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| In the second edition of a two-part retail special, this mailer journeys through Europe’s patchwork landscape of tolerated, illicit, and future legal cannabis outlets. Cannabis retail in Europe is just as diverse as its regulatory approaches towards the plant, with major differences by country and product format. |
| The closest European consumers can get to a dispensary experience is through Amsterdam’s coffee shops and the social club scene concentrated in Catalonia. Unlike North American stores, however, onsite consumption is a defining feature of Europe’s tolerated cannabis retail markets; their atmosphere more closely resembles a cafe or friend’s house than a convenience or department store. From a consumer perspective, we debate how Spain’s social clubs stack up to their better-known counterparts, the Netherlands’ coffeeshops. |
| The largest competitor to cannabis retail in Europe, as with most regions, is the illicit market. Flourishing under prohibition, the street cannabis purchasing experience has become increasingly innovative and nuanced – particularly in Europe’s largest cities. We head underground to London’s cannabis scene for a glimpse into its inner-workings. |
| Stepping back into legal territory, we consider how sales channels have worked for CBD ‘wellness’ products, before exploring how recreational retail could shape up in upcoming legal markets like Germany. With both an over- and under-saturation of retailers causing problems in North America, we look at data from these markets to analyse just how many cannabis stores Europe might need. |
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A. Tolerated Cannabis Retail & Onsite Consumption
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| Onsite consumption is the defining feature of ‘tolerated’ cannabis retail in Europe. Much of the cannabis consumption experience is centred around it, unlike the majority of North America’s dispensaries. |
| The buzz of Europe’s social clubs and coffeeshops is fueled by the sense of community built around the purchasing experience, with retailers often resembling entertainment venues thanks to live music, sports screenings, events or board games. |
| A large part of the tolerated cannabis retail experience is the selection process itself, with consumers seeing, smelling and selecting buds to suit their tastes. This is a stark difference from the sealed opaque packaging seen in Canada, or ordering through a touchscreen at a large US dispensary, where you cannot see the actual product before purchase. |
| As the majority of flower is sold in clear ziplock bags at coffeeshops, social clubs and on the street, Europeans may be unimpressed if this aspect is missing from the legal purchasing experience. |
| With a non-commercial club model launching soon in Malta, joined by proposals from other regions, this distinctly European retail model doesn’t look like it is disappearing anytime soon. |
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| Why are there lower levels of public support for cannabis legalisation in the Netherlands than in Spain? |
| Despite both having long-running access to cannabis through tolerated retail models, just 47% of Dutch respondents to FW’s polling supported legal, government-regulated sales of cannabis products to over-18s, compared to 56% of those in Spain. |
| Support for legal cannabis sales in the Netherlands has been hampered by negative associations with the current coffeeshop model, including the surge of canna-tourism. Amsterdam hosts more than 5 million tourists each year, with around 1.5 million making a visit to coffee shops in the Dutch capital. |
| Social clubs are more discreet and less tourist-friendly than coffeeshops – often unidentifiable to the unknowing from their exterior, with a referral required for membership. This greatly reduces the number of inexperienced cannabis users, which are arguably the most likely to encounter issues during or after consumption. |
| A 2019 study revealed cannabis to be involved in 11% of intoxication-related trips to the Emergency Department of a major Dutch city, and responsible for 39% of all intoxications by ‘drugs of abuse’ (i.e. illicit drugs). This remains far lower than for alcohol, however, which was involved in 62% of all overconsumption-related emergency room visits. |
| Rather than the data alone, the difference in the perceived levels of harm from coffeeshops compared to bars may also be impacted by the more ‘brash’ nature and sheer concentration of coffeeshops in regions like Amsterdam. |
| Partly to attract the attention of eagle-eyed tourists, coffeeshops (and the plethora of headshops) often feature overtly prominent storefronts with heavy ‘stoner’ imagery. As a result, certain regions like Amersfort have elected to prohibit imagery of cannabis leaves on the exterior of coffeeshops. It is hard to blame retailers for resorting to cliches rather than developing a separate brand or visual identity, especially as the absence of formal regulation has resulted in ongoing risks of regulatory change and store closure that deter non-essential investment. |
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| How much do coffeeshops drive tourism to Amsterdam? |
