Europe is the route to market for South Africa’s existing and wannabe medical cannabis growers, with Germany being the largest potential market, and Italy being a sleeping giant.

With France, Poland and all the eastern European countries also set to come onstream soon, Europe will provide agile South African cannabis growers with a potential market of hundreds of millions for its products, research by Prohibition Partners, the world’s leading market intelligence and strategic insight firm into Europe's legal cannabis industry, has found. 

Unpacking a study into the opportunities in medical cannabis for South African growers, Stephen Murphy, co-founder and CEO of Prohibition Partners, says Europe is this country’s “best export market” opportunity as all European nations, even the most conservative EU countries, are currently “figuring out how to treat and police” cannabis.

The study was commissioned and funded by the EU-SA Partners for Growth project which is aimed at maximising trade and investment between Europe and South Africa.

Cannabis took centre stage at the State of the Nation address in February with President Cyril Ramaphosa identifying the sector as a key part of South Africa’s post-Covid economy.

Access to markets, purchasing agreements, licensing, regulatory uncertainty and lack of information have all been seen as hobbling South Africa’s emergence as a global cannabis player.

But Murphy warned that South African growers have to be tactical in their approach to exporting to Europe as each European country has taken an individual approach to regulating their cannabis industry.

One avenue South African growers should definitely pursue, however, is getting their EU GMP certification, which is the “gold standard” of pharmaceutical certification in Europe.

EU GMP certification can be attained upon inspection of a producer’s facilities by inspectors of various EU member states. It takes a significant amount of time to attain EU GMP certification, due both to the demand for inspections as well as the meticulous attention to detail required to get equipment, staff and processes up to the required standard.

“Europe is going to become the biggest market and the US and Canada, which are the other two big cannabis markets, are not requiring this certification. So South African companies need to focus on getting EU GMP certification because that will put them in pole position to be able to export to Europe,” says Murphy.

He says cannabis has been on the longest bull run of any agriculture commodity over the last 20 years, and that demand for cannabis is currently outweighing supply. 

But he pointed out that what is required is not just cultivation, but “talent, IP and innovation”. 

“The industry needs innovation around product development, innovation around technology, innovation for patient access, experience, data and tracking. South Africa, with a very strong tradition in this sector and established pharma and healthcare producers, has a phenomenal opportunity to take a lead in this industry. This will just add another string to South Africa’s bow,” says Murphy.

Murphy says from current sales of  €400-million, the European cannabis market is projected to be worth €2.7-billion in 2024.

Apart from key consumption markets, the study also looked at what formats (finished / extract-based formats or in dried-flower) were best for South African growers, and what individual European nations required from cannabis exporters in terms of pricing and distribution criteria. 

 

Issued by Stephen Murphy co-founder and CEO of Prohibition Partners