Michael Sassano, CEO of international cannabis manufacturer Somai Pharmaceuticals, explores the state of cannabis extract manufacturing in Europe and who is currently leading the pack.
CANNABIS extraction and product manufacturing in Europe is just starting to ramp up. Since the first European sales of extracted THC products began in 2020, the race is on to produce the best products for European markets.
How Far Along is Cannabis Extract Manufacturing in the EU?
The phase 1.0 products in the market today consist of basic THC and CBD distillates mixed with MCT oil and come in various dropper bottle mixtures of high THC, high CBD or a balanced combination thereof. Just like the United States and Canadian markets, the expectation is that European extracts will enter a 2.0 phase, and more innovative finished products will drive the sector to achieve, at minimum, a 50% market share of the European Union cannabis market within the next few years. According to Prohibition Partners, the most recent European numbers show an increase in extract focus: Austria produced 100% extracts in 2021; Czechia produced 83% capsules in 2021; Denmark’s Q1 2022 registered 78% extract sales; 46% of Germany’s public reimbursed sales were extracts in Q4 2021; the United Kingdom’s May 2022 extracts accounted for 30% of total market sales.
There are only a few extract manufacturers in the European market. They can be categorized as vertically integrated manufacturers, independent Active Pharmaceutical Ingredient (API) manufacturers, and independent full-range product manufacturers.
Who Are the Major Market Players in European Cannabis Extracts?
Vertically Integrated Manufacturers
Fully vertical cannabis companies that control the growing, production and distribution are currently some of the biggest names in the business. The largest is Tilray out of Portugal, which has the most dominant position in extracts and balanced-formula drops across the main European market. Bedrocan is based in the Netherlands and has added to its famous medical flower lines with various formulations of extract drops. Clever Leaves of Columbia has a Portuguese grow but produces its extracts in Columbia. They have expanded their U.S.-extracted CBD lines to Europe and are expected to have a Columbian-produced THC formulation soon for the German market. Curaleaf — previously known as EMMAC — is using its Portuguese grow operation alongside UK and Spanish manufacturing facilities to produce balanced extracts that have recently started to enter the market. Little Green Pharma out of Australia keeps making an aggressive push into the European market by purchasing a Danish grow facility and exporting THC drop extracts from Australia. Columbia Care boasts a broader range of products with claims of vape products in the EU and drops. Aurora out of Canada and now also Germany signaled last year that they are raising more funds to expand their presence in the EU medical market and expect drops in the future.
API Producers Making Pharmaceutical-Grade Products
Many earlier extraction companies focused on API production by selling pharmaceutical-grade CBD for clinical trials or white label formulations. They take advantage of the increased availability of THC biomass from independent growers in Europe and other countries. In Europe proper, there are approximately 25 licensed cultivators. The most extensive EU infrastructure is Portugal, with 18 licensed growers and over 120 pre-licensed potential future growers.
These same companies may soon be expanding to additional API of THC and other cannabinoids. Brains Bioceutical is one such API provider that started with CBD and is now expanding its operations to additional APIs like THC. Valcon Medical recently started producing bulk THC distillate API for white labels and recently attracted an 11.8 million euro funding round to expand its Denmark facility. Portocanna of Portugal just received its EU Good Manufacturing Practice (GMP) certification, focusing on bulk distillate API production and high THC drops. Vayamed of Germany is producer of distillate API and drops for magisterial preparation. Eurox , now Evextra, is a true homeopathic pharmaceutical manufacturer in Germany with a division making Dronabinol in a brand new state of the art GMP facility and has a cannabis cultivation in Portugal which will be operational soon. Linnea Natural Pharma Solutions mostly does pharmaceutical CBD, and has CBG and an array of nutraceuticals.
Independent, Full-Range Product Makers
A small number of full-range product extractors and manufacturers are betting that finished products are the future for Europe and going far beyond the German trend of magisterial prepared APIs. The few that exist have leaner capital structures without growing operations and put their investments into product innovations in manufacturing and the science of formulations and delivery methodology. Their approach is more pharmaceutical and medical orientated.
IPS Pharmaceuticals is a sizeable narcotic manufacturer that has added cannabis white-label services. IPS makes a variety of formulations and products for companies like Columbia Care and Grow Pharma. They have vape cartridges, capsules and oils for these cannabis companies. Panaxia Pharmaceutical Industries — although based in Israel — has a Malta manufacturing hub and one of the most diverse lines of product offerings from a wide range of CBD and THC oils, vapes, inhalers, lotions, concentrates, tablets, suppositories, and sublingual tablets. Somai Pharmaceuticals in Portugal works with nearly all growers to produce many APIs and a wide variety of products that go beyond MCT oil to incorporate the latest technology. Somai focuses on faster onset and more bioavailability and has the broadest range of products, including drops, sprays, transdermal, sublingual tabs, vapes and soft gel capsules, in addition to flower drying, packaging and certification.
Global Players Are At Bat in the European Market
European extracts are growing, and the merger activity around these independent companies will only increase until most of the names you see here are vertical companies. Distributors are actively looking for manufacturing partners and mergers to improve profit margins: Finished products maintain a healthy profit, and most distributors can efficiently act as a pass-through for flower products and European growers into many countries like Israel, Canada, Columbia, Uruguay and Lesotho. Europe is fast catching on to what U.S. counterparts have known for a long time: Manufactured finished products reflect a large population segment and reach more patients than flower. As Europe transitions from API-based products, expect more exciting news and product launches from these extractors and manufacturers. Europe is only at the beginning!