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Is it Time to Buy European Cannabis Stocks?

There are a couple of bargains in the European cannabis space.

Written by Jeff Siegel
Posted February 4, 2019

While US and Canadian cannabis stocks continue to crush it, a lesser-known cannabis market that could ultimately end up being the largest in the world, isn’t getting much attention.

According to Prohibition Partners, Europe’s cannabis market is estimated to be worth as much as $140 billion by 2028, likely becoming the world’s largest legal market over the next five years.

Here are some highlights from that report …

  •  In 2018, six European countries announced new legalization legislation.
  • Greece and Macedonia are utilizing cannabis cultivation in an effort to support an ailing agriculture industry.
  • With a market of more than 742 million people and total healthcare spend of $2.63 trillion , Europe will be the largest medical cannabis market in the world.
  • European insurance companies in Italy, Denmark and Germany are now covering cannabis prescriptions.
  • Early indicators from leading cannabis programs suggest that fulfilling medical cannabis prescriptions will become a basic requirement of any public healthcare policy.
  • In 2018, Germany, Denmark, Malta, Greece and Italy discussed the possibility of a fully regulated adult-use cannabis market while Luxembourg has promised to introduce a regulated adult use market before 2023.
  • Germany, Italy, The Netherlands, Denmark, Portugal, and Greece will be the forerunners in medical cannabis production.

Although all this looks good, the European cannabis market is still in its earliest stages of development, and certainly the bureaucratic obstacles of attempting to operate within the confines of EU regulator mazes will likely keep Europe’s cannabis market from growing as rapidly as what we continue to see in North America.

That being said, for investors looking for growth, the European cannabis market offers a very long runway of opportunity.

Certainly some of the bigger cannabis players have been descending upon Europe to get a first-mover advantage. These include, but are not limited to, Canopy Growth Corporation (NYSE: CGC), Aphria, Inc. (NYSE: APH), Aurora Cannabis (NYSE: ACB), and The Green Organic Dutchman (OTCBB: TGODF).

There are also some lesser-known cannabis players that have significant exposure to Europe. And they’re a heck of a lot cheaper to buy than those Canadian cannabis behemoths.

Take the Wayland Group (OTCBB: MRRCF), for instance, which has significant exposure to Europe with footprints in the UK, Switzerland, Germany, Italy, and Malta. Word is, the company is also exploring a potential spinout / EU listing for its international assets.

Then there’s ICC International Cannabis Corp. (OTCBB: KHNBF). This one has exposure in Denmark, Poland, Bulgaria, Portugal, and Greece.

Both of these stocks trade a huge discounts to those bigger Canadian players. And with good reason. The amount of revenue being generated by CGC, APH, and ACB far exceeds anything being delivered by MRRCF and KHNBF. But don’t forget, CGC, APH, and ACB were, at one time, small, niche players,too. Today, they’re billion-dollar market cap players.

The point is, sometimes it makes sense to get a little exposure to some of these smaller players in an effort to get in on the ground floor of something that could, one day, be huge. Just be cautious of your risk tolerance, and don’t bite off more than you can chew.

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