Bright light city gonna set my soul, Gonna set my soul on fire, Got a whole lot of money that's ready to burn - Elvis Presley
An unprecedented whole-lot-of-money has been deployed into US cannabis this year - $3.7bn Equity raised & $5.0bn M&A closed for H1-2021, vs $1.0bn & $2.9bn respectively for all of 2020. It sets the stage nicely for the return of the annual Mecca of global cannabis professionals/investors to Las Vegas. How does Europe fit into this cauldron of excitement?
Murmurings of Europe Adult-Use cannabis have started to creep into our North American conversations. With German Adult-Use legalisation making the front page of BILD and a Canadian LP securing an option on a Dutch Adult-Use startup, we get asked about Europe's Adult-Use timing. At this point, there's enough to show a path, even if the usual politicking will delay the inevitable. For perspective, European progress is outpacing Calfornia's 1996-start medical cannabis journey; there are more reference markets now than ever, building momentum for new ones.
Our message in Vegas is to get into the pick of the litter of European medical cannabis; pick up invaluable operating assets now and you'll at least ensure you're in line for Adult-Use as a long term growth opportunity.
KOMAND works with North Americans to engage such targets in Europe. If in Vegas next week, we welcome your interest in Europe. Please contact us if you'd like to have a sit-down, we've a suite in the Palazzo Hotel.
The Penultimate Perception
Against the Clock or Ahead of the Curve
- August 2021 European Perception
2021 has been a solid, if somewhat sluggish year for sales growth and legislative movement in the European cannabis industry. While aggregate revenues still haven't taken off and the path to liquidity worries many shareholders, there is no major cause for concern. German medical sales remain steady, the French finally got out of the blocks with their initial pilot, and the U.K. is meandering into its role as a cannabis financing centre. All is as one would expect, at a very European pace.
Some European investors have run out of patience with this pace, curiously redeploying their efforts towards the US market and the upcoming adult-use markets (e.g. NY, NJ). With much less fanfare, there have been pockets of EU legislative movement, an example being the Czech manufacturing/export bill as outlined in KOMAND's latest European Reality Check, due to become effective in Jan 2022.
Banking on the timing of European legislative change is unadvisable, but "getting in" ahead of certain legislative movements can be done at significant discounts, with EU wide scalability (as in the case of Czechia). In contrast, highly coveted US companies in newly legal states continue to attract insatiable investor demand, with premium prices fully reflecting that competition.
Europe's time for this will come. The astute now are the winners for then.
In Europe, small and precise movements in cannabis legislation can turn a local opportunity into an international one. In Czechia, an uncoming law change positions the country as an EU supply hub adjacent to Europe's largest market and in a central European location.
Cannabis licensing is fundamentally different in Europe than in North America. KOMAND shows that EU pharma manufacturing/branding/wholesale companies already have the licences, relevant experience and infrastructure to win. New entrants should understand the strategic implications of this, or prepare to lose.
Numerous companies have purported to supply Europe with medical cannabis. KOMAND starts with the fundamentals of Europe's anticipated demand vs planned supply. The reality is that for the next 3 years, some suppliers will be required, and many will not.
This groundbreaking paper helps cannabis operators, investors and related sector companies to understand European market realities and formulate their competitive strategies, using established business fundamentals.