Overvalued Or Opportunity? Experts Navigate The Landscape Of Europe's Cannabis Market

"European cannabis companies are still overvalued," stated Emily Paxhia, co-founder and managing partner at Poseidon Investment Management.

Notably, Germany did not legalize the recreational use of marijuana as anticipated, but rather scaled back its law reform plans after liaising with regulators.

This controversial decision has incited a wave of opinions within the venture capital community investing in the European cannabis market, reported Tech Crunch.

See Also: Politicians Push For EU Cannabis Reform As Weed Popularity Grows Across The Continent

Expert Perspectives

According to Óskare Capital co-founder Oliver Lamb, Germany's move is not necessarily a bad thing. In fact, it might be a welcome development for some.

Germany's "push to slow down the legalization of recreational cannabis is positive for the medical and pharmaceutical market," Lamb argued. "The hybrid recreational-medical experiment has already been played out in North America, and there were a painful amount of lessons learned that it would be reckless to ignore."

Moreover, Lamb underscored the importance of learning from experiences to avoid repeating the same mistakes. In his view, the distinction between the medical and recreational sectors has become increasingly blurred in the U.S., which he believes has "undoubtedly been to the detriment of targeted medication development."

Entourage Effect Capital founder Matt Hawkins shared a similar sentiment.

"We’ve seen a failure to do this, with just a handful of dispensaries up and running alongside lax law enforcement, which led to an overt and booming illicit market," he said of New York's cannabis market.

See Also: Colorado Cannabis Distributor Expands To European Wellness Industry Via Two Letters Of Intent

However, concerns have emerged about the potential market for legal cannabis in Europe.

“The scaling back by Germany has made us more hesitant to deploy capital in Europe. Germany’s process has indicated the entire continent will struggle to create a commercial adult-use market in the coming years and have a limited total addressable market,” Hawkins elaborated.

As the market undergoes repricing, cannabis startups are not exempt. Despite the turbulent situation, the message for these startups remains resilient and familiar: survive and advance, Paxhia explains, adding, "That’s Poseidon’s motto."

For those cannabis companies that foresee a struggle for survival, finding a buyer appears to be a feasible alternative as industry consolidation is expected in the coming months. However, Lamb warned that "whether we are talking about investments or M&A, we are in a strong buyer’s market."

Explore the shifting landscape of the European cannabis market and investor strategies at the upcoming Benzinga Cannabis Capital Conference, in Chicago on Sept 27-28. As Germany's decisions cause ripples, join industry leaders to dissect these trends and plan your next move. Get your tickets today before prices increase and secure a spot at the epicenter of cannabis investment and branding.

Read the full article at Tech Crunch

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