When evaluating the international medical cannabis markets, we can predict with a high degree of certainty that the European market will not be the first destination for global activity, but most likely, Canada or the US will beat them to it.
However, this reality is set to shift in the coming years, as Europe is expected to take a leading position in the field of medical cannabis. The last two years have seen a real revolution in both public opinion and regulatory policy regarding the use of cannabis for medical needs in Europe. One of the world’s leading medical cannabis research firms, Prohibition Partners, estimates that this market will reach 123 billion euros by 2028 and is expected to become the world’s largest cannabis market in five years.
To date, European Union countries have invested over half a billion euros in the field and at present, Germany, Italy and the Netherlands are leading the charge with advanced legislative policies on growing, selling and using cannabis. Even countries such as France, Spain and the United Kingdom are currently considering the right policies to implement. Certainly, there are no simple challenges to speak of when it comes to a continent of 742 million people, more than 50 countries and 24 different languages. The primary issue facing the EU will be to find the golden path of unified regulation and to establish a common standard accepted by most countries.
Israeli innovation in the field of medical cannabis has garnered the attention of companies in Europe – both at the technological and scientific development levels. In terms of exporting cannabis blooms to European countries, Israel is certainly of keen interest to various European countries. However, fierce competition is already underway with European countries such as Greece, Macedonia and Portugal. These countries have relatively cheap labor, similar weather to Israel solved the issue of customs duties in Europe. Israel can still exploit its relative technological advantage and offer unique cannabis varieties tailored to various medical or cosmetic needs, but this window of opportunity is also expected to end in the coming years as Canadian and American companies base operations in Europe.
Another opportunity for Israel is in the field of CBD, the main component of the cannabis plant that does not have psychoactive effects. Unlike Israel, where the Health Ministry still regards CBD as a dangerous drug, most countries today allow the purchase of CBD legally rather than demanding a prescription. However, each country has a different policy, with Denmark and Belgium, for example, still requiring a doctor’s prescription. Leading Israeli companies are providing various CBD-based solutions locally, and due to current regulatory barriers, there is no incentive to sell it in Europe, so time-to-market is rapid and it generates significant revenue. Today, despite the legal ban, products containing CBD can be purchased in a growing number of dedicated stores in central Tel Aviv, and police also appear to have decided not to enforce the law on this issue.
The business potential, along with other benefits such as geographical proximity and high accessibility, create a substantial window of opportunity for Israeli cannabis tech companies. Identifying the potential is not enough. The government ministries that are behind the promotion of CBD, headed by the Economy Ministry, the Export Institute, the Innovation Authority and the Health Ministry, play a crucial role in realizing it. They should take the reins and remove regulatory barriers that prohibit Israeli companies from selling CBD products abroad, as well as clearing the path to research and development dedicated to the wellness markets of non-prescription products.
Implementing a policy that prioritizes medical cannabis will not only promote the growth of these companies and generate significant profits for the Israeli market, but will also move Israel further toward stronger economic ties to a number of EU countries.