European Cannabis Q2 2023 Quarterly Update

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Country access schemes were simmering in the EU. Pressure continues to build from patients and advocates to increase access to cannabis, and the EU politicians and health ministers have been feeling it and are running out of room to not act on decriminalization, rescheduling and/or accepting the medical benefits of cannabis for its population. Adult use is still a hot potato that has turned into finger-pointing exercises between the individual countries pointing to the EU Parliament and then pointing to the UN and then around the circle it goes. There were bright spots to cheer about.

Germany once again took the poll position of roller coaster emotions all quarter. At the start, the announcements went from "we are committed to full legalization" and quickly turned into the “legalization light” which brought out the two-pillar strategy. And just after the quarter ended, they released The Cannabis Act. A very positive first step for cannabis reform which basically can be summarized as a step to decriminalization and rescheduling. The main points were decriminalization of possession of cannabis, home growing up to 3 plants and not for profit social clubs with a hidden gem for investors in medical cannabis which eased the doctors ability to prescribe by reducing the narcotics burden. Let’s see the final versions, but if approved medical perceptions of cannabis could be as accessible as antibiotics to treat all indications that people are trying to solve with cannabis.

There are many other countries that throughout the quarter made progress towards advancing cannabis reform. Malta has been processing dozens of cannabis social club license application . Switzerland is expanding it’s social clubs trial experiment to other cities after it’s successful pilot which started in Zurich. Czechia is throwing caution to the wind and challenging the EU with a bold recreational style program that may become either a cautionary tale or will be scaled back to a more German style program. In fact, the brush fire of cannabis in Europe is simmering and nearly every EU country is addressing their acceptance as all their neighbors open access to cannabis medically and potentially adult use “light” versions. In a similar ping-pong Spain, which had promised reform by the end of 2022, spent last quarter causing anxiety. The Spanish Health Minister came out with the most outrageous claim mid-quarter that he saw no medical benefit to cannabis besides epilepsy and multiple sclerosis, seemingly straight from the GW Pharma webpages. The blowback was so intense and flew in the face of common sense that a week later he promised some progress in June, which should passed with no resolve. Any long time cannabis advocate understands that there are the will of the patients and population versus lobbying groups and out of date medical bureaucracy that is getting usurped by decades now of factual evidence that people are indeed benefiting, and the positives outweigh the negatives. 

And M&A was robust as larger companies snapped up deals of under capitalized companies. Curaleaf bought the Clever Leaves Portugal GMP drying facility for. JMCC bought the Materia ventures asset to add GMP drying and German access to their Jamaican cultivation. OTO and South West Brands merged in an all stock deal to create OTO Group. Avicanna acquired the Medical Cannabis Division from Shoppers Drug Mart in a structured payment deal. MediPharm Labs completed its acquisition of VIVO cannabis for £9m in stock stretching its reach from Canada to Australia. Atlas Global Brands bought GreenSeal CAD$2.5m to bolster Australian flower sales.And from the capital raise point of view, there were a few small tickets that were dropped. MGC Pharma raised £2.1m through the issuance of ASX and LSE listed stock for ongoing operations. Northern Leaf raised £3m in proffered shares as pre-IPO capital. Love Hemp announced some pre-IPO raising in the quarter. 

While economically, much like the overall economic global trends, the EU cannabis sector moved along positively but cautiously. The cannabis growth story in Europe is strongly being supported by incremental country by country progress. Although we never get all that we wanted, the EU cannabis industry is getting exactly what it needs right now, positive pushing.

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