With 2020 coming to a close in less than two weeks, we want to highlight one of the most significant themes of the year as it relates to the cannabis industry.
The theme is the European Union (EU) and we believe that the continent made significant strides in 2020. Although the EU cannabis market recorded impressive growth when compared to 2019, the growth came in below broker-dealer expectations and we believe that this put pressure on the companies that are highly focused on it.
Although most people think of tetrahydrocannabinol (THC) when they think about the cannabis industry, the cannabidiol (CBD) vertical has been a primary growth driver for companies that are focused on the EU. The EU has strict regulations for cannabis that contains THC and this has played an important role in the growth of the EU’s CBD market.
According to New Frontier Data, the two biggest CBD markets in the EU are Germany and the United Kingdom (UK). These two markets account for approx. $2.17 billion (USD) and $2.03 billion (USD), respectively, in annual spending for 2020.
By 2025, the cannabis research firm expects spending in Germany and the UK to grow to $3.57 billion (USD) and $3.32 billion (USD), respectfully. We are favorable on the growth prospects that are associated with these CBD markets and have been focused on identifying businesses that are capitalizing on them
Poland is another EU CBD market that we are bullish on and believe that it does not get the attention that it deserves from Wall Street. A few months ago, Hemp Industry Daily published data on the Polish CBD market and we were impressed with how the industry has advanced in such a short period of time.
When compared to 2019, Polish farmers have almost doubled the amount of acreage that is being used to cultivate hemp so far this year. During the last year, Poland developed a reputation as a primary hub in the EU for processing CBD. The reputation was formed due to the growth of small extraction operations and this is a market that we are bullish on.
According to official data, Polish hemp farmers cultivated at least 7,480 acres in 2019 which represents an increase of 79% when compared to 2018. The figure is based on the area that was declared by farmers who received an EU subsidy.
We believe that the Polish CBD industry is expected to continue to record strong growth. The size of the market has steadily increased since 2015 (based on the number of hectares of hemp that is being cultivated) and this is trend that caught our attention.
According to the European Industrial Hemp Association, Poland ranked seventh in the EU for hemp acreage in 2018. Most of the polish hemp farmers have entered into contracts with a CBD company to cultivate hemp. We are aware of a few operators that are levered to this emerging growth market and will monitor how the industry ramps up in 2021.
One of the companies that has been capitalizing on the hemp market in Poland is HempFusion Wellness. In early January, the company will complete a go-public transaction on the Toronto Stock Exchange (TSX) and will commence trading under the symbol, CBD.
HempFusion has been sourcing hemp from the EU and its main suppliers are based in Poland. The company recently entered into a five-year exclusivity contract for sales into Europe and the US. All of the product is delivered in the raw form and is declared to be USDA certified organic when it arrives. From a quality standpoint, the type of hemp that HempFusion will be using for its products are considered to be top tier and we are favorable on this aspect of the story.
If you are interested in learning more about HempFusion Wellness, please send an email to firstname.lastname@example.org with the subject “HempFusion Wellness” to be added to our distribution list.