What will happen to Europe’s medical cannabis patients?
As European countries start to seriously engage with recreational cannabis reform, industry operators and policymakers must grapple with the question of how this will affect the medical cannabis sector and outcomes for patients.
Tjalling Erkelens, CEO and Founder of Bedrocan, recently warned that medical cannabis could become scarce and that patients may become disadvantaged through recreational legalisation. We explore the extent to which this could occur in Europe, and provide practical recommendations for stakeholders to implement to protect patients during this transition.
Will recreational cannabis reforms bring more legitimacy to medical cannabis, or less?
On a theoretical level, wider cannabis reform could either undermine or further legitimise the medical sector. While sceptics view medical cannabis as an ‘unproven’ science that creates a backdoor to recreational consumption, many are becoming aware of clear, clinical justifications for cannabis-based medications.
As legal access to cannabis broadens across the continent, the profile of recreational consumers, brands and cannabis-centric culture will inevitably grow. This provides opportunities for differentiation, but also alienation, from existing medical operators and the patients they serve. How medicinal cannabis will ultimately come to be viewed across Europe is the responsibility of both regulators and operators - but how responsibly the industry reacts in the face of large recreational opportunities will be key to informing public perceptions.
What happens to medical patients when wider access is legalised? Will their suppliers pivot to the recreational sector?
The biggest issue to play out over coming years is the extent to which medical cannabis operators will shift into recreational markets, and patients away from the medical sector. Evidence of this happening has been commonplace in US and Canadian markets.
In Oregon - where the medical sector was impacted particularly hard - nearly two-thirds of patients gave up their medical cards, and the number of medical-only retail shops fell from 400 to 2 according to the Associated Press. However, a decline in patient numbers of this scale is less likely to be seen in Europe due to tight restrictions on prescription eligibility, as opposed to the North American medical card model where consumers can more easily obtain medical access for comparatively minor conditions.
According to Headset, the proportion of medical sales now appears to have stabilised in mature US markets. Despite steep declines in Oregon, medical sales have contributed 8-12% of the state’s total cannabis sales each month since the start of 2020. Drawing on data from markets with both recreational and medical sales, Headset explains that after an initial rapid surge in recreational sales, medical channels typically reach stability at between 10-20% of total cannabis sales in the state.
Source: Comparing US medical and recreational market development, Headset, 2021
To what extent might this happen in Europe?
Firstly, European medical cannabis has a much more tightly-regulated framework than North America, with production within the EU-GMP pharmaceutical framework, and doctor prescription and oversight. As such, there’s less of a natural ‘pivot’ for specialised, pharmaceutical operators into more commercial CPG & ‘vice’-type sectors.
The patient’s perspective also looks very different in Europe vs North America. The inclusion criteria is much more stringent, and the total patient base far lower - meaning that existing patients are less likely to bleed into recreational markets.
Given the deeper pharmaceutical and clinician involvement in European medical cannabis, operators active in both sectors may find themselves viewed less favourably by regulators and doctors. While this hasn’t proved a major barrier to Canadian suppliers in Europe currently, the distinction may become more pronounced once both markets coexist in a single country.
Cannabis production is also far less fungible at the European level. In North America, all cannabis production and consumption takes place within the same (national or state-level) border. In Europe, by contrast, the majority of patients’ medical cannabis is imported.
Given UN drug control treaty restrictions on the export of non-medical cannabis, international sales of recreational products are unlikely to emerge anytime soon. This dramatically narrows the base of current producers that could easily transition output to recreational markets.
Presently, there’s few European countries that have the ‘winning’ combo of significant medical production, probable commercial adult-use reform, and a domestic population large enough to support recreational market production at scale. On this matrix, Portuguese producers are amongst the best positioned in Europe to take advantage of any upcoming recreational reform (as are those in Israel, if considering slightly further afield).
