RE: BUYERS19 Jul 2019 17:15
Navigating Europe
Though laws continent-wide are gradually changing, there are plenty of local companies that say that they will ultimately have the home advantage.
Antonio Costanzo is one European who wants to fend off the North American threat. He’s the CEO of London-based medical cannabis company EMMAC Life Sciences, which was valued at around $96 million at its last fundraising round. For comparison, publicly-traded Canopy has a market cap of over $13 billion, while Aurora is valued at over $7 billion and Tilray at over $4 billion.
Like the Canadian companies, EMMAC has been on a spending spree this year, buying the French and Swiss wellness companies GreenLeaf and Blossom, taking over medical cannabis labs in the U.K. and in Spain, and setting up a joint venture in Italy. Costanzo, who previously served as Uber’s head of public policy after spending a decade in the online gambling industry, says experience with heavily regulated fields in the European context will be key to expanding there.
“We started looking at the European medical cannabis space and thought the biggest challenge was being able to navigate different legislations and…create a single market,” Costanzo said. “The advantage we have, being European, is we know how Europe works… It’s a very local play—you need to speak to regulators in each country.”
There is also some wariness of foreign companies pressuring European regulators to change their rules. The EMCDDA’s Hughes said he had heard of lobbying taking place at both the national and EU levels.
“As the Canadian industry is federally legal, a few of the big companies are now valued in multiple billions of U.S. dollars,” Hughes said. “We should be aware of the huge financial interests in opening the European market, particularly for recreational use, and the possibility of negotiating relatively loose regulations in order to maximize sales, following the direction of the alcohol and tobacco industries.”
So far, though, Europe doesn’t seem to be the same sort of pressure that’s been seen in the U.S., where legalization has come as the result of voter initiatives—Illinois last month became the first state to take a legislative path to legalization, rather than responding to ballot pressure. In the U.S, the push to legalize is also tightly bound up with protesting high levels of incarceration, particularly of African-Americans, on drug charges for possessing cannabis.
“The intensity and advocacy in the U.S. is higher because you have this social justice and equity component of it. Parts of the population were discriminated against for many decades,” said Chris Burggraeve, a Belgian-American former Coca-Cola marketing executive who heads up an American cannabis and CBD brand called Toast. “Every single candidate for election at any level will need to have a point of view on marijuana because it’s a voters’ issue, whereas in Europe I’m not sure it’s hot enough to be a full voters’ issue.”
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