Challenges in Europe’s cannabis industry & finding the right partner: Q&A with Vitalis’ Kostas Ioannou

(Editor’s note: This is the third in a series of Q&As with speakers at MJBizConINT’L, Sept. 4-6, in Toronto. Kostas Ioannou’s panel will discuss hemp and cannabis opportunities in Europe. To read the previous Q&A in this series, click here.)

Kostas Ioannou has advice for North American companies interested in expanding into Europe’s booming medical marijuana market.

“I am a firm believer that the selection of local partners who have the same vision, core values and attitude about the industry is the key for a successful partnership,” the cannabis regulatory expert told Marijuana Business Daily.

Ioannou, based in Athens, Greece, helps clients of Canada-headquartered Vitalis Extraction Technology navigate the various European Union frameworks. That includes helping them select suitable extraction equipment for their facilities and achieving EU-Good Manufacturing Practice (GMP) compliance.

Ioannou urges companies to stay on top of laws and regulations as they evolve in the fast-growing industry.

“What I am curious to see is how EU countries fine tune their legislation and regulations to attract investments in the months ahead,” he said.

Ioannou spoke about cannabis opportunities in Europe during an interview with MJBizDaily ahead of his panel discussion at MJBizConINT’L next week.

Which European countries promote the domestic production and export of medical cannabis, attracting foreign investment?

It’s important to first define medical cannabis.

In most European countries, we see the distinction between medical cannabis and hemp based on the THC potency of the strains, varying from 0.2% THC in most EU countries to 1% in Switzerland.

In markets such as Switzerland, we see a very big growth of cultivation of high-CBD strains over the last few years. Such products target the wellness and retail markets.

In the medical sectors, these are the countries welcoming production:

  • Denmark allows for the cultivation of high THC-potency strains and for toll processing. Products are already being prescribed.
  • The Netherlands, through the Office of Medical Cannabis, is the largest supplier of flower in various EU countries.
  • Malta has been very favorable to the industry, and there are quite a few Canadian and U.S. companies that have received a (letter of intent) from Malta Enterprise.
  • In Greece, there are about 30 companies that have gotten approval for the installation license.
  • In Portugal, we are expecting to see a lot of flower being cultivated in the country.
  • Cyprus has already announced that it will be issuing three licenses for unified production.
  • In Spain, there should be three to five companies that already have a license to cultivate flower.
  • Another producer in Europe, but not in the EU yet, is North Macedonia, where the biggest challenge is the EU-GMP certification of the facilities.

How should North American companies interested in producing in Europe choose from so many options? Lowest cost? Best regulatory framework?

Synergies will be of the essence in the EU. The regulatory framework in most EU countries are different from one another.

In most cases, companies from overseas partner with local groups when entering those markets, and usually the local partners are the ones with less experience in the industry.

Partnering with the right local people in any country will add value to a foreign company and help them understand and adopt the cultural differences of the new markets, both in operations as well as market characteristics.

Choosing a geographical location solely based on cost of production is not the only determining factor of success.

What are the biggest challenges for companies setting up their facilities across Europe?

For a company to be sustainable, it has to be able to make a profit. Sales and distribution channels must be established, but more importantly, demand must be there for their products. Doctor and patient education is key.

I also adopt the opinion that flower will eventually be commoditized, resulting in a significant price decrease.

New, innovative products, with precise dosing and supported with clinical trials, will remove the hesitation both from the medical community and retail buyers and allow for people to gain trust in the plant.

The most important ingredient for success is the right corporate attitude. Modularity and flexibility, both in production practices and product manufacturing – but also to navigate throughout the EU – is essential in the still-shaping EU framework.

What’s the advantage of producing in low-cost European countries when you could just produce in even lower-cost Latin American or African countries?

From a cost-benefit analysis, it would be very tempting to import biomass from a low-cost producing country instead of growing locally.

However, the profit margins, at least now, allow for higher-cost cultivation/production in order to enter new markets such as Germany and Denmark.

As with many products, “Made in Germany” or “Made in Italy” signifies something, and people are willing to pay extra for that.

Let’s not forget that consistency is very important in the industry.

Also, production has various stages. You could be producing biomass, flower, active pharmaceutical ingredients, inhalers, lifestyle products.

Platforms that aim to connect verified buyers and sellers will play a significant role bringing to the surface such opportunities, both local and international.

This interview has been edited for length and clarity.

Alfredo Pascual can be reached at [email protected]

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