So far, European medical operators’ positions on recreational cannabis have been mixed. The longstanding dutch cultivator Bedrocan, for example, has repeatedly ruled out itself out of recreational markets. In contrast, Curaleaf acquired EMMAC’s medical and CBD assets, creating Curaleaf International in a deliberate market positioning ahead of recreational reform.
Jonathan Lubosch-Haenisch, Co-founder at Iuvo Therapeutics thinks:
“We expect that the current medical market will not only continue to exist but grow in harmony with the recreational market as we've seen in other international markets. A transparent and conclusive segregation between medical or recreational is vital.”
How can we ‘protect’ patients in Europe?
Ensuring that patients have a route to access appropriate products and discuss treatment with a qualified healthcare provider is vital. Here, again, broader adult access could prove both a help and a hindrance.
Recreational sales enable a broader ‘spectrum’ of legal use. This ranges from the purely recreational, to the quasi-medical, through to full medical. For many, access to cannabis outside of the highly medicalised and restrictive European medicines framework will be a boon, allowing people to treat cannabis products more like a wellness supplement or an over-the-counter remedy than an opiate prescription.
Restrictive prescribing requirements, particularly in markets such as the UK, mean that many who may currently benefit from a medical cannabis prescription are unable to. With an estimated 1.4m people in the UK self-medicating with cannabis for a diagnosed medical condition, it is plausible that recreational reform would do more to provide this population with an effective source of legal access than any politically-feasible reforms to the UK’s current medical cannabis framework would.
For others with more pressing clinical needs, however, clinician oversight, pharmaceutical quality and affordability (such as through healthcare coverage) are imperative. Protecting this subset of patients - no matter how small it is relative to recreational and quasi-medical users - should be a core goal of regulators, healthcare systems and the cannabis industry.
Hannah Deacon, Director at Maple Tree Consultants and campaigner for medical cannabis access told us:
“It is imperative that we get the framework, legislation and access correct for clinically vulnerable people who need access to medical cannabis. It is very apparent within the UK that there are issues with access to clinicians, quality supply chains and quality EU GMP products that are well priced. It is important that we do see access on the NHS and this will likely only come through robust evidence, which could be in the form of real-world evidence and observational data. And whilst there is a crossover between medical and recreational use for some patients, I think it's really important to remember that many critically ill patients would not have a satisfactory outcome without clinically-led product prescribing.”
Benedikt Sons, Co-founder and CEO at Cansativa explains:
“Patients who do not receive reimbursement may prefer to go to a recreational dispensary or turn to the illicit market instead of medical channels. This creates a genuine risk as those patients would not be monitored under their practitioners care. We are advocating for extending the current medical programme in Germany to allow more extensive and less bureaucratic cost reimbursement.”
How might this impact investment opportunities?
The prospect of recreational reform will also influence broader investor strategies for where to deploy capital, and strategic decisions made by medical cannabis companies themselves. This risks knock-on effects into medical sector investment, with certain markets or parts of the value chain deprioritised, or strategic and operational decisions deferred. In countries that look likely to legalise, investments into retail and brand-based cannabis assets may benefit relative to other areas, potentially to the detriment of patients.
Conversely, recreational reform could have a clarifying effect in the medical sector, by shifting attention of short-termist and retail investors into newer market opportunities. This may help clear space for longer-term and committed investors within medical sectors, and help stabilise stock prices for listed medical cannabis companies. It may also help companies to attract support from sources such as government agencies potentially cautious of a ‘green rush’ in Europe’s earlier medical years.
There are also many investible parts of the cannabis supply chain which offer major benefits for both medical and non-medical markets. These include genetics, product formulations and IP, machinery and equipment, and production and compliance tech solutions. Cannabis hardware can also successfully cross both markets, such as Storz & Bickels’ medically-certified vaporizers, which are endorsed by doctors and recreational aficionados alike.
Recommendations:
Practical steps that industry and policymakers can take to protect patients and the growth of the medical sector amid broader recreational reform include:
