Despite the federal government’s stubborn refusal to declassify the plant and Congress’s ongoing reluctance to address common-sense measures like banking reform, the United States remains the world’s most lucrative cannabis market. With the launch of new adult-use programs in several states this year, some optimistic estimates project 2024 revenue could reach $50 billion; combined with hemp, professional prognosticators predict the market could be worth more than $100 billion.
According to analysts at BDSA, the U.S. accounted for about 56 percent of global cannabis revenues in 2023. Because of the country’s size and population (345 million), it’s unlikely any other single-country market will overtake the U.S. soon. Considered as a whole, though, Europe (population 745 million) certainly could. With federal-level legalization spreading across the continent like wildfire and mostly sensible tax and regulatory structures, Statista projects the European Union will generate $6.2 billion in revenue this year—and the region’s market is just getting started.
Unsurprisingly, Europe—especially Germany, where 84.5 million residents gained legal access to adult-use products in April—is a primary target for American and Canadian companies seeking new markets. North American operators read early indicators on the continent as positive signs for future growth.
“Probably the best analogy would be to say it’s the U.S. circa 2014 or 2015,” said NewLake Capital Partners founder and Chief Executive Officer Anthony Coniglio, whose company is investigating opportunities in the region. “It’s still very much the early innings there, and there are significant catalysts that are different from what we see in the U.S. For example, where [cannabis is] legal, it’s legal. There’s no piecemeal regulation like in the U.S., where some states are medical and others are recreational.”
That is not to say Europe has thrown the doors wide open for cannabis. It hasn’t. Many countries on the continent have legalized medicinal sales but remain cautious about authorizing recreational commerce. In fact, although a growing number of countries worldwide have decriminalized the plant, only a relative handful have legalized recreational use. Still fewer have established regulatory structures for recreational sales. Austria, the Czech Republic, and Greece reportedly have commercial recreational programs under consideration but have not announced official plans.
Much of the world now embraces cannabis as medicine, but regulations vary widely. Some countries allow only flower, some only vapes, and others permit only tinctures, oils, and capsules; some require a physician’s prescription and dispensing is permitted only by pharmacies.
“Every U.S. state has its own regulations, but at their core they’re fundamentally similar,” said Wana Brands President Joe Hodas, whose company recently entered the Swiss market. “I think Europe is considering the U.S. model, but Australia is a prescription model. Product brands must have compounding pharmacy partners in some countries, but those pharmacies can package fully prepared gummies, which counts as compounding.”
According to Carma HoldCo co-founder and CEO Adam Wilks, “The U.K. market also requires a prescription. Based on our reception there, we’re very optimistic about Australia.”
But Grove Bags Chief Marketing Officer Lance C. Lambert, who has attended almost every industry trade show in the world at least once, offered a caveat. “Medical cannabis is legal in fifty-three countries around the world,” he said. “Their definition of medical is not necessarily our definition of medical. If a doctor prescribes a certain strain, that’s the only one the patient can get.”
Consumer preferences for product formats, flavors, strengths, cannabinoids, and terpenes vary by market, as well. Wilks pointed out terpene profiles, strength selections, and strains “will be important in Australia.”
No matter how encouraging foreign markets may seem, none of them are the industry’s Shangri-La. Markets face similar stressors worldwide. For example, European online marketplace Bloomwell reported flower prices in Germany fell by as much as half after the country legalized adult-use sales.
Overseas markets experience familiar growing pains, too. Prohibition Partners reported German regulators received 226 social club applications in July, representing an increase of 250 percent over the previous month. Licensing lags, however, with only eight social clubs approved in a single German state by mid-August. Prohibition Partners blamed “growing frustration among aspiring clubs” on “complex bureaucracy and the absence of a clear regulatory framework.”
Tax structures in some international markets can seem convoluted and, in countries like Australia, taxes may be even more aggressive than they are in the U.S.
Energy, labor, and raw materials costs also vary widely, making location choices complex even though robust importation and exportation policies exist. According to Lambert, domiciliary requirements in some countries can stymie even the largest, most well-funded operators. That’s why many North American companies prefer partnerships, licensing agreements, and franchise-like relationships to owning operations in most international markets. He cited Germany as a prime example.
“Regulation and the way the market is set up in Germany makes it attractive to establish a corporate presence there,” he said. “But the Germans are pretty strict about personnel. Companies need a physical presence, and they must pay VAT [value-added tax] not only on goods and services but also on employment.”
Establishing a foreign presence “can be a little scary and a little intimidating and expensive at the same time, and sometimes the red tape is just too much,” he added. “Companies experience delays because the rules change. It’s not uncommon for a non-plant-touching company to take a year to make a small deal.”
