that operates in Germany, the United Kingdom, Denmark, and Malta. In Germany specifically, a narcotics permit enables the company to buy medical cannabis directly from countries like Canada (who ships most of its exports to Germany), while a dealer’s license allows it to sell cannabis products to pharmacies.
With a background in pharmaceutical distribution, Anand recognized quickly that although Canada had legalized cannabis at a recreational level, something significant was lacking in Canada’s medical cannabis framework.
“We decided to go into more favourable jurisdictions that really treated cannabis like a medicine, as opposed to calling it ‘medical cannabis,’ but not necessarily treating it at parity with other pharmaceutical products,” he says.
Whereas a Canadian seeking medical cannabis may be able to obtain a recommendation for it from their doctor, it is not technically considered a prescription medication, and not all doctors support it. As such, it is rare for insurance companies to cover it. In Germany however, patients can be reimbursed.
In addition to Canada’s strange rules around medical cannabis, Anand says “one of the biggest failures” of legalization is that it hasn’t affected the status of CBD, which remains a controlled substance. Anand points to Australia, where CBD will soon be sold over-the-counter, and the United Kingdom, where products containing the cannabinoid can be found in convenience stores, as examples of nations that have done better.
“We’ve seen the World Health Organization say that CBD on its own is a relatively benign substance, so the fact that a country that has federally legalized cannabis continues to regulate CBD at the same level we do THC makes absolutely no sense to me,” he says. “[Materia] has a CBD wholesale and e-commerce business in the U.K., and I just can’t really compare and contrast Canada and the U.K. from a CBD perspective.”
While Health Canada recently held a consultation to consider a potential market for cannabis and CBD products that would not require a doctor’s recommendation, Anand says it may already be too little, too late.
“It is driving companies and businesses away from the Canadian market,” he says. “By the time we look at the regulations of CBD, we’ve most certainly missed out on both international and domestic opportunities.”
Making Topicals In Ireland
When cannabis was legalized, Siobhan McCarthy was hopeful the career she had built at The Body Shop and Lush would set her up for her dream job as a cannabis topicals maker. The founder and CEO of Blyssful Alchemy had spent several years building a topicals brand and hoped she’d be able to find a partner in the legal market. Unfortunately, not a single Canadian entity had the tools to support her skillset.
“I spent two years knocking on every door possible, and was offered many different things that no one was ever able to execute on,” she says. “It became very apparent to me that there wasn’t one licensed producer that could grow, process, bottle, package, label and excise.”
While there was initial interest in bringing her product formulations to market, she learned it would be next to impossible to do so in a way that was financially and environmentally sustainable. One deal offered would have had cannabis grown in the Maritimes shipped to Ontario for crude processing, shipped again to British Columbia for refining, and then shipped to at least two more regions to be processed, bottled, and excised, before then being shipped again to different distributors and retailers.
“Nobody was capable of doing the full meal deal, and nobody has put any time or effort into building up our local economy,” McCarthy says. Cannabis topicals weren’t always included in Canada’s regulations, and until a few months ago were not available to consumers. Today, a handful of products exist, with several using formulations from existing U.S. brands.
Frustrated, the dual citizen looked to Ireland, where products containing CBD are legal (so long as they contain less than 0.2 percent THC) and saw an opportunity. She collaborated with the Hemp Higher Project, an initiative encouraging wider use of hemp, and Canabaoil, a family-run hemp farm, to formulate her first line of products.
McCarthy launched the Irish arm of her business in January 2020, and sells skin salves and muscle and joint creams to athletes through gyms and dojos. She notes that in Ireland, the demographic for topicals is very different than in Canada, where the majority of her customers are women between the ages of 30 and 65.
“In Europe, CBD has been accepted and encouraged as a wellness product, whereas in Canada, it’s still scheduled and hidden from sight,” she says. “I think as Canada starts to open up its regulatory approaches and adopt CBD under a wellness regime, we will be able to proliferate and the marketplace will be similar to Europe.”
Growing And Processing Hemp In Switzerland
Before legalization, Clint Younge was the CEO of MMJ Canada, one of the largest chains of black market medical cannabis dispensaries in the country. When shops were raided by police in 2016, he was charged with possession for the purpose of trafficking, precluding him from participating in Canada’s legal regime.
“I knew that was coming,” he says, “so instead of whining about it, I started selling my services to European candidates.”
Now, Younge is the president of Company X, a hemp and CBD firm based in Switzerland comprised of three divisions: Swiss Hempcare, a cultivator, processor, and distributor, Greenology, a cultivator and processor, and Charlie’s Laboratory, which tests, refines and whitelabels CBD products. (Fun fact: While most other nations stipulate that CBD products cannot contain more than 0.2 or 0.3 percent THC, in Switzerland, the threshold is much higher, at one percent.)
With distribution in more than 10,000 online and brick-and-mortar retailers throughout Europe, Younge says the size of the market is just one reason he’s enjoying working overseas.
“The best part about working over there is that we have 750 million people throughout Europe, but in Canada, I was handcuffed,” he says. “There’s only so much you can do when we have 35 million people, and then so many restrictions within the industry that don’t allow you to operate the way a smoothly flowing industry should.”
The private company operates cultivation facilities in Zurich and Valais, growing a Spannabis award-winning strain of low-THC cannabis indoors while cultivating other varieties at scale on more than four hectares of land, and a laboratory in Schwyz. Younge says remaining private has allowed Company X to stay in control of its operations, something some public firms in Canada have struggled with.
“We chose to not go the publicly traded route, because we didn’t want to answer to people that didn’t have any experience in our facilities,” he says.
Recreational cannabis legislation is currently being considered in Switzerland, and Younge is hopeful that soon it and the rest of Europe will follow in (at least some of) Canada’s footsteps.
“The culture is really booming, and it feels like it was in 2015 in Canada. You see people working together, and pharmaceutical companies working with more independent companies,” he says. “Europe has the ability to watch us and not make the same mistakes, so they’re not.”
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