Classifying CBD as a narcotic could decimate EU market, says report
New Frontier Data said if a recent decision by the European Commission to suspend applications for CBD to be included in its Novel Food Catalogue was continued, it will “make it impossible for Europe’s CBD market to exist in its current form”
The potential classification of cannabidiol (CBD) as a narcotic under proposals being considered by the European Commission (EC) could effectively end hopes for a “legal, regulated, hemp-derived CBD industry” in the European Union.
In a report published late last month, said if a recent decision by the EC to suspend applications for CBD to be included in its Novel Food Catalogue, which covers permitted foods and ingredients in the bloc as opposed to drugs.
If the decision by the EC was left to stand, the report said it will “not only make it impossible for Europe’s CBD market to exist in its current form, but also constrict cannabinoid research and innovation throughout the continent”.
“The reasons for the contentious policy stance are unclear. Given the low numbers of applicants for the Novel Food Catalogue, the EC may be hoping that producers will recognise that complying with the novel food regulations is preferable to complete prohibition. Alternately, the EC may be responding to pressure from pharmaceutical companies who see plant-derived CBD as a threat to their markets for medications and nutraceuticals”, New Frontier continued.
The report also highlighted that given a “considerable and expansive consumer demand for CBD” and a major proportion of transactions occurring online, existing CBD businesses were “generally unlikely to cease operations, thereby creating a large grey market replete with existing consumers and operational structures”.
“The EU and its member states are unlikely to have the resources to aggressively enforce a blanket prohibition on the existing CBD market. Enforcing a ban on such widely available products would not only be costly, but the widespread nature of the current CBD market would be a significant regulatory or policing effort, potentially diverting resources away from other enforcement priorities. Given the [coronavirus] pandemic-induced economic contraction which has acutely impacted European governments, it is unlikely that the EU or its member states will invest heavily in new CBD-focused policing resources”, the report added.
However, New Frontier said that should the CBD market remain in its current state and incorporating expectations of future CBD spending and purchasing, the market could grow to €13.6bn by 2025 from €8.3bn in 2020, a compound annual growth rate (CAGR) of 10.4%.
Looking to individual countries, the report highlighted Germany and the UK & Ireland as the largest markets for CBD, forecasting spending growth over the five year period to €3bn from €1.83bn and to €2.8bn from €1.71bn respectively.
The next largest markets were the Benelux nations, Czechia & Austria and Italy, with spending in each expected to exceed €1bn in 2025 from their current estimated ranges of between €700-€900mln.
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