With Federal Legalization Stalled, Cannabis Companies Are Finding A New Green Rush In Europe

Forbes

25-05-2025

Alex Kwon, the cofounder and CEO of California-based vaporizer hardware manufacturer Active, started selling his THC oil vape tech to cannabis companies in the United Kingdom about two years ago.
'We started with putting our toe into the European market, but now we have a swimsuit on and we're walking in up to our belly,' says the 40-year-old Kwon, who cofounded the company in 2018. 'Soon we will be diving in.'
Active, which Forbes estimates to generate more than $100 million in annual revenue, sells vaporizers made for oil to some of the biggest cannabis companies in the U.S., including Trulieve, Green Thumb Industries and Curaleaf. A few years ago, it did not have any business in Europe. Today, more than 5% of the company's revenue is derived from cannabis companies in the UK, which legalized medical marijuana in 2018, and Germany, which legalized medical use in 2017 and opened a limited recreational market in 2024. Kwon is currently negotiating a deal with an EU brand that would expand Active's European business even further. 'Europe could easily grow to 20% of our sales,' he says.
Active's expansion outside America is one Kwon is not taking lightly. The EU, where about 25 countries have some form of cannabis legalization or decriminalization, is poised to become a $50 billion (annual sales) market if reform spreads across the entire continent, according to Whitney Economics. And Kwon wants Active to be on the ground floor of this new burgeoning cannabis industry.
'I think Europe is the battleground where cannabis is going to be won—it's the gateway to the rest of the world,' says Kwon.
The U.S. cannabis market is projected to grow from $32 billion in annual sales to about $46 billion in three years, a 44% growth rate, according to data firm BDSA. But the EU is expected to grow 115% over the same period. And while cannabis companies in the U.S. cannot transport product across state lines, EU business can grow the crop in one country and export products around the continent.
For now, the EU cannabis market is small. Annual sales this year are expected to reach $1.2 billion, according to a forthcoming report by Prohibition Partners. It is projected to reach $2.6 billion in 2028 and $6 billion in annual sales within a decade, or more than a 400% jump from this year. Germany, which is the EU's largest economy and the continent's largest legal marijuana industry with about $500 million in sales last year, is expected to generate just under $1 billion in sales at the end of 2025. The UK, which has not been part of the EU since Brexit in 2020, currently has a medical market with about $255 million in annual sales. The Netherlands and Switzerland both launched pilot programs to test recreational marijuana while Poland, Czech Republic, and other countries have launched medical programs. Malta and Luxembourg currently have adult-use programs and France has proposed medical legalization measures as well.
Compared to the U.S., where 38 states have some form of legalization that generated $32 billion in annual legal cannabis sales last year, Europe's cannabis market is about the size of New Jersey's marijuana economy, but the potential upside and practical regulations that allow cannabis to be grown in Spain and Portugal and exported to other countries legally, has created a solid investment thesis for some U.S. companies to invest hundreds of millions of dollars in the EU.
Beau Whitney, the founder of cannabis data firm Whitney Economics, says that Europe is an emerging market that's too important to ignore. While the U.S. has had a huge head start—California first legalized medical marijuana in 1996—the European market features government collaboration and financial incentives that the United States does not. (The barriers to entry in Europe are high, companies need to have EU GMP-certified facilities, but that's a good thing for investors because it lowers potential competition. Some countries only allow pharmaceutical cannabis products.) In the U.S., only 27% of cannabis companies are profitable, weighed down by federal prohibition, over regulation and punitive taxes on the state and local level. While former President Joe Biden launched a federal review to reclassify marijuana as a less dangerous drug—it is currently in the same category as heroin and LSD—the U.S. Drug Enforcement Administration has held up the review. And now with President Donald Trump in the White House, reform has come to a halt, despite the fact that he endorsed changes to the country's marijuana laws while on the campaign trail.
'The U.S. market is state by state and dysfunctional,' says Whitney. 'From an investment perspective, it's high risk, low return, which is upside down.'
In contrast, countries like Germany have taken practical approaches to legalization and folded it into its existing medical establishment. In the UK and Germany, patients go to their regular doctor to get prescriptions for marijuana, which can be filled at traditional pharmacies or through online pharmacies that will deliver cannabis to a patient's house through the mail.
Massachusetts-based Curaleaf is the largest U.S. player in Europe right now. The company expanded to the UK and the EU in 2021 when it acquired Emmac Life Sciences, a vertically integrated medical marijuana business with cultivation sites, manufacturing and distribution facilities across Germany, Italy, Portugal, Spain, and the UK for $286 million—$50 million in cash and 17.5 million shares of Curaleaf.
Boris Jordan, the founder and CEO of Curaleaf, said during an earnings call after the Emmac acquisition that the European market 'will eventually rival the U.S.'
Emmac has since been folded into Curaleaf's overseas strategy, becoming Curaleaf International. And when looking at revenue growth, Curaleaf's international growth dwarfs its U.S. operation. Last year, Curaleaf International generated $105 million in revenue, a 72% jump from 2023 when it made $61 million. In the U.S. meanwhile, Curaleaf generated $1.2 billion in 2024, or 1,000% more than its European division, but last year's stateside revenue is down slightly from $1.3 billion in 2023.
Juan Pablo Martinez, CEO of Curaleaf International, believes that Jordan's prediction is quickly becoming a reality. 'The total addressable market is certainly there, the growth rates are certainly there, and I am confident that the market is going to be larger,' says Martinez.
Meanwhile, Cookies, the cult weed brand cofounded by musician and entrepreneur Berner, sells cannabis in the UK, Germany, Israel, and Thailand and is about to launch sales in Australia. Working off a licensing model, Cookies has deals with three companies that grow its strains in Portugal, Germany and Canada.
Parker Berling, the president of Cookies, says at first, expanding internationally was part of its strategy to be the first American brand in every country where pot is legal. Now, 'the international sector is the fastest growing part of our company,' says Berling. 'We've been selling internationally for years, but in the last few months and through the end of this year we're seeing it become a material part of our business.'
Will Muecke, the cofounder of London-based marijuana-focused private equity firm Artemis Growth Partners, which has nearly $400 million in assets under management, is doubling down on Europe. Muecke says that Artemis, which has invested $200 million into U.S. cannabis companies since 2018, is no longer actively looking to invest in the North American market. Artemis has invested about $25 million in European companies since 2022, including Denmark-based Valcon, a cannabis extraction business, and Muecke says he sees an opportunity to invest up to $50 million more into the EU.
'Our [European strategy] is tail of the dog right now, but it's wagging the dog,' he says. 'It's crushing it.'
Of course, not everyone is bullish on Europe. Kristoffer Inton, an analyst from Morningstar who covers cannabis companies, says the flood of interest from U.S. companies and especially Canadian companies, which are legally allowed to export marijuana to the EU, is not sustainable.
'The prospects of international medical marijuana are promising but it's also where everyone who is struggling sees it as a Godsend,' says Inton. 'If everyone sees it as a Godsend, it's probably going to not be a Godsend for anyone.'
After all, the industry has heard a similar promise before. When Canada federally legalized cannabis in 2019, investors flooded the market with capital on the thesis that Canada could supply its home market, the U.S., and the globe. While reform has ground to a halt in the U.S., Canadian operators were caught with a glut of supply, the price per kilo of cannabis crashed and companies have been struggling to survive ever since. The same thing could happen in Europe, but with 745 million people, it would take a hell of a lot of weed to crash the market.