What’s in Store for the European Cannabis Industry in 2024 – Part 2

2024 is set to be the year of elections, with more than half of the global population (4.2m people) set to vote in over 70 elections around the world. 

As we saw in 2023, changes in government administrations can have a significant impact on both attitudes and policies surrounding cannabis, and the global landscape could be drastically different by the end of the year than it is right now. 

Inevitably, there is a continued focus on the growing acceptance of adult-use cannabis throughout the world. While our roster of industry experts believes this excitement could help provide a much needed financial boost for the sector, they emphasise that medical cannabis will continue to be the engine of growth throughout 2024. 

Thomas Skovlund Schnegelsberg, CEO, Stenocare

The key theme for 2024 will be further growth for medical cannabis sales – in Europe and globally

The past year, 2023, had both good news with growth in patients’ treatment with medical cannabis and sad news with licensed producers closing. However, the year will be remembered for its continued positive momentum of growth in most markets.

Stenocare in Denmark has several expectations for the year ahead. New markets will open and embrace medical cannabis as a new treatment. Ukraine and its war veterans will have the opportunity to use medical cannabis for PTSD, and we will also see new countries legalise to offer alternative treatment for chronic pain and opioid-addicted patients.

Speculation that recreational cannabis will become generally legal in Europe will continue, fueled by the German efforts. But it is important to understand that the EU law framework for all European members outlined in EU Article 2 and Schengen Article 71 that production, distribution, sales, and possessing recreational cannabis is illegal, and the members must enforce the laws. The only path is to introduce a time-limited pilot with a narrow scope that complies with the EU law framework. From an industry perspective, this will drive both public awareness of medical versus recreational use and further contribute to reducing the historic stigma for the cannabis plant.

Stenocare expects that both sales and the number of patients will continue growing during 2024. On a company level, this will translate into 100% growth in sales and break-even by the end of the year. As the young medical cannabis industry works towards the Prohibition Partners 2027 sales projections of USD 2.2 billion in Europa and USD 12.8 billion Globally, Stenocare is inspired by the famous quote from Winston Churchill: ‘It is, perhaps, the end of the beginning.’

In the UK, Hilltop Leaf’s CEO Hamish Clegg suggests that domestic cultivation, product consistency and a greater balance of quality and price will define the market in 2024. 

The price versus quality focus comes as some companies flooded the market in the second half of 2023 with very cheap products, which is great for patients on a tight budget, but not sustainable from a profitability stance at the current scale of the market, or from a quality of product basis.

In 2023 some of the sub £5/g product quickly sold out – this resulted in patients not being able to get consistency of supply causing frustration. I think there may be a greater balance of price and quality in 2024. I believe patients would rather pay a little more (£6-7/g) and receive the same product every single month.

2023 was incredibly patient-driven with patient demand to try as many different products as possible. There is a sensible reason for patients to try multiple products (strains, strengths, formats) to establish the most appropriate strain for their condition – we are all different after all. However, that is very hard to do if patients don’t stick to one product for a sensible period of time, such as three months. Chopping and changing makes it near impossible to determine which product is most appropriate for that individual. Next year I think products coming to market will be more clinically-led and high quality. Therefore, I think clinicians will be looking at working with suppliers who can give their patients consistent supply and have high quality products.

The supply chain will inevitably be helped by the first UK supply. I think 2024 could be the year we start to see UK production coming to market, albeit in small volumes. Capital markets are also likely to open up as interest rates start to reverse. This will help the UK industry to continue to grow – that said I think investor focus on cash flow, cost discipline and ESG will mean there is capital available only for the right opportunities.

Finally, we all hope society (Police, Employers, Govt, the wider demographic and even NICE) increases acceptance of CBPMs as a treatment. That said this will only happen if patients  continue to respect others acceptance and follow the guidance of their doctors.

Turning to the emergence of adult-use cannabis markets across Europe, Paris-based Augur Associates explained there are two distinct models countries seem to be adopting. 