Sociocultural idiosyncrasies can limit international opportunities, as well, according to Coniglio.
“The people I’ve met who are looking to operate in Germany are German; in the [United Kingdom], they’re British,” he said. “You need to have people from that country on the front line. Local people are well positioned, as opposed to Americans stepping in and trying to navigate the regulatory structures.”
But the biggest hurdle for American operators seeking international opportunities isn’t regulations or cost factors or adapting to market preferences. Instead, most companies may find it uncommonly onerous to comply with manufacturing standards that far exceed what the strictest U.S. state currently requires.
“U.S. operators are accustomed to adapting to regulatory structures,” Coniglio said. “That doesn’t faze them. The biggest hurdle will be adapting to EU GMP [Good Manufacturing Practices] protocols.”
Lambert agreed. “You can’t just be all cocky and confident and extreme capitalist,” he said. “You have to meet the country’s standards. If you’re going to operate in Europe, you have to meet EU GMP— even if you’re a packaging company or equipment manufacturer.
“My best advice? Do your homework,” he added. “You really need to do your due diligence. You may have to do a lot of reverse engineering. Is your core client the same internationally? Make sure the market contains the right customer. And choose the best path: Is it better to partner with someone, or do you want to take the leap and spend tens of thousands of dollars to incorporate overseas? It takes lots of time and money to establish residency in other countries.”
Despite the hurdles, adjustments to business processes and relationships, and regulatory rigor, American companies that have made an intercontinental leap report finding a warm welcome in most markets. Even better, they’re finding unexpected pathways to potential profitability.
The edibles conundrum
Germany may be the buzziest European market right now, but Wana Brands’ Hodas isn’t convinced the country will live up to expectations—at least not right away.
“When you look at international markets, you have to look at what is viable,” he said. “The U.K., the Netherlands, Germany, Australia—the path to market in those countries is not simple. You have to look at opportunity cost. Does it make sense to explore these countries?
“Everyone’s excited about Germany, but [Germany hasn’t] created a pathway for edibles,” he continued. “So, it’s potentially a country that does very well down the road, but that’s not the case right now.”
In fact, he noted, most countries outside the U.S., Canada, and a handful of others aren’t sure they want to include edibles in their legal markets. That’s something of a stumbling block for Wana, which manufactures exclusively edibles—gummies, to be exact, and a lot of them. According to founder Nancy Whiteman, the company annually produces nearly 100 million of the infused treats through extensive licensing agreements in Canada and the U.S.
“I don’t think people really understand edibles in Europe yet,” Hodas said. “For one thing, I think the overarching perspective is ‘What about the kids? Don’t kids like candy?’” However, he added, like their counterparts in the U.S. (where 15–20 percent of legal sales are edibles), European regulators are overlooking a fact proved all too often in more mature markets: “If you don’t provide edibles in a legal, regulated, taxed market, people will just get them on the illicit market.”
Hodas also believes banning edibles in medicinal markets—which probably will compose the majority of the international scene for a while longer, he predicted—is counterproductive.
“If you take edibles out of the mix, your choices are tinctures, flower, vapes, and concentrates,” he said. “Inhaling smoke is not great for health, and some patients can’t do it. Medical patients will get far greater benefit from edibles than from smoking. And consumers are used to consuming medical products [and dietary aids] in edible formats.”
So, when the Wana team decided to take the European plunge, they focused on Switzerland, a country with one-tenth Germany’s population but much more opportunity for an edibles brand that offers both medicinal and adult-use products. The country has had a functioning medical program since 2022 and is in the midst of an adult-use pilot program that employs pharmacies, social clubs, and nonprofit retail outlets in all major cities as distribution channels. Outlets are limited to 5,000 participants each, and brands must apply to be part of the trial, Hodas said. Beyond that and some strict testing requirements, though, the program is among Europe’s most progressive and accessible adult-use frameworks, allowing for any product format as long as manufacturers and distribution points follow the rules.
In March, Wana became the first American edibles brand to formally enter the European market when it partnered with Swiss company Alpen Group to manufacture and distribute gummies in Switzerland. Hodas said the partners hope to have products in the marketplace by the end of the third quarter.
“Switzerland is a sleeper market,” he said. “Two things are going to occur: Ultimately, the Swiss will use these pilot programs to establish full legalization, and other countries will watch what happens and design their programs accordingly. They’ll be looking at whether the Swiss program works as a whole and, if so, what works best?”
Despite his confidence in the Swiss experiment, Hodas is a realist. As an industry veteran of ten years, he’s seen projects fizzle, companies disappear, and markets collapse. His advice to others considering international expansion?
“Be aware Europe is a long-term play,” he said. “You won’t start making money tomorrow.”
