While Canada and the US have been at the forefront of the cannabis legalization movement, the growing European market is becoming an attractive area for marijuana companies.

On Tuesday (August 13), Cresco Labs (CSE:CL,OTCQX:CRLBF) became one of the most recent members of the European cannabis space when it announced that its Euro-denominated shares will be listed on the Frankfurt Stock Exchange (FSE) in Germany under the symbol “6CQ.”

“We are pleased to further expand access to Cresco Labs shares with our listing on the Frankfurt Stock Exchange,” said Cresco Labs CEO Charlie Bachtell in a press release. “(This will) make it easier for European institutional and retail investors to pursue an investment in Cresco Labs and participate in our continued success in creating shareholder value.”

BC-based cannabis company XPhyto Therapeutics (CSE:XPHY) also announced its FSE listing on Tuesday under the ticker symbol “AXT.”

“Given XPhyto’s German cannabis licence and its commitment to building import and distribution capability in the country, a Frankfurt listing was a logical choice,” said XPhyto CEO Hugh Rogers.

On Wednesday (August 14), XPhyto revealed more plans to increase its presence in Europe with the news that its Germany-based subsidiary Bunker Pflanzenextrakte has entered a cannabis research and development agreement with the department of biochemistry at the Technical University of Munich.

Other cannabis companies have also looked to the FSE to expand their operations across the pond. Columbia Care (NEO:CCHW) announced its launch on the German exchange in July. Nicolas Vita, CEO of Columbia Care, also believes the move will help the company break into the European market.

Columbia Care was followed by Pasha Brands (CSE:CRFT,OTC Pink:CRFTF) last month, which listed its common shares on the German stock exchange as well.

Growth of Europe’s cannabis sector

Europe’s marijuana market is much smaller than that of Canada and the US — due in part to varying cannabis legalization across the continent — but there has been definite growth over the past few years.

A report released by market research firm Brightfield Group states that the European cannabis market is set to flourish in the future. The report estimates that Europe’s cannabidiol (CBD) industry was worth US$318 million in 2018 and by 2023 will have grown by 400 percent.

“CBD is just starting to take hold in Europe, with both product availability and consumer awareness still quite limited. This is a great opportunity for developed brands to enter and expand through Europe with far less competition than we’re seeing in the US,” said Brightfield Managing Director Bethany Gomez.

Europe’s CBD market could also see some drastic changes in the next few months. Currently, CBD products in Europe are limited to “external use,” but an amendment has been proposed by the European Food Safety Authority that would allow CBD in food products; it could pass by the end of the year.

Brightfield notes that key drivers to growth in Europe are countries like Spain and Switzerland, which are working to build and improve regulations around product quality in the cannabis and CBD markets.

A report from Prohibition Partners estimates that Europe’s total cannabis market will reach a size of 123 billion euros by 2028.

Germany has become one of the largest cannabis markets outside of North America since medical cannabis was legalized in 2017. Several top Canadian cannabis companies have already made big moves in the country.

Earlier this year, Aurora Cannabis (NYSE:ACB,TSX:ACB) was selected as one of three companies in a public tender to cultivate and distribute medical cannabis in Germany.

Canopy Growth (NYSE:CGC,TSX:WEED) also bought into Europe’s cannabis market with the purchase of the continent’s largest cannabinoid-based pharmaceutical company, Germany’s C3 Cannabinoid, for 27.1 million euros.

Support for cannabis legalization in Europe has been growing as well.

Leading the charge has been Luxembourg. The country’s health minister, Etienne Schneider, confirmed that the small nation will be the first in Europe to legalize the use of recreational cannabis.

Later this year, Luxembourg hopes to unveil a proposal for a legislative process that could have recreational use legalized by 2021. It has urged other European nations to relax their cannabis laws too.

“This drug policy we had over the last 50 years did not work,” Schneider told Politico in an interview. “Forbidding everything made it just more interesting to young people.”

As cannabis legislation in Europe continues to move ahead, the burgeoning market may prove to be a space ripe with untouched opportunities for investors.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Danielle Edwards, hold no direct investment interest in any company mentioned in this article.

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