Global attention is shifting to Europe, where countries are overcoming regulatory hurdles with innovative legal approaches. However they mostly remain quite reserved, banking on “regulated decriminalisation” rather than actual adult-use non-medical commercial markets.

Some countries are legalising under the guise of scientific research, (while however bearing no actual international legal ground in terms of scientific projects). Switzerland, the Netherlands and Germany are at the forefront of this approach, employing pilot projects to assess the social, health and youth protection consequences of legal commercial supply chains.

The European non-medical industry is thus gradually evolving between the meshes of two emerging models. The first is based on ‘private non-profit organisations’, also known as Cannabis Social Clubs, whose members are registered and responsible for growing cannabis and distributing the harvest among themselves.

Malta and the first German pillar illustrate this model, which also allows citizens to grow cannabis at home. In this non-commercial model, the industry has very little involvement and it will be quite difficult for them to get in. Which bears the question: who will pay to set these clubs up? It is not a small feat, nor cheap. Money laundering and infiltration by the illicit sphere will need to be watched carefully. The Luxembourg project is a downgraded version of that first option (if it ever gets there).

The second model involves ‘spatially limited and tightly controlled supply chains’, as tested in Switzerland and the Netherlands, and as proposed by Germany in its (potential) second phase of regulation.

The aim of these supply chains, which are limited in time and should be perceived as political experimentation, is to explore effective and (supposedly) compliant ways (with EU and international law) of legally distributing cannabis. These are ‘little steps’ regulatory processes, mostly using international compliance issues as a reason not to go full-legalisation; these burdensome processes are looking to be over-regulating under the pretences of protecting public health from cannabis radioactivity. However, these processes are moving forward, despite a quite unfavourable political EU climate.

The Czech Republic project seems to look like an upgraded version of that second option (while integrating the basis of the first option) and could represent the very first fully regulated market to be set up in the EU. Belgium and Portugal have launched preliminary processes and should be watched closely in 2024.

If it is successful in overcoming regulatory hurdles and a politically critical climate, the European adult-use cannabis market could become a major global business sector. 2024 looks set to be a pivotal year, with innovative models and pilot projects shaping the future (or not). While the challenges are still numerous, the momentum is undeniable.

This momentum, in both adult use and medical cannabis, is set to see a much needed boon for cannabis investments, according to SOMAÍ Pharmaceuticals CEO, Michael Sassano. 

2024 is shaping up to be a year of potential big wins for cannabis from legislative, valuative, and popular opinion viewpoints.

Clearly, politics and regulations have always been an Achilles heel for cannabis. Recent movements show that regulators are rejecting political lobbyists and going for what is right and popular.

In August, the United States Health and Human Services (HHS) Assistant Secretary for Health Rachel Levine sent a communication to Drug Enforcement Administration (DEA) Administrator Anne Milgram about rescheduling cannabis from a Schedule I narcotic, like heroin or LSD, to a Schedule III.

The Germans are facing similar calls on both sides of the aisle to de-list cannabis as a narcotic and decriminalise the plant. The recently approved proposal to decriminalise cannabis, enact social clubs and remove cannabis as a narcotic looks like it will progress through the German parliament.

These two landmark regulatory events could send the global legalization efforts in most countries into overdrive. Already, we see major cannabis policy announcements from almost every continent, and countries like Thailand, Ukraine, Czechia, Albania, Morocco,  Brazil, and Japan to name a few, are all pushing cannabis programs. In 2024, expect countries you never thought would join the cannabis train hopping aboard.

2024 should be a turning point after six years of turmoil and inconsequential legislative moves. The Biden administration needs an easy win, and regulatory action is one. German politicians need a win and will most likely secure it administratively. Globally, countries need to bring about change in turbulent times. Generally speaking, valuations cannot get cheaper as companies have successfully survived and are now on the upswing. Additionally, consumer preference will outweigh lobbyists’ influence through 2024.

Let’s not wait for 2025. Urge regulators to make 2024 the year they do what their constituents want instead of pursuing ideas benefiting corporations.

You can read Part 1 of our 2024 predictions here