Multiple markets mean multiple challenges
Carma HoldCo, parent company of Tyson 2.0, has been extraordinarily busy establishing international partnerships. Since launching in Canada in 2022, the company has entered five additional regulated international markets including, most recently, the U.K. and Germany. CEO Wilks expects Tyson 2.0 to be available in Jamaica and Puerto Rico (not technically an international market since it’s a U.S. territory) in September and Australia later this year.
Wilks attributes the company’s brisk pace primarily to three things: his background in fast-food franchising, Mike Tyson’s international celebrity, and a wealth of accessory merchandise that is sold in unregulated markets worldwide. The hard goods, which are available in brick-and-mortar locations in sixteen countries as well as online, promote name and product recognition, Wilks said, almost like a sales team on the ground even before legalization.
In addition to working with what he described as a network of “cultivators, manufacturers, and distributors all over the world,” the company also has a powerhouse partner already embedded in multiple markets: PHCANN International, a multinational pharmaceutical company headquartered in Amsterdam. Much of Carma’s international-markets flower is grown in PHCANN’S EU-GMP-certified indoor cultivation facility in North Macedonia. With an annual capacity of fifteen tons of dried flower, the facility exports to Germany, the U.K., Israel, and Australia.
Though Carma’s rapid expansion might suggest otherwise, Wilks said challenges abound when “going international.” Regulations vary from country to country, supply-chain issues can arise without warning, and standing out as a brand while adjusting to local cultures requires more than a little finesse. So does maintaining the brand’s storied authenticity and holding partners accountable. Additionally, providing marketing and operational support to so many disparate entities demands constant effort, as does keeping track of which markets allow which product formats.
One of the biggest challenges, Wilks said, is vetting “well-qualified cultivators, manufacturers, and distributors all over the globe.” The Carma team evaluates potential partners based on a laundry list of characteristics including staying power, capital position, knowledge of applicable regulations, a functioning supply chain, and a following in the local culture.
“We’re pretty anal with who we bring in,” he said. “Obviously, in this space you need to do your own due diligence.”
Another super-sized challenge, according to Wilks: “You’ve got to be able to adapt. What works here in the U.S. may not work somewhere else. For example, pre-rolls are one of our top products, but we can’t offer them in every market. Ingredients may be a problem in some markets. Shapes can be a problem: Some markets won’t allow ears.”
Mike Bites, one of the company’s most popular edibles, are gummies in the shape of a bitten ear—a tongue-in-cheek reference to the notorious title fight in which Tyson bit off a piece of his opponent’s ear … and promptly lost his boxing license. (The license eventually was restored.)
Despite what sometimes seems like endless travel and detail work, Wilks said he’s never felt more energized.
“We could not believe how welcoming the U.K. community has been,” he said. “Pharmacies are ordering twice what we anticipated. Germany’s been great, too. I’m excited about Australia. We already have non-regulated products there, but we’re holding off the regulated launch to focus on the demand we currently have in the U.K. and Germany.
“There’s obviously some challenges, but it’s exciting at the same time,” he added. “I couldn’t be more excited about all the opportunities. We’re extremely excited about the potential for cannabis as an industry on a global scale.”
His advice for others considering international expansion?
“Anybody going international needs to understand the regulated market landscape, find the right local partnerships, adapt, innovate, and build a strong, authentic brand consumers can connect with and relate to,” he said. “It’s not easy pushing into international markets, so just buckle up and enjoy the ride. It’s a challenge, but it’s a fun one. It’s keeping us on our toes.”
Today Asia; tomorrow, the world
Sunderstorm co-founder and CEO Cameron Clarke is keeping an eye on Europe, but his main focus is farther east—in Thailand, to be precise, where in May his company became the first American firm to launch a manufacturing-and-distribution operation for medicinal products formulated for Asian markets. In partnership with one of Thailand’s first licensed cultivators, distributors, and retailers, the facility makes and ships KANHA-branded products to more than 100 Thai stores so far. Beginning in the fourth quarter of this year, the facility will manufacture and export two additional lines to Japan.
The status of recreational use is in flux in Thailand after a political shakeup earlier this year during which the government threatened to reclassify cannabis as a prohibited narcotic. That’s not a big concern for Clarke; he’s more interested in medicinal markets anyway, at least for now. Asia, which has employed plant medicine for centuries, represents a vast, untapped market for regulated cannabis, he believes.
“Belief in plant medicine is very strong in Thailand,” he said, adding that a large medical tourism market also bodes well for the cannabis trade in the country. In fact, he said, one of the most exciting aspects of the Thai market is the opportunity to develop wellness centers for global plant-medicine tourism. His company is taking part in one such effort that should debut this year.
Thailand also provides an environment conducive to profitability for the industry, Clarke said.