| The Netherlands introduced rules restricting non-residents from coffeeshops in 2013. But not every municipality has enforced the ban, seeking to balance the impact of coffeeshop tourism with an uptick in street dealing in its place. The mayor of Amsterdam, Femke Halsema, is pushing for the city to follow suit, as a ‘temporary measure’ to manage the cannabis sector as the Dutch pilot supply chain programme gets off the ground. While her proposal was recently defeated, the city has also launched an anti-nuisance ‘Stay Away’ campaign to curb the excesses of Amsterdam tourism, targeting those visiting the city for bringe-drinking, drugs, and sex.But just how powerful a lure are such vices for tourists? An OIS report commissioned by the mayor into the impacts of coffee shop policy, prostitution and tourism in the Singel/Red Light District provides insightful data to gauge the importance of coffeeshops to foreign tourists. |
| Out of all respondents to a face-to-face survey of over 1,100 foreign tourists to the region (aged 18-35): |
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| Although those surveyed in the region are more likely to be there for cannabis or prostitution than the average tourist, the importance of cannabis and coffee shop culture to tourism is undeniable. This was especially the case for British visitors, for which visiting coffee shops was by far the most common motivation to visit Amsterdam (33%), overtaking the amount that reported visiting to walk or cycle through the city (21%) |
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B. Illicit retail – London market case study:
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| Most European cannabis consumers are not lucky enough to access cannabis retail stores, aside from those in Europe’s tolerated markets. The main competitor to any new legal cannabis market is therefore the power of the illicit market. |
| The sophistication of illicit cannabis dealing and purchasing is often overlooked – many believe it to be a low skill, low innovation area, with the perception of dealers being intimidating or violent. While that can be true, the consumer purchasing experience is becoming more easy and enjoyable, especially in Europe’s city hotspots. |
| We explore what new legal retail channels will need to compete with in Europe, using lived experience and conversations with consumers, breeders and dealers to paint a picture of the cannabis consumer’s experience in London. |
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Retail method
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- Doorstep delivery or collection
- Postal delivery may also be available (usually for crypto-based payments)
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Product
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- Choice of flower available at a range of prices, may have a menu
- Hash not as commonly available, thought to be declining in popularity
- Availability of other formats (edibles, vapes, concentrates) remains low but is increasing – often through separate dealers than flower
- Product commonly UK indoor-grown or imported (eg. from the US, Spain or Morocco)
- ‘Homegrow’ (referring to lower grade amateur-grown flower, rather than more refined indoor-grown flower) is usually sold by ‘hobbyists’ rather than dealers – with some preferring it due to typically milder effects
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Packaging
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- Majority of flower and hash is sold in clear zip lock bags
- Rise in prevalence of sealed branded bags for premium (or imitation premium) products
- ‘Medical style’ pots may also be used
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Promotion
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- Increasing use of encrypted groups such as Telegram, enabling distribution of menus and reviews
- Strong UK weed scene (often connecting through Instagram) has led to consumers having stronger brand recognition for dealers, growers and genetics breeders
- Loyalty schemes, seasonal offers and freebies may be offered
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Price
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- Pricing varies based on quantity, quality and origin (whether factual or perceived)
- For a 3.5g a consumer can expect to pay £25-30. Premium ‘flavours’ often command higher rates for the same quantity, such as imported ‘Cali’ flower that often retails for £60-80
- Pricing usually discounted as the purchase quantity increases
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Sophistication
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- Uniforms from delivery apps like Deliveroo and JustEat are often worn for discretion
- Dealers range from individuals to enterprises with teams and fixed locations
- Rise in online purchases through services like ‘Dispenseroo’ – brazenly advertised across London’s underground network
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Accessories
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- Majority of consumers smoke flower with tobacco, king-sized rolling papers, and a cardboard roach (although hash may be smoked with a standard tobacco filter)
