The Most Profitable Business Sectors Within the European Cannabis Industry

According to a report that was published by Prohibition Partners, the European cannabis industry should be worth about €123 billion by 2028. Europe is set to become the largest cannabis market in the world, which is encouraging people to invest in cannabis. In addition, the European cannabis industry is still young and entrepreneurs can start a business with a fraction of the cost they would have to spend to open a similar business in North America.

However, you might be wondering which business sector within the European cannabis industry is the most profitable at the moment. Should you invest in cannabis seeds, CBD or industrial hemp for the textile industry? Which of these segments would bring in the most profits? Let’s find out.

 

Industrial hemp

Europeans have been growing hemp for at least 4,000 years. Today, the industrial hemp industry in Europe is worth at least $1 billion (€895.64 million), which is a large portion of the global industry’s worth, which currently is about $3.7 billion (€3.31 billion). The good news is that the global industry is on the rise, and it’s projected to exceed $5.7 billion (€5.10 billion) in 2020.

The hemp market within the European Union is very active, with various production facilities in most member nations. The top players in the EU are France (which accounts for 40 to 50 percent of the continent’s hemp production, depending on the source), the Netherlands, Lithuania and Romania. Lately, the Baltic states have invested massively in this sector, and the area is projected to become the second-largest hemp-growing region after France.

Now, industrial hemp has a lot of applications. You could use it to make a wide variety of products, such as rope, textiles, shoes, food, biofuel, insulation, plastics and more. The purpose of this article is to examine how much profit each of these applications could bring to potential entrepreneurs.

 

Hemp seeds as food

Europeans have used hemp seeds as animal fodder for hundreds of years, but this practice has experienced a massive shift in the last decade or so. Nowadays, it’s estimated that up to 60 percent of the hemp seeds that are being produced in Europe are being used in food for humans and only 40 percent are still being used as animal fodder.

This shift is driven by the large demand that is present in the food sector. Hemp seeds are now seen as a superfood, thanks to their rich nutritional profile. As a result, you can find cannabis seeds in almost all European supermarket chains, either as pure, unaltered seeds or in various products such as muesli, chocolate, fibre bars and more.

In addition, manufacturers press the cannabis seeds and sell both the resulting oil and the press cake as healthy foods. The cakes are rich in protein, and they are often included in athletic supplements, and the oil is used for cooking or salad dressings.

Currently, it’s estimated that the global hemp food sales will be worth $479 million (€429 million) in 2020, and that figure is projected to increase in future years. At the moment, the increasing demand for hemp seeds is continuing to drive sales. As more and more Europeans are becoming health-conscious, the trend is not likely to disappear anytime soon.

 

Hemp fibre for industrial uses

Hemp fibre accounted for 40.4 percent of the global hemp revenue in 2017. Because of its versatility, hemp fibre is sought after by manufacturers that are operating in a wide variety of niches. You could use hemp fibre to produce cloth and textiles, rope, biofuel, bioplastic, construction materials and more.

However, the textile industry is the largest consumer in the global hemp market. Producers in the textile industry use hemp to create fine textiles, denim, fabrics, twine, rope, bags, nets, tarps, carpets and much more.

The versatility of hemp as well as the strength of its fibres, along with the fact that hemp fibres are 100 percent recyclable and eco-friendly, convinced multiple world-renowned apparel brands to use hemp in their manufacturing processes. Since more companies are taking steps to become more environmentally-focused, this segment is projected to expand in the future.

 

Hemp in animal husbandry

Hemp has been used in animal husbandry for centuries. One of the main advantages of using hemp in animal husbandry is that you can use different parts of the plant for different purposes, each of them bringing in some profit. Another advantage is that you could use some parts of the hemp plant in a different industry — for example, in the production of pharmaceutics or human foods — and use the rest of it in animal husbandry to increase your profits and reduce your waste.

You can use hemp as fodder or fish feed. But here’s the thing, you could just as well sell the press cakes that you get from cold pressing hemp oil. This means that you could increase your profits from producing hemp oil by selling the cakes to farmers.

Industrial hemp contains a high amount of hemicellulose and has a good absorbent capacity. As a result, the shivs and the inner core of the stalks can be used as animal bedding, further increasing your profits.

 

Hemp paper

Even though more than 90 percent of the world’s paper is currently made out of wood pulp, hemp paper is still around. Hemp contains up to 85 percent cellulose, which means a thinner piece of paper would offer the same strength and tear resistance as a thicker piece of wood pulp paper. As a result, nowadays, hemp paper is used for products that need to be thin and somewhat durable.

