As the week comes to an end, our 4/20 stories do too. In our last special today, we focus on Europe. There have been many developments in the European cannabis market recently. So where are the biggest opportunities and challenges? Today, we hear from a cannabis breeder and a post-harvest equipment manufacturer.
Regaining optimism
"It's an interesting time at the moment. It felt like the market lost a bit of momentum in 2022, but this year the mood is a lot more optimistic. In Europe, we're seeing a lot of LPs starting to come online finally," says Damian Nixon, Business Development Manager at Paradise Phytogenetics. 
According to Damian, Portugal is the obvious example, with a significant amount of companies gaining licenses and many more currently in the pre-license stage. "We are also seeing movement in Switzerland following a change to legislation last year allowing CBD producers to apply for licenses to cultivate THC varieties."
"Increased competition is also influencing the market at the moment, and this has led to some high-profile casualties, reflecting the fact that medical sales have not grown as fast as hoped," Damian says.
"There's a strong preference for High THC strains still, but also more interest in balanced genetics, such as 1:1 THC/CBD varieties. Producers are focusing far more on ensuring the quality of the product too as the competition gets stiffer."
Challenges
"As with any business, finding the right partners and identifying clients that are going to be successful is a challenge," Damian says. "However, more specific challenges from the market dynamic revolve around responding to the pain points producers are experiencing and servicing those needs."
One of their challenges is that there is a vast gray market of seeds out there, so for a producer getting quality and consistency is a key need. "It's not just about finding genetics with provenance, but genetics that are supported with the knowledge and experience to help producers get the best from the propagation and cultivation process."
"We are only as successful as our clients, so the challenge we most relish is to assist clients in maximizing the potential of their product through supporting them as they cultivate our genetics."
Opportunities
Several countries in Europe are moving towards more liberalization in regards to recreational cannabis. "I mentioned Switzerland, but there is movement in the Czech Republic and, of course, Germany, with its recent announcement clarifying the aims and direction of the legalization process there. Even in the Netherlands, the coffee shop experiment being initiated this year is set to drive some change. This has many people anticipating and gearing up for the recreational experience," Damian says.
"Looking further afield, Thailand is an obvious opportunity, although elections in June may affect the speed and nature of legalization. For us, Colombia is looking very interesting at the moment. Finally, the regulatory regime has become far more supportive for doing business, as evidenced by the doubling of medical cannabis flower exports in 2022."
"Aside from the regulations, Colombia offers a great deal of opportunity thanks to its low costs of production and climate conditions which provide for year-round harvesting. Colombia is finally starting to realize its potential," Damian concludes.
"Production figures are really positive"
"It is well known that, currently, many countries of the European continent are experiencing an acceleration in the cannabis policy reform. However, in Spain, things are not so optimistic," says Arnau Juscafresa, CEO of Master Products. "Enforcement is inconsistent, as although private cannabis activity is permitted and cannabis clubs, for instance, are common, the use and consumption of cannabis is still illegal in our country. But, on the other hand, regulated licenses and authorizations issued by the AEMPS (Agencia Española de Medicamentos y Productos Sanitarios) are submitted for the cultivation of medical cannabis."
Arnau Juscafresa and Lluc Micaló
According to Arnau, this fact is an excellent indicator that the projection of medical cannabis in the Spanish market is enthusiastic and thought to be increased in the incoming future. "All regulated licenses are directly for medical purposes, for the production and/or manufacturing of cannabis for scientific projects, or even to obtain the necessary batches for manufacturing narcotic ingredients for medical developments. And, in terms of production, figures are really positive," Arnau says. "According to public media reports, the estimated forecast is 23,43 tonnes of medical cannabis by 2023, four times more than last year. Of these, 19,06 (81%) are intended for production for medical purposes, while the remaining 4,36 (19%) are for research. Spain is currently in the 11th position in the ranking of cannabis-producing countries and will become the 9th if this forecast comes, finally, true."
Concerning government support actions, in June 2022, lawmakers approved medical cannabis recommendations for the first time ever, and after months of uncertainty, the Ministry of Health finally announced and confirmed that they were currently working on medical cannabis regulations. "The AEMPS was the public entity in charge of developing a regulatory plan within six months for the integral use of cannabis in both therapeutical and recreative uses. That six-month deadline expired in December 2022, and the Spanish population got deflated with the whole regulation progress."
At this moment, negotiations and discussions are going on behind the scenes, not only in Spain but across the European continent. "Leaders such as Germany and Switzerland, that are achieving steps forward become the perfect mirror in which Spain looks at with hope and conviction that, in less time than expected, the legalization of cannabis in all its uses would, finally, be unleashed."
"So, in this uncertain but positive framework, at Master Products, we do continue working to give our consumers the best post-harvest solutions for medical cannabis and industrial hemp, not just in our country but overseas, sharing our expertise and bringing new experience that goes beyond the entire and rational purchasing decision," Arnau says.
Challenges
"The current market situation, due to the large supply of cannabis production, has led to an exponential decrease in prices, which forces all players to rethink and reinvent the way they focus their business strategy and activity," Arnau explains. "Growers and manufacturers have been forced to reduce costs and find new solutions for being both competitive and competent. And this is precisely one of the challenges we face. By creating production lines and automating the cannabis treatment, process production becomes even more profitable. Adding inputs and outputs conveyors, for instance, reinforces and strengthens the productive capacity of the trimmers, leading up to +30% final production. Further, quality controls on the incoming and outgoing stages get improved, and that fact also facilitates and optimizes the whole output. Automating also means standardizing the production, and this implies higher performance in less effort, time, and costs -just like had happened in any other industry when moving from manual to automatic processing."
"Listening and understanding our customers' needs drives us to exceed our challenges and improve our skills and capabilities to keep on offering innovative solutions, especially in the medical cannabis industry, which is increasing at exponential levels. We have reinforced our post-sale service and have developed new services to accompany our clients, such as the consultancy to pass the EU GMP requirement and the development of validation documents such as Installation Qualification and Operational Qualification (IQ&OQ), mandatory certification required to obtain the different international seals of guarantee held by the certifying authorities."
"Great challenges motivate us to grow, and we know every difficulty bring new opportunities," Arnau says. "That is the reason why our innovative philosophy encourages us to find new trends and develop innovations to professionalize, even more, the cannabis sector."
"Our main goal, as engineers and manufacturers of industrial equipment, is to implement innovative strategies to optimize and automate the whole value chain. Our aim is to provide new solutions for cannabis treatment that include benefits for the use, as well as functional improvements throughout the whole production performance. From trimmers to buckers for individual use or for industrial production lines, to sorters and deseeders machines that are unique on the market and that comply with the technical details of the most demanding EU GMP requirements, the essential seal of guarantee for all medical targets."
Opportunities
"Although we are a Spanish company and we distribute and offer our solutions in our country, our sales force is now focused internationally, even outside the European continent, where our brand has become a leader in the sector thanks to our experience and extended network of distributors and partners," Arnau says.
The current economic situation has brought Master Products to explore new markets in both cannabis and industrial sectors, and discovering new trends is a priority for them. "Due to that fact, we invest efforts in marketing research, and our R&D department reinforces its activity in creating new solutions to satisfy customer needs, generating profitable benefits for both parties."
"Fortunately, there are still many opportunities to be tackled and new challenges to be faced. Medical cannabis above all, is here to stay, that is a reality, and for sure, we will keep on working and consolidating our know-how to still be an active player in this expanding market."