Benzinga | Oct 21, 2021 12:10PM EDT

International Spotlight - Continued Cannabis Expansion in European Markets

During Benzinga Cannabis Capital Conference, several leaders of various cannabis companies gathered to discuss the continuous expansion of the cannabis market outside the U.S.

The panel included: Alvaro Torres, CEO of Khiron Life Sciences (OTC:KHRNF), a vertically integrated cannabis operator in Latin America and Europe, and Kyle Detwiler CEO of Clever Leaves (NASDAQ:CLVR), a multinational cannabis company, joined Alexander Rabinovitch, CEO of InterCure (NASDAQ:INCR), a leading cannabis company in Israel, Roland Schneller, COO of Cansativa GMBH, a leading cannabis wholesaler in Germany, and Jaime Krug, Partner and CQO at Centri Business Consulting, LLC.

The experts discussed the prospects of the most significant markets in the EU, including Germany, the UK and Israel.

The Evolution Of The German Market

Medical cannabis was legalized in Germany in 2017. Kyle Detwiler considered some of the particularities of the "German pharmaceutical market for cannabis" that make it very different from the US medical cannabis market.

"In Germany, Physicians prescribe cannabis to patients, that is provided at a pharmacy. And companies have to abide by pharmaceutical manufacturing requirements that all the large pharmaceutical manufacturers abide by, including the famous EU GMP certification. It takes a long time to develop a product or a brand," he said.

Schneller explained that between 2018 and 2021 the market in Germany has turned more competitive.

"In the first years we saw roughly 3 tons of medical cannabis sold in Germany, however in 2021, 15 tons were sold, five times more. It was a young market with a limited supply. Now, in 2021, there are more than 30 suppliers in Germany and we see significant expectations in terms of quality from our clients," Schneller said, adding that in 2018 there were 4 wholesale suppliers of medical cannabis in Germany. However, in 2021, there are 80 distributing medical cannabis in the country.

"2021 is a very important year for us because we saw in July the introduction of domestically grown cannabis by Tilray (NASDAQ:TLRY), Aurora (NASDAQ:ACB), and Demecan." added the COO, who also noted that the 2.6 tons supply agreement will not be enough for a 15-ton medical market.

The UK Market According to the CEO of Khiron Life Sciences

Torres characterized the cannabis market in the UK as "in a very nascent stage, like Germany four years ago."

According to the CEO of Khiron, the biggest challenge to expanding the local market is to "gain more acceptance from doctors. Doctors fear liability problems with prescribing medical cannabis."

However, Torres also mentioned that as more doctors prescribe medical cannabis, the local market is becoming interesting, especially, given "the purchasing power of UK citizens, around ?150-?180/month".

"We need to inform doctors about medical cannabis, so they understand this is not a trend, it is a medicine. It is the next big market after Germany in the future of medical cannabis," said Torres, in reference to the UK market.

Israel: The Largest Importer of Medical Cannabis

Rabinovich noted that the Israeli cannabis market became the biggest market outside of North America, with 40 tons at the moment, and last year imported 15 tons of pharmaceutical-grade cannabis from Germany.

The new government issued new legislation with significant ramifications on the import/export of cannabis from Israel. Rabinovich views the new regulations as an important challenge for the cannabis industry in the country.

"We have a new government in Israel, and for the first time, cannabis is out of the coalition's agreement." According to the new regulations, producers in Israel can only export final products with special packaging that is not fit for the industry. To overcome supply-chain issues Rabinovich explained that InterCure (TSX:INCR) (TASE: INCR) relies on strategic partnerships.