In short:
Europe is one of the world’s biggest medicinal cannabis markets, with its economic value projected to grow from $821 million to $3.3 billion by 2027.
Australian farmers are capitalising on this trend, signing multi-million dollar export deals.
What’s next?
Some in the industry are confident France will fully legalise its medicinal market in 2025, offering further opportunities for Australian exporters.
Cannabis is big business and top-secret indoor farms across Australia are scaling up to capitalise on surging demand.
Global legal cannabis spending reached more than $56 billion in 2022 and is set to reach $153 billion by 2027, according to market analyst Euromonitor International.
While most of the growth has been driven by “adult-use” consumers in the United States, meaning those who buy without a prescription, Australian companies have set their sights on a new wave of medicinal users — Europeans.
Continental opportunity
Across the globe, the plant’s legality generally falls into five categories: illegal, decriminalised, medicinal use legalised, recreational use legalised and recreational use commercialised.
Most of Asia and Africa are on the stricter end of the scale.
Canada and about half the US are on the commercial end, while Australia and most of Europe are somewhere in the middle.
Europe is currently the centre of attention when it comes to the global medicinal market and Germany leads the way.
The country accounted for $621 million of the total $821 million in sales on the European continent in 2023.
Medicinal cannabis patient numbers in Europe are predicted to surge by more than 230 per cent over the next four years, according to market analyst Prohibition Partners.
That could lead to a huge boost to the European market, with Prohibition Partners projecting the total figure will hit $3.3 billion by 2027.
While that is a small fraction of the US and Canadian markets, for companies like Byron Bay-based Australian Natural Therapeutics Group (ANTG), it presents a big opportunity.
“Germany is definitely the key market with a 90 million-odd population and a fairly progressive stance on medical cannabis,” chief executive Matt Cantelo said.
“And I would dare to say, also a smart approach to the regulations.”
ANTG, which has facilities in New South Wales and Queensland, has been exporting to Germany since 2020.
In April, new laws made it easier for Germans with a prescription to access medicinal cannabis.
The country also legalised recreational use for adults but stopped short of allowing a commercial market.
Mr Cantelo said a new 10-year supply deal with a company in Cologne would be worth more than $100 million.
“We do think it’s going to exceed that because since April we’ve seen a huge surge in demand right throughout Germany,” he said.
The new contract will lift the company’s total annual production from about 2.5 tonnes to 4.5 tonnes, which Mr Cantelo said would help create up to 45 new jobs across their Armidale and Brisbane sites.
‘Long time coming’
On the other side of the country, cultivator and manufacturer Little Green Pharma is also scaling up to meet projected demand.
Chief executive Paul Long said the relaxation of restrictions in Europe had been “a long time coming”.
“We actually saw a bit of a flatlining of the volume inside the German market, so this was a bit of a fire underneath that volume,” he said.
“We expect that increased demand to come in the next six to 12 months and beyond.”
The company is now looking to France, as Mr Long expects the country to legalise a full medicinal market next year.
If it does, he said most of the French people currently using illegally using cannabis would likely shift to medicinal use.
The United Nations estimated that 6.8 million people in France currently use cannabis illegally.
“People have this preconceived idea that cannabis is … just chasing a high,” Mr Long said.
“What we’ve seen [with] the patients coming from the illicit market to the medical [is] the lion’s share — 70 to 80 per cent — have actually been self-prescribed.”
He anticipated a similar experience to the Australian market, which had seen a significant increase in prescriptions since 2016.
“Once the product gets to the same price point at a better quality, where they can see a doctor and get a script, that’s when really the floodgates open on volume,” Mr Long said.
“We’ve seen that here in Australia in the last 12 months.
“It’s definitely more than just the people out there looking for something to do on a Friday night.”
Room to grow
Australia is a relatively young player in the marijuana market, legalising medicinal use in 2016 and approving exports in 2018.
The ACT broke ranks in 2020, becoming the first state to legalise recreational use.
Due to the lack of a domestic commercial market and United Nations treaties, which essentially restrict the import and export of recreational marijuana, Australia is focused on the medicinal market for now.
Data from the Office of Drug Control showed that Australia produced 23 tonnes for the domestic cannabis market in 2022, with 1,500 kilograms sent overseas.
The industry hopes the relaxation of laws in Europe will dramatically lift that figure.
University of Melbourne economics professor Jenny Williams has followed the liberalisation of cannabis markets around the world.
She said Australia’s existing foothold in Germany provided “good scope” for exports to increase.
The debate about the long-term social and health implications of cannabis use is ongoing across the globe and in Australia.
Ms Williams, who also studies harm minimisation, said Germany provided an alternative example for Australian policymakers considering liberalisation.
“It seems to be hitting the right marks in terms of providing an alternative to the black market and trying to restrict access to young people,” she said.
“There are alternatives to what we’re seeing happening in North America and Canada, which might not be to everyone’s taste.”
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