Author: Marguerite Arnold

Next week, on January 13, the first cannabis ETF will launch in Germany on the Deutsche Börse in Frankfurt. Created by Canadian asset manager Purpose Investments and HANetf, the Medical Cannabis and Wellness Ucits ETF (CBSX) is well-timed at least, to take advantage of the developing shape of the market for the next several years. CBSX is domiciled in Ireland with passported sales to the UK and Italy.

This is, obviously huge news and from a number of fronts beyond being a first mover in what is likely to be an interesting basket if not a portfolio of opportunities scattered all over the continent.

The second reason this is significant of course is that this marks the first time the Deutsche Börse in Frankfurt has actually seemed to embrace the idea of cannabis stock trading at all. This has been hotly fought battleground since 2018 when the exchange briefly delisted all North American cannabis stocks before putting the entire sector on probation ever since.

However, that was so two years ago. These days, with cannabis reform afoot in every European country right now and of even the first inklings of the recreational kind, the world is clearly changing.

Further, that such an announcement comes after a fall of almost continual scandals from the Canadian side of the world, and a regulating industry on this one, cannot be overlooked. The industry from this side of the ocean is in the thick of accepting and meeting the challenge of a regulatory landscape that is not only higher than in North America but also changing thanks to harmonization of global standards.

ETFs, or exchange-traded funds, hold huge potential for investors looking to invest in the vertical but afraid of the cross-class volatility of the industry in general. Sure, cultivation in warmer, cheaper labor climes is afoot, but not all cultivators understand the distribution game. And of course, distribution is currently seen as a “hot ticket” but there have been several flameouts already.

That said, of course, for all the bumps and bruises of an exploding if not establishing industry, and inevitably more to come, the way appears to be smoothing for a regulated financial trade market in the heart of Europe. 

And that is a very cheerful way to welcome in a new decade of reform.

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For all the delay and all the obfuscation about all things cannabis, even in Germany, there are signs this Christmas that things are changing faster (at least unofficially) than anyone could really predict.

Cannabis reform has come to the European continent this year in a big way, even if the first initial gains were small. There are more patients than ever before and in more countries, and even though “CBD” still remains a dirty word to some, there are clearly signs afoot that the market for these products is happening whether regulators want it or not.

CBD stores are opening in Germany, and even advertising on the sides of streetcars. In Frankfurt (far from the hipness of Berlin) two opened this fall in the middle of the city.

Right before Christmas hemp rum was found in a mainstream German grocery store, and imported to Germany not from Jamaica, but from the UK.

Such unusual hybrids are also still the norm in this market.

It probably won’t be much before 2021 that Germany again takes up the question of recreational reform. But in the meantime, other products are finding their ways in, slowly but surely.

Beyond streetcars, medical cannabis advertisements are appearing in medical-only publications, and even further for generic, white-label kinds of medication. The battle for pharmacists and doctors is clearly on.

The Battle For The Soul And Market Entry Of Cannabis Is On In Europe

For all the drama, and all the noise, it is clear so far that the cannabis industry has barely broached the continent, on any front. That said, it has made landing.

2020 may not bring any great strides forward, but don’t knock slow and steady progress, which is happening just about everywhere.

There are also clearly markets that will drive others. Germany will continue to be a powerhouse, on all fronts, just because of the insurance question and its economy. With Britain brexiting, look for all kinds of experiments on the recreational front, although don’t expect the NHS to massively step up on reimbursements beyond GW Pharma product any time soon.

With 2021 clearly on the agenda however as a turning point year, the industry in Europe has, for all the retrenchments of the Canadians this fall, only one way to go. Up.

It is also clear, from the products now making their way onto German shore shelves, at least, that the creativity and entrepreneurial juice is just beginning.

Be sure to book your tickets to the International Cannabis Business Conference in Europe next year!

As 2019 comes to a close, what happened of note this year in Europe in regards to cannabis and what does this bode for next year? 

For all of the doom and gloom, if not scandals, on the Canadian cannabis front, it is clear that the cannabis industry has at least established itself in Europe in the last three years, albeit via niche rather than mainstream market entry strategies. Next year, while it is unlikely to see any “blockbuster developments,” it will be a building period yet again.

Scandals Were Inevitable

With laxly enforced, if not changing, regulation and Health Canada regulators overwhelmed, it is not surprising that there were both disasters and scandals this year, beyond any deliberate “bad actors” (although there were clearly those in the room too). That said, although the response from official sources has, so far, been slaps on the wrist, do not expect that to continue. 

In Germany, as of the end of the year, cultivation bid winner Aurora had zero cannabis in the country thanks to a GMP investigation at the source by German officials. This trend, and in countries far from Deutschland is likely to be a dominant theme in 2020.

In Europe at least, it is not just rules about cannabis that are changing. Harmonization of food and medical standards, which includes discussions about everything from pesticides to labeling, are in the room next year across the region because of European law and international harmonization.

Brexit will throw more questions into the mix.

Cannabis Europe, in other words, is set to have another growth year in 2020 – and in equally strange, one step forward, two steps backward kinds of ways.

The timetables for reform of greater kinds are now in the room, however, there is clearly a holding pattern too which is shaping up, as previously widely predicted, to be at the end of 2021. That is when Luxembourg is expected to allow the first national recreational market in Europe outside Holland.

With this stake in the ground, both non-EU countries of Denmark and Switzerland, also are likely to move in tandem but with probably not too much ahead.

In the meantime, smaller distribution deals are afoot, even in Europe’s most conservative markets.

Also, local producers, not backed or affiliated in any way with large companies (of either Canadian or even European extraction) are eyeing a clearly opening market, no matter the pain, stutters, and retrenchments that still inevitably will be found along the way.

Be sure to book your tickets for International Cannabis Business Conference Europe in 2020 in Berlin, Barcelona, and Bern!