Market Crisis-Proof? European Demand for Cannabis Increases Amid Pandemic
It is forecasted that these regular consumers will spend 62.7 billion euros ($68.5 billion) this year
Translated from Health Europa website
Despite the inevitable regulatory delays due to the Covid-19 pandemic, European demand for Cannabis remains strong and continues to evolve, shifting towards a greater interest in infused products.
In April, during the Global Cannabis Town Hall organized by New Frontier Data, director John Kagia detailed how the European Cannabis market caters to around 42.6 million people (5.9% of the population) in 28 European countries.
It is forecasted that these regular Cannabis consumers will spend 62.7 billion euros (US$68.5 billion) this year between regulated and unregulated markets.
Spanning three active darknet drug markets, from January to March 2020, the EMCDDA report identifies an increase in the number of sales of Cannabis flower products among common weight categories of purchase between 1g and 28g.
It appears that as concerns about Covid-19 escalated and countries began implementing lockdown measures, consumers stockpiled products.
The estimated value of products sold via Cannazon, a marketplace dedicated to marijuana products, reached approximately 4.3 million euros between January and March 2020, representing a volume of 1.6 tons.
While the initial dramatic peaks were occurring, Cannabis consumers were led to consume other Cannabis products that were in stock.
Understanding Consumer Demand in a Crisis
Unlike alcohol, which is generally considered a social drug, the majority (52%) of Cannabis consumers choose to consume alone.
As such, behaviors around Cannabis consumption may not be drastically disrupted during prolonged social isolation; therefore, the demand for Cannabis may persist predictably throughout the pandemic.
That said, and despite flowers being the most common form of Cannabis consumption, pandemic-induced concerns may steer consumers away from alcoholic beverages, who may seek newly developed alternatives such as edibles and other infused products.
Inhalation Cannabis consumption allows THC to enter the lungs and quickly pass into the bloodstream, leading the consumer to feel the associated psychotropic effects much more rapidly than by ingesting an edible.
The effects of the former are felt almost immediately and with relative consistency; on the other hand, edibles are often considered less desirable due to inconsistencies affecting the onset of effects and the overall consumer experience.
Advancements in scientific development and product innovation have begun to overcome some of these drawbacks of edibles, which initially hindered their commercial adoption.
The latest forms of infused products include topical or sublingual products.
Quality challenges stem in part from the cannabinoids themselves, which are hydrophobic and lack solubility, requiring additional processing for body absorption.
This biological obstacle may contribute to concerns about the 'marijuana brownie,' a traditionally popular choice of Cannabis edible, known for its inconsistent effects with equally unpredictable onset.
Excited
As New Frontier Data continues to assess and measure the impact of the current economic and social crisis on global, regional, and local Cannabis markets, the legal Cannabis sector is expected to offer relative stability, if not a potential hedge mechanism (risk investment protection strategy), for both private and public investors, as well as a promising source of additional revenue for countries and states.
Despite the recent increase in unregulated market activity, the pandemic is still expected to ultimately benefit legal Cannabis markets, with the additional benefit of triggering more advances in medical and even adult research and development.
As Mitchell Baruchowitz, Managing Partner of New York-based Merida Capital Partners, a leading Cannabis investment fund, recently observed: “What we know is that people who will be locked in their homes prefer Cannabis to alcohol.”
Similarly, he said: “We have found some fundamental things about marijuana: people hoard it because they feel they may run out of access to it. They are deeply concerned about access to good flowers.”
New Frontier Data research begins to show how this uncertainty has caused a shift from illicit markets to legal dispensaries, as consumers doubt the ability of illicit suppliers to meet the demand for preferred products and have any viable quality control.
Cannabis investors and financial stakeholders are becoming as optimistic as Baruchowitz in concluding that the legal Cannabis sector is “not only recession-proof but also global-crisis-proof.”