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Cannabis Industry Braces for EU Demand Surge Following German Legalization

And the opportunity should be "very appealing" for U.S. equipment manufacturers.

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In April, the global cannabis industry rejoiced as Germany legalized recreational cannabis. Industry associations held "smoke-ins," and some classified it as a crucial step toward the "global medical cannabis explosion."

According to Jim Sanfilippo, CEO of VIST Labs, a cannabis decontamination company, the potential growth for Europe's industry is very similar to the U.S. market about 10 years ago. Sanfilippo says the European market is "very appealing" for U.S. equipment manufacturers because the upstart market will lean on invaluable insight from U.S. stakeholders to accelerate European cannabis commercialization.

"The European market is particularly appealing to companies like VIST due to the specific needs and standards outlined in the European Pharmacopoeia for medicinal cannabis," Sanfilippo says. The European Pharmacopoeia provides common quality standards throughout the nation's pharmaceutical industry.

"In the U.S., cannabis is treated as an agricultural product, although there is a lack of standardization of protection for consumers," Sanfilippo adds. "By contrast, Europe treats cannabis as a medical product and requires a much stricter standard ... These standards are pharmaceutical grade, and require near sterility in order to protect consumers."

Companies like VIST are well positioned to become a leader in the European market for cannabis decontamination solutions, especially when meeting rigorous EU standards.

European Cannabis Supply Chain Impact

As the European market comes online, the impact will send ripples throughout the supply chain.

"The European cannabis market is undergoing rapid change, with Germany and the UK leading the way. However, there is limited to no domestic production capacity in the two largest markets, and forecasted demand will outstrip their domestic supply for years to come," says Arthur de Cordova, CEO of Ziel, a company that specializes in cannabis remediation using radio frequency treatments. De Cordova says the primary winners will be Canada, Portugal, Macedonia, Colombia, and the Netherlands because they each have mature cannabis operations and GMP facilities, which are a requirement for export to all EU countries and the UK.

For example, Portocanna, a medical cannabis processor in Portugal, last month received GMP validation for flower decontamination using Ziel's RF technology, setting the company up well to supply medical cannabis from its EU-GMP pharmaceutical facility to new markets in Germany and the UK.

"As U.S. companies rode the wave of investment when cannabis was federally approved in Canada eight years ago, U.S. companies are similarly poised to ride this "second wave" in Europe," de Cordova adds.

Anticipation for Mary Jane Berlin

The surging interest in Germany led to a groundswell leading up to Mary Jane Berlin, an industry trade show set to kick off this Friday. In three days, some 40,000 attendees and about 400 exhibitors will head to Messe Berlin for the event.

"The upcoming Mary Jane Berlin should be a genuinely monumental show," says Bryan Gerber, CEO of Hemper. "The country's legalization sets up the dominoes for the rest of the EU to follow suit."

Gerber stresses that once Germany finalizes its legal cannabis framework, other countries will likely follow suit, speeding up the pace of European legalization.

"U.S. companies should pay attention to this development, especially in the world of accessories," Gerber says. 'The EU market is about a decade behind the U.S. in terms of consumption methods and habits – that gap creates potential for U.S. companies to invest in the EU accessories market with a head start in experience gained in the states." Hemper offers monthly smoking subscription boxes that include various smoking accessories.

Gerber expects the European cannabis market to be massive. "Europe is heating up," he says, "and events at the inflection point like Mary Jane Berlin are the perfect place to see it happen."

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