Can European Companies Catch Up to the North American Cannabis Sector?

Cannabis investors are watching companies like GreenStar Biosciences Corp. (CSE: GSTR) closely while Europe continues to lag behind.

Cannabis business is flourishing in North America after legalization of medical/recreational cannabis last year. European countries are slowly beginning to catch up but are being held back by slow moving legislators.

Companies like GreenStar Biosciences Corp.’s (CSE: GSTR) have rapidly sought to identify and target promising companies in the North American cannabis sector. The company acquired Cowlitz and has been able to leverage the Washington State producer to great effect.

In the first year after the new legislation was passed in the US and Canada, many companies experienced supply shortages due to unexpectedly high demand for cannabis products. GreenStar Biosciences Corp.’s (CSE: GSTR) partner company Cowlitz has been immune to this problem thanks to their patented micro-pod system and integrated indoor and outdoor production facilities. Like many cannabis companies, Cowlitz capitalized on the rising popularity of recreational marijuana and recorded a tremendous revenue growth of $14.6 million in just five years of operations.

Cowlitz’s success is just one example of the industry’s potential after cannabis legalization in the US and Canada. There is still a long way for Europe to legalize the product for recreational use, but countries such as Spain are making progress allowing cannabis production companies to their market.

Linneo Health, is 60 percent owned by the British GHO fund and 40 percent by the Spanish company Torreal, received the Good Manufacturing Practices (GMP) certificate for the production and marketing of the dried flower of cannabis for medicinal use in Spain.

The company obtained permission from the Agencia Española de Medicamento y Productos Sanitarios (Aemps), an agency of the Spanish Ministry of Health, Consumption and Social Welfare, which previously authorized the cultivation and production of cannabis for medical use.

According to Linneo Health, at the end of this year the commercialization of the dried flower will begin and from 2020 it will be offered in an industrial way with a production of more than five thousand liters obtained from cannabis from extracts to active principles.

The GMP certificate grants Linneo Health the adequate use in the quality and good practices of the pharmaceutical industry, for which it will be able to commercialize cannabis medicinally in Spain during the following months.

Medicinal Cannabis is key for Europe

The demand for cannabis for medicinal purposes in the world is on the rise, as the consulting firm Prohibition Partners estimates that by 2028 this market will be worth about 58 million euros in Europe, while The European Cannabis Report estimates that this sector will generate a turnover in excess of 65 million euros in the next decade.

According to that study, Germany will produce a total of 16 million 200 thousand euros in ten years, so it will be the most attractive market for this sector, followed by Italy, France and Spain. This broadly follows the trend of the North American markets where there has been explosive growth. The problem is that Europe will continue to be held back by slow legislators who are more interested in decriminalizing marijuana than unlocking the huge potential of the industry.

North America remains the focus of investors

Companies like Linneo do demonstrate the potential for marijuana in Europe but without proper legislative support they will find themselves unable to compete with North American cannabis companies. This fact alone has made investors continue to focus on the American and Canadian arena.

Despite the potential of Europe North American companies like Greenstar Biosciences are likely to continue to be the focus of investor’s attention until European legislation can catch up with Canada and many U.S. states.

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