The EU might be following the US as the second largest cannabis market globally, but if you put these numbers into perspective, taking into account the number of consumers, the market and the pricing developments, the EU is the place to be right now. This was shared this morning by Beau Whitney with Whitney Economics, who gave the keynote speech at the start of the Cannabis Summit in The Hague, Netherlands.
"US foot-dragging opens the door for EU leadership," Beau stated in his market overview, and dove into this statement in his further talk. He explained that while the US struggles with regulatory inconsistencies, the EU is seeing country-by-country legalization efforts within a broader EU-driven policy framework.
Market structure is a key difference. The EU has nearly as many cannabis consumers as the US—65 million compared to 90 million—but spending patterns differ. The US market has traditionally been more lucrative due to higher prices and widespread access to legal cannabis. However, pricing compression in the US is reducing profitability, and equilibrium between the markets is expected over time.
Beau Whitney, Whitney Economics
The transition from medical to adult-use cannabis is accelerating in Europe, with Germany and Switzerland leading legalization efforts and France considering expanded medical reimbursement. Eastern and Southern European countries could emerge as key suppliers, positioning the EU as a major producer and consumer region. The approach is slower than in the US but is perceived as more stable.
While the US cannabis market is projected to grow through 2035, most growth is expected from illicit-to-legal transitions rather than organic market expansion. Federal reform remains stalled, and state-level markets are struggling with profitability. "Federal legality remains unresolved, and the current dispensary model limits access," Beau noted.
Oversupply in the US—56 million kg of authorized capacity versus 22 million kg of demand—has led to declining prices and economic stress for operators. In contrast, the EU is taking a measured approach to supply regulation. "Operators in the US need to adapt or they will produce at higher costs than they can sell for. The EU should take note—oversupply can kill opportunity before it even begins," he warned, as survey data indicates that only 27.3% of US cannabis businesses are profitable, with the remainder either breaking even or operating at a loss. "The US is a hot mess right now. Europe, by contrast, is demonstrating leadership through EU-driven policy."
Investment trends in the US reflect these challenges. Most investments are debt-driven rather than equity-based, with consolidation and refinancing occurring at higher interest rates. This has created a potential debt cliff that poses risks to both the investment and cannabis sectors at a corporate level, risks that are less pronounced in the EU.
As Beau concluded, the EU is expected to continue its step-by-step legalization process. "Expect an accelerated expansion of cannabis legalization in the EU," Beau concluded. "Communicate, educate, and support business development. Understand cost structures and take a global perspective, even when focusing on localized activities."
On Monday, we'll present a photo report of the Cannabis Summit
For more information:
Cannabis Summit
https://www.cannabis-summit.com/
For more information:
Whitney Economics
Beau Whitney
(503) 724-3084
www.whitneyeconomics.com