NEW YORK, June 14, 2019 /PRNewswire/ -- Much has changed in the aftermath of the World Health Organization's (WHO) marijuana reclassification recommendation back in February — in particular, the potential for the European Union (EU) CBD market. Products made from the non-psychoactive cannabinoid are growing in popularity in the EU, through innovation and perseverance from North American companies such as StillCanna Inc. (CSE:STIL) (OTCPK:SCNNF), Marijuana Company of America, Inc. (OTCQB:MCOA), ICC International Cannabis Corp. (OTCPK: WLDCF) (CSE: WRLD.U), OrganiGram Holdings Inc. (NASDAQ: OGI) (TSX. V:OGI) and Aleafia Health Inc. (OTCQX: ALEAF) (TSX: ALEF).
Europe's CBD market potential is startlingly large. Leading market intelligence firm Brightfield Group predicts the estimated $318 million market (2018) to grow +400% through 2023 and be at least 2 times larger than the U.S. market. It's an opportunity not lost upon producers, such as StillCanna Inc. (CSE:STIL) (OTC:SCNNF) that has already accumulated EU CBD assets in the UK, Romania, and Poland, leading to lucrative global supply deals.
Positive momentum for CBD and medical cannabis is growing, as the WHO recommendation was soon followed by a non-binding resolution voted on (and passed) by the European Parliament.
"CBD is just starting to take hold in Europe, with both product availability and consumer awareness still quite limited," says Brightfield Managing Director, Bethany Gomez. "This is a great opportunity for developed brands to enter and expand through Europe with far less competition than we're seeing in the U.S. ... CBD has been well received on a greater scale, especially in countries that already have medical or recreational cannabis programs and there are growing efforts in countries with no cannabis or CBD programs to have one or both in the coming years."
So far, the largest CBD markets in Europe are in the United Kingdom and Austria, while Switzerland and Spain are building out and improving regulations surrounding product quality. With a population of more than 740 million people, the European market is home to more than double that of the combined populations of the United States and Canada.
Joining StillCanna Inc. (STIL-SCNNF) in the race to stake EU ground are companies both large and small, including both Marijuana Company of America, Inc. (OTCQB:MCOA), and ICC International Cannabis Corp. (OTCPK:WLDCF) (CSE:WRLD.U.CN) who have also gained ground in the UK.
Back in March, MCOA's wholly-owned subsidiary hempSMART officially launched its industrial hemp-formulated CBD products in the UK.
Perhaps more diversified are the EU assets of ICC with cultivation, extraction, formulation and distribution assets in the UK, but also in Denmark, Poland, Switzerland, Germany, Greece, Italy, Portugal, Malta, and Bulgaria—which is likely set to become the first country in Europe to permit the sale of hemp-derived CBD nutraceutical products on the open market.
Other companies are finding their own entry-points into the EU market, such as OrganiGram's (NASDAQ:OGI) (TSX.V:OGI) investment into Serbian-based Eviana Health Corporation to jointly produce high-potency CBD oils, pharmaceuticals, nutraceuticals, topical creams, and health products. In May, Aleafia Health Inc. (OTCQX:ALEAF) (TSX:ALEF) saw its shares get a boost upon announcing its entry into the German medical cannabis market through a joint venture with Acnos Pharma GmbH, a German pharmaceutical wholesale, in a market that's still sorting out its own legality over the cannabinoid.
Leveraging the EU CBD Market
Back in May, StillCanna Inc. (STIL-SCNNF) signed a definitive agreement to supply Bioscience Enterprises of California with up to CAD$36 million worth of CBD isolate. The deal was the first major announcement after StillCanna had only officially acquired Polish hemp producer Olimax, just weeks prior.
The Olimax addition gave StillCanna a vertically-integrated licensed cultivator, extractor and formulator of CBD, and a team with a core strength of agriculture expertise with hemp. As well, the acquisition resulting in the planting of 1,500 hectares of land in Poland using the company's proprietary hemp varietal, with an expected harvest in early August.
What the company does with that harvest will likely be even more impressive.
According to an April 2019 Hemp Benchmarks report, the wholesale price per kilogram for hemp isolate in the United States was $6,077 per kg. StillCanna has mastered the production process, to produce hemp isolate for a paltry CAD$500 per kg.
With a forecasted production potential estimated to eclipse 16,000 kg in 2019, the company's forecasted production value can be expected to be more than $97 million—for an impressive profit margin of over 824%.
Beyond the Bioscience Enterprises of California deal, StillCanna has also secured a lucrative deal with UK-based Dragonfly BioSciences, LLC, which in March increased its monthly order to over 170 kgs per month for the next quarter. Now with a strategic relationship signed with Sarah Yetman, an expert in the international transportation of industrial hemp and CBD, StillCanna is looking to secure further international shipments and supply deals on a global scale.
"We are very impressed with the infrastructure that Sarah has been able to establish in both the USA and abroad," stated Jason Dussault, CEO of StillCanna. "Her expertise and experience provides an invaluable service to StillCanna and is an important link in our supply chain. This relationship allows our products to reach a wider international audience. Ms. Yetman also brings a broad international base of buyers for both CBD products and hemp biomass."
"I couldn't be more pleased to be working with StillCanna and providing them with the global logistics they require," said Sarah Yetman. "The contacts and infrastructure I have established is a custom fit for both the Company and myself. I look forward to implementing and overseeing the first of many shipments."
As the EU and North American markets continue to liberate the potential of CBD, deals such as those expected from Sarah Yetman and StillCanna may shorten the distance between continents. Other producers are also looking to get into the EU's CBD market, as it heads towards its predicted multi-billion-dollar potential.
Further European CBD Market Entrants
Through its wholly-owned subsidiary hempSMART, Marijuana Company of America, Inc. (MCOA) is producing industrial hemp-formulated CBD products for the UK market. In order to expedite the rollout of the hempSMART™ product line in Europe, MCOA has taken steps to list the subsidiary on the Vienna Stock Exchange, ahead of entering Portugal, and later France, Germany, and Austria.
Having a presence in even more EU nations, ICC International Cannabis Corp. (WLDCF) (WRLD.U) including Denmark, Poland, Switzerland, Germany, Greece, Italy, Portugal, Malta, and Bulgaria. Truly built as an international entity to live up to its namesake, ICC is also looking to innovate how CBD is purchased. The Canadian company has acquired the rights to a self-dispensing THC/CBD vending machine, which is planned to be deployed into its existing network of 80,000 high-traffic retail endpoints and pharmacies across Europe.
Coming into the EU through a unique entry point (Serbia), OrganiGram Holdings Inc. (OGI) announced its private investment in Eviana Health Corporation. The Serbian-based Eviana creates high-quality, organic CBD from natural hemp strains of cannabis sativa. It operates on a parcel of 100 hectares of Serbian agricultural land, where it grows hemp. Due to the company's license, OrganiGram gained easy access to the European market, and its significant demand for high-level CBD.
Aleafia Health Inc. (ALEAF) (ALEF) chose the high-potential medical cannabis market of Germany through a joint venture with pharmaceutical wholesaler Acnos Pharma Gmbh. Aleafia's stock price bumped upward upon the announcement of entering the EU, and the potential for production of branded cannabis oils for distribution and for usage in clinical trials. The company's expressed optimism to soon see the export of cannabis health and wellness products to the German market.
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