Author: Marguerite Arnold

For all of the hurdles that exist in the European market, there is one avenue that has, so far at least, remained remarkably unexplored. That is certainly the case on the financing end.

Yes, European family offices are conservative, and “equity” (at least as it is thought of in the North American sense) remains less interesting in the free for all of public markets among Europeans compared to their cross Atlantic peers.

However, for the right canna-entrepreneur, the most attractive thing about European financing so far has remained largely off the table. Namely tax credits, especially of the R&D and tech kind (although there are other kinds of credits on the table when crossing into related fields.)

Yes, there are rules about this kind of thing (and a lot of regulations). But as a vehicle for helping to offset the risk of evolving medical cannabis projects in particular, the pursuit of obtaining these tax credits has so far remained in its infancy.

It won’t for long. 

Where, Why and How Will This Impact Industry Growth?

For an industry that so far has financed its highest fliers via the public equity markets (and exotic financial instruments like reverse mergers), the European financing options now on the table are intriguing, if not much more attractively legit. 

Tax credits have already shown up of course. The largest firms from Canada are hip to this game. But increasingly so are the smaller players, and that is where tax credits and other financial instruments and structures here will start to play a bigger difference.

Writing off the construction of a GMP facility may not be entirely “experimental,” yet putting a new drug into it certainly could qualify. That’s especially true with any kind of qualifying research attached.

Right now, that is a siren’s song to a green industry that has frequently been short of cash.

Who Can Use This Kind Of Financing?

The best thing about tax credits is that they operate as a kind of insurance for investors looking for some way to offset the risk of investing in a new market. Cover the investment with a multi-year tax credit just in case? That is, for those who have a need for such vehicles, a no-lose proposition.

The only catch is that entrepreneurs need the right team (experts, including lawyers, and financiers are a must.) This is not something you do at home, or by yourself.

For the latest in Euro-financing strategies, be sure to attend the International Cannabis Business Conference 2020 in Europe in Barcelona, Berlin and Bern!

While the big Canadians are taking their beatings there is a new hum of something green and growing afoot in Europe. Namely, with all the buzz in the air about cannabiz business by the Canadians, the Americans, and just about everyone else, European farmers are not waiting things out.

The cannabis industry rules are starting to change and fairly drastically. Those on the ground in opening markets such as Malta, Spain, Portugal, Denmark, and Greece are doing the math. Traditional agricultural crops or medical cannabis, especially in an oil-based or distillate form. You don’t have to be Einstein to “do the math” and see the potential of cultivating cannabis.

Corporations saw the potential long ago, however, private farmers are eyeing the lucrative cannabis cultivation sector too. Those in the 10-30 million euro range are amply equipped to go to the bank for a loan at a standard European bank, to convert greenhouses already purposed to meet European food production guidelines.

That means that the party, as they say, is in fact just getting started. Calling all European family offices. 

A Turn In a Very Green Tide

For those who have not been watching, the world is changing fairly rapidly. Beyond the clean-up, let alone admission of the Great Garbage Patch, there are icebergs melting rapidly. All of those zombie apocalypse Netflix zingers have an awfully realistic view of what appears to be becoming reality rapidly.

You don’t have to be a 16-year-old girl to understand that the world is literally, melting.

This means a couple of things. For the cannabis industry, it means that local production of local medication is a political must that is showing up in a lot of international, if not transatlantic, discussions right now.

To people that honed their teeth on local, state, and even federal politics, the international perspective is equally bizarre. On the ground? It means that the local business communities left out of the conversation so far (from Germany and Spain to countries far from there) are finding a green vest cannabis voice that will not be stopped.

For all its hiccups and bumps, in other words, local European production is now in the room. And it isn’t goin’ back.

Be sure to attend the global 2020 International Cannabis Business Conferences in Barcelona, Berlin, Bern, San Francisco, and Vancouver, B.C.!

The newest announcement that Tilray has arranged the largest cross-European border transfer of medical cannabis to date is cause for celebration for more than just the two firms on either end of the deal. Cannamedical, the second oldest cannabis specialty distribution firm in Germany was on the other end of the deal.

The news is actually bigger than just this one announcement. It officially marks a new day in the greater cannabis industry in general.

There are many swirling currents in the international environment right now – perhaps the biggest of which are both CETA and the EU-US MRA Trade Agreement, which just kicked into full swing in July. That along with the 1961 Convention and existing MRA (pharmaceutical trade) agreements mean that there are new pathways for canna products opening up as reform hits on either or both ends of established pathways. 

But as of this fall, much like the now melting icebergs are creating new transatlantic pathways through the Arctic, the cannabis industry is entering the marketplace through all sorts of interesting passageways, and there are plenty of treacherous, mostly submerged hazards to navigate.

Who Is Coming Up To The Plate?

‘Who is getting involved’ is an interesting question, as European farmers are realizing, pretty much all over the map, particularly on the large commercial greenhouse side of the equation, that they are also in the running for the medical business. If your main business is tomatoes or peppers, for example, medical cannabis crops sound like a compelling idea right now.

Cross European trade of EU certified crops is on the upswing in other words, just as South African and Australian producers are also entering the market. And Israel is, of course, waiting to pounce.

Certification Is Key

While EU GMP regulated CBD producers in the U.S. right now are lining up for a bonanza on the medical side, there are many in Europe who see the writing on the wall and are aiming to play the game too. Greek produced medical CBD for example, may well beat anything out of the U.S., at least on cost. And who knows? Most of Eastern Europe is still in the running as a dark horse candidate in the medical market as the attention of the big players shifts towards recreational reform.

Regardless, for those with the right certs and audits, the map is opening, and further on a fairly global way, for a new trade whose day has most certainly come.