“Production and labor costs are low,” he said. “Thailand has a fantastic history of exporting pharmaceutical and nutraceutical products all over the world; they just needed to establish the regulatory framework for cannabis. They did that, and they’ve invested hundreds of millions of dollars into cannabis infrastructure to date. Now, they’re ready to export globally.”
Unlike other American companies that employ partnerships, licensing, or franchise-like models for their international operations, Sunderstorm prefers to partner on licensing, facility development, and distribution but maintain complete control of manufacturing.
“We manufacture, ourselves, in every location,” Clarke said. “We hire local people to support the local economy, then we train them and manage them. There’s a big cost in resources and finances to drive our business in this way,” but the system allows Sunderstorm to control intellectual property like formulations and recipes and ensures product consistency “from Bangkok to Boston.”
Clarke and his crew plan to begin exporting from Thailand to Europe during the first quarter of 2025. They also have designs on Australia and are watching as the plant’s legal status evolves in the Philippines.
“I’m hopeful about that one,” Clarke said.
His advice to others considering international expansion is simple, yet profound.
“Recognize the global market is a very medical market, and it’s highly regulated,” he said. “It’s much more of a wellness story than a recreational story. In the end, that’s the best way for us to drive interest in the industry from consumers all over the world: We need to get back to our roots with this powerful plant medicine.
“The plant connects us,” he added. “The whole experience is cannabis wellness. To me, that’s what the global market is all about.”
Money is the same everywhere
Coniglio’s company doesn’t touch the plant. In fact, NewLake Capital Partners doesn’t touch products of any kind. The company is a real estate investment trust that acquires industrial and retail properties and then leases them to clients including Curaleaf, C3 Industries, and Calypso Enterprises. NewLake’s interest in international markets currently centers on Europe, where Coniglio and his team are “exploring potential opportunities.”
His study of the European environment has focused more on the sociocultural and financial differences between the North American and European industries, leaving him fascinated with what he called “macro dynamics” in the latter region. Some of those dynamics may give European markets an advantage on the world stage, Coniglio said.
For example, “What keeps me up at night is [Food and Drug Administration] regulation and oversight [of the U.S. industry] that many in the industry today won’t be able to adapt to,” he said. “In order to exist going forward, U.S. businesses will have to adopt operating procedures more like those in Europe. European operators tend to look more like pharmaceutical companies than the average U.S. operator [does].
“The FDA [eventually] will regulate this industry,” he continued. “Operators will have to adjust to the FDA. Since the FDA is used to dealing with pharma, this industry will have to adapt and behave more like pharma.”
The pharmaceutical-like nature of industry operations in European nations isn’t just regulatory gamesmanship. From the start, stakeholders there set out to establish cannabis as legitimate medicine for some very good economic reasons.
“The more socialized nature of their medical reimbursement structures in Europe means you may find a more robust medical reimbursement system in the near term than you do in the U.S.,” Coniglio said. “France [which approved an extremely limited medical program this year after a three-year pilot trial] is one example. If France decides to legalize medical cannabis, speculation is that the government will reimburse for treatment.” In addition, he noted, in July the German Federal Joint Committee proposed allowing doctors to prescribe cannabis without reimbursement pre-approval from insurance companies.
“Markets may grow very, very rapidly because of the reimbursement system,” Coniglio said. “With reimbursement for medical products, there may be less competition from the illicit market because price pressure for the consumer won’t be an issue.”
Despite the differences between markets, operators worldwide can’t find enough of one essential resource: money. And that’s why NewLake is investigating markets beyond North America.
“Because cannabis is legal in [much of] Europe, operators should have access to the regular capital markets,” Coniglio said. “However, that’s not really what I heard when I was there. People complain about an inability to get mortgages and capital because of the type of business they’re in.”
Consequently, “many Europeans are looking for American partnerships—more for capital than expertise,” he continued. “Europeans know how to manage European markets and rules, but they need more capital and knowledge. Europe is eight to ten years behind [the U.S.], but they can learn a lot from how the U.S. industry has scaled up.”
Coniglio believes the European market definitely bears exploration, particularly by cultivators. Since borders are legally porous, cultivators can locate where the climate, resource costs, and labor are propitious and export to anywhere they can find buyers. And, as it is in the U.S., flower is king on the continent—but unlike in some parts of the U.S., supply has not yet outpaced demand.
He offered one big caveat, though.
“Europe is not going to be your savior,” he warned. “It’s not going to be this growth engine. Make sure your house is in order before you head over there and before you go trying to manage a business that is a six- to eight-hour or more plane ride away and four to six time zones away. Make sure your core business is performing the way you want it to perform.
“Entering a new market is always harder than you think and takes longer than you think,” he added. “You have to earn the right to enter by being on a solid financial foundation.”