- Dry herb vaporisers, bongs and pipes have seen limited adoption among non-connoiseur consumers, with dab rigs even more scarcely used
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C. Legal sales channels
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| ‘Diet-cannabis’ – CBD outlets and ‘cannabis light’: |
| For those uninterested in (or unwilling to go underground for) THC products, consumer CBD is the dominant retail format. From a dizzying boom, the CBD retail environment has tightened in many European markets. Regulators’ warnings of CBD’s ‘novel food’ status has nudged chain retailers into dropping the product, relegating it to smaller independents and specialty shops. Many analysts predict anaemic growth in the years ahead, and it is clear that CBD performs best when availability is strong across multiple commerce channels. |
| In the UK, the regulator’s pragmatic (if not always straightforward) approach to CBD compliance has allowed multiple commerce streams to take a more established hold, from supermarkets and drugstores to a highly-successful Amazon pilot. CBD has also become embedded into other channels, from Deliveroo and grocery apps to infused offerings in spas, hotels, and restaurants. |
| E-commerce represents a significant proportion of European CBD sales, and physical specialty stores have underperformed relative to online channels uncurtailed by geography or opening hours. D2C and CBD marketplace platforms are an efficient way to navigate product restrictions, while consumers benefit from cross-checking of reviews and pricing. However, both dedicated e-comm and retail outlets may struggle to convert ‘casual’ users and drive impulse buys and wider sector growth in the way that sales through mainstream outlets facilitate. |
| In markets where ‘cannabis light’ hemp flower is sold (whether legally or through technical loopholes) such as France and Italy, standalone CBD stores have fared much better, with some chains amassing double and triple-digit storecounts. In our view this success stems from the emulation of the North American dispensary model, and the novelty that this brings. |
| A key area for the European sector to consider is how CBD will be regulated in markets that begin to introduce THC sales: in Canada, for example, CBD is regulated like THC and can only be sold in cannabis stores. While regulating CBD under a new cannabis framework in markets like Germany may allow products to circumvent issues like novel foods, it may also further restrict the channels through which consumers can access products. |
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| Germany: Potential for cannabis sales in pharmacies |
| While the German government is committed to specialty licensed THC stores, they have also kept open recreational cannabis sales through pharmacies as a potential distribution channel. It is interesting that the main pharmacists group is publicly lobbying for pharmacy control of the supply chain, although opinion is far from uniform across the profession – mirroring pre-legalisation debates that took place in Canada.Is this a sensible strategy for the government to take? Perhaps. The main rationale for pharmacy sales is to enable access for people in rural areas where standalone stores could be sparse. It’s also possible that pharmacy sales would feel more approachable for certain demographics such as older consumers, those interested in cannabis for quasi-medical uses (such as to sleep or help relax) and people with questions about other drug interactions. |
| However, this model also raises several practical and ethical questions. Firstly, a more effective way to ensure universal adult access to cannabis is to allow online sale and delivery, which operates very successfully in Canada. The value of pharmacy sales is also limited if vendors are prevented from offering health advice for recreational products, and pharmacists could be trained to provide standalone advice on cannabis use, risks and drug interactions without recreational sales. |
| On top of logistical issues of diverting shelf space and trained pharmacist time away from the provision of health services, there are broader issues around blurring the lines between medical and recreational use. Are the risk perceptions of recreational cannabis use minimised if it is made available in pharmacies? And would existing patients feel their diagnosis and prescription are devalued if the next person in line is in search of a heavy-hitting high? |
| Uruguay is the only market that offers recreational cannabis sales through pharmacies, in addition to home- and co-op grow provisions. However, the products available are limited and the majority of participating pharmacies are concentrated in the capital rather than rural locations, limiting the usefulness of comparison. |
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D. How many cannabis stores does Europe need?
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| In our past issue, we explored analysis by Leafly and Cannabis Benchmarks on the optimum number of cannabis stores per capita: Leafy suggests one store per 5,000 people, and Cannabis Benchmarks one per 7,500. |
| How does this compare to European storecounts now, and what would it look like as more countries legalise? |
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