Mastering the challenge of market saturation and oversupply in Europe

More and more countries across Europe allow for the cultivation, manufacturing, and processing of medical cannabis. Yet many challenges are still in the way. Not all of the facilities are in operation, and not all of the companies are able to deliver what was promised. Some countries, like Germany, are also dealing with oversaturation and regulatory hurdles. One of the panels at ICBC Berlin Global Investment Forum was dedicated to helping companies navigate the European cannabis market.



Consistency and quality
Adrian Fischer of Demecan says that, as a German producer of medical cannabis, ensuring a consistent supply and quality is important in the competitive European market. "We've established a facility to do just that. I would advise you to invest in two labs: a tissue culture lab and your own QC lab. If you have full control over the product, then consistency follows." According to Adrian, Demecan's offering of GMP services is also beneficial for foreign companies wanting to sell in Germany. "We import GACP flowers from producers, after which we do the GMP processing. This offers more flexibility for companies to sell in Germany."

David Engel of Ondara Directorship mentions that the complex regulatory landscape of Europe poses challenges. "The European markets are not harmonized in the way they handle different aspects. Markets are also governed by agencies that don't always understand cannabis, which makes things very challenging." David also emphasizes the importance of the proper facilities to produce cannabis reliably in order to succeed. "That's where a lot of companies have gone wrong in North America in the past. Every aspect needs to be precisely controlled: temperature, humidity, drying methods, etc. Without access to a lot of capital, which is the case in the industry now, many companies are cutting corners when it comes to facility design. Yet that is asking for trouble concerning the quality of your product. When we acquired a greenhouse in Spain, we spared no expense to make sure we had control of every aspect of the cultivation process. That cost us a lot of money, but we knew that we couldn't not do it, as we would have the consequences later on."

Knowing your market
Vera Broder of MHI Cultivo Medicinal mentions that the regulatory framework in Portugal is very conservative. "One must understand that when you invest in medical cannabis cultivation in Portugal, it is a long road. Many companies entering the market are not entirely understanding the pharma path in Portugal. That leads to companies that were set up but didn't make it through, which is a shame."

Therefore, Alexander Rieg of HAPA Pharm adds that it is important to really know the market that you are entering. "Many cultivators have big dreams and ideas, wanting to build a state-of-the-art facility. But you should also know the market where you want to sell your products. In Poland, for example, the registration of a product will take 12-16 months. Moreover, there is no insurance to pay the costs for patients. It's important to consider these things when wanting to enter a new market."

Genetics
When it comes to overcoming market saturation, choosing the right genetics is an important aspect, says David Engel. "We saw what happened in Canada. Certain genetics would become popular, everyone starts growing them, and the prices plummet. We have a genetics company that can provide companies with exclusive genetics that only they would have access to. That is a great way to stand out in the market."

Competition or collaboration
Vera Broder also adds that collaboration is critical in a starting industry. "Especially here in Europe. We have a lot of experience coming from North America, but it's a whole different ballgame in Europe. That pharma regulations are completely different, for example. While the European market has a lot of potential, we are still far from reaching that potential. If we all work together, we can find a way to better educate the market. If we work together, rather than compete against each other, we can make this a more well established industry and avoid the mistakes made in North America and Israel."

Click here to watch the whole panel.