EU manufacturers primarily use hemp paper to produce rolling papers. Hemp enables them to produce rolling paper that’s very thin but still resistant enough to be rolled and handled.

Hemp paper is also used quite often by digital artists or painters. Hemp paper makes soft yet durable canvases that can be used to create paintings, posters or prints that should withstand the passage of time.

Even though you might think that there is no money to be made from hemp paper, selling to a dedicated niche could always increase your profits. In addition, an acre of hemp could produce as much paper as up to ten acres of trees over 20 years, so the process is really cost-effective.

 

Cannabidiol (CBD)

CBD is a non-psychotropic cannabinoid that is found in hemp. Praised for its beneficial effects on human and animal health, CBD is currently one of the hottest health and wellness supplements in the EU.

Despite the fact that most of the hemp that is currently being grown in Europe goes into the production of a wide variety of products, CBD is driving the recent increase of hemp plantations across the continent.

According to a report that was published by Orion Research, the European CBD market is currently worth about €450 million, which represents about 30 percent of the global CBD market share. This puts the European CBD market in the second position, right behind the North American market. However, the European CBD market value is projected to be worth over €1.5 billion by 2023.

Now, investing in CBD has certain advantages. First and foremost, CBD is trending. European consumers are willing to buy supplements to improve their wellbeing. Thanks to its multiple beneficial effects on human health, CBD is gaining in popularity with each passing month.

Despite the confusion that was created by the European Food Safety Authority when it classified CBD as a ‘novel food’, CBD sales are still increasing in most European countries. CBD products are widely distributed within Europe. You can find the cannabinoid in vape stores, tobacco shops and pharmacies. In some countries, you can find CBD in convenience stores, supermarkets or even featured on Amazon.

Unfortunately, the regulations regarding CBD production and distribution vary from country to country, so you should consult the local authorities to learn how to get a cannabis-growing licence.

 

Hemp for personal care

CBD is not the only health & wellness product that you can make out of hemp. According to a report presented by New Frontier Data, 12 percent of the hemp produced in Europe in 2017 went into the production of personal care products.

That shouldn’t come as a surprise, considering that hemp seed oil (not CBD oil) has been used in beauty creams and other personal care products for decades. Hemp seed oil can treat acne and cleanse and moisturize the skin, among other things. These benefits, along with its reasonable price, make it ideal for skin cream manufacturers.

 

Medical marijuana, recreational marijuana and cannabis pharmaceuticals

The European market for medical marijuana is still young and it has a long way to go until it reaches the level of sophistication you can find in North America. At the moment, there are only three large (maybe average or even small would be the more appropriate term, if we were to compare these markets with Canada or the American states that legalised medicinal marijuana) medical marijuana markets in the European Union — Germany, the Netherlands and Italy.

Even though these markets are increasing by a considerable amount each year, it’s extremely difficult to enter the European medical marijuana market at the moment. Most states that legalised medical marijuana offer a limited number of licences each year, and getting your hands on one of those licences can be more difficult than winning the lottery.

Since Europe is bound to become one of the largest cannabis markets in the world, North American cannabis giants flocked to European shores and secured their place in the market. These companies have the know-how, the technology and, more importantly, the money they need to outbid their competitors, so they are more likely to receive a European cannabis growing licence.

At the moment, there is no European recreational marijuana market to speak of. Recreational marijuana has been legalised in selected parts of Europe, but this practice is often only tolerated and not encouraged by the local governments. As a result, and unlike in North America, you won’t find recreational marijuana in dispensaries.

Some European states have legalised the use of cannabinoid-based medicines, but entering this market could be very difficult for now. However, dronabinol, nabilone and nabiximols are legal in several EU countries, and they are prescribed to patients suffering from severe illness.

 

How to make a profit out of cannabis — final thoughts

All projections note that European cannabis businesses will bloom in the following years, and that’s most probably true. European consumers are slowly but surely understanding that cannabis is more than a recreational drug, and they’re willing to try cannabis-based products. As a result, there’s an increasing demand for cannabis and cannabis products in the European market, so cannabis businesses are bound to make a profit.

Related: European Cannabis Stocks – What to Invest In

Now, investing in cannabis is certainly a good idea. As for what to invest in, that’s totally up to you. You could choose to harvest the plant and sell it to other businesses, you might just process the plants harvested by others or you could implement a ‘from seed to shelf’ concept. All of these choices could help you profit.

 

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