Europe’s Cannabis Market Is Smaller Than Missouri’s. So Why Are U.S. Operators Still Looking?

By Javier Hasse, Co-Founder & Editorial Advisor

Europe’s entire legal cannabis market is smaller than Missouri’s. Not Germany’s market. The whole continent.

That’s the math according to investor Aaron Edelheit, and it hasn’t stopped American operators from staring across the Atlantic. Back home, most of their markets are flat or shrinking. Over there, the story is still being written.

In a June Substack post, Edelheit made the case for staying home. By his numbers, the European market came in well under $1.5 billion in 2025. Prices dropped 13% in the first quarter of 2026. German flower averages €4.52 a gram, VAT included. And Prohibition Partners projects Germany, the UK and Poland, Europe’s three biggest markets, to grow at a combined rate under 15% a year through 2030.

Seth Yakatan, of Katan Associates and Ordo Verde, and global strategy consultant Mitchell Osak of Quanta Consulting read that and wrote back. In a white paper shared with IgniteIt, neither of them claims Europe is big. Yakatan says size is the wrong yardstick. Osak says the only yardstick that matters is whether anyone makes money there, and for how long.

Worth knowing: both make a living in this business. Yakatan advises cannabis companies. Osak says a good chunk of his consulting work in recent years has come from helping Canadian, South American and African producers export to Germany, Australia, the UK and Israel.

Yakatan: Buy The Option

Yakatan doesn’t fight Edelheit on size. He fights him on price, in the Wall Street sense. What is a small market worth when its laws could move?

“Europe should not be valued as a mature cannabis market, but as a continent undergoing numerous regulatory transformations,” he writes.

His evidence is the industry’s own history. “The greatest returns have accrued to investors who correctly anticipated regulatory change before it became visible in financial statements and in practice,” he writes. Take Canada. Before legalization, analysts lowballed the market, he argues. “They focused on patient counts rather than consumer adoption.”

Europe, in his telling, is “a collection of regulatory call options.” Translation: a stack of bets on countries that might flip. Germany leads the pack as the region’s largest regulated market. Behind it sit France, the UK, Italy, Poland, the Czech Republic and Switzerland, which is already running adult-use pilot programs.

Then come the numbers, all his own. Keep Europe mostly medical through 2035 and peak revenue lands around $4 billion. Let Germany expand access and get France or the UK to allow adult use, and it’s roughly $10 billion. Bring several major economies into adult use and the ceiling rises to $20 billion or more. The paper doesn’t show the assumptions behind any of those figures.

Yakatan also flags where his own argument gets slippery. He calls Edelheit’s piece “a valuable warning against irrational exuberance” and admits: “The challenge for Europe is distinguishing realistic optionality from speculative optimism.”

Osak: Show Me The Profit

Osak is no export skeptic. He calls it “a viable and lucrative strategy for many Canadian and U.S. cannabis companies.” But he looks at Europe from the desk of the executive who has to ship the product, not the investor who funds it.

His big warning has a name: the TAM trap. Companies see a giant market-size forecast, raise money against it and build capacity for demand that never shows up. “Cannabis TAMs are always seductively large,” he writes. The EU numbers floating around the industry, he adds, are “crudely estimated (if not often made up by the analyst) and always best-case scenarios.”

His fix is a different acronym. TAP, or total available profit: what a market actually pays out once prices, taxes and costs take their cut. “Profit, not revenue, is what ultimately drives value and shareholder returns,” he writes. “The right question is: Can we make money in XYZ?”

Edelheit doesn’t get off easy either. Osak calls him “too conservative about the revenue opportunity and too laissez-faire with the problematic strategic alternatives in the U.S. market.” Look at home, he says: low or negative growth in most states, delayed openings in Texas and Florida, a large gray market. And sometimes a market does deliver. Germany’s medical market took off in 2024 and 2025.

Timing is the real danger, in his view. “In Canadian and US markets, my analysis shows that prices start declining and market growth begins to slow down significantly around month 15 post-legalization,” he writes. In Germany, prices have already dropped at least 50% in roughly two years, by his count, though they started much higher.

The rules keep shifting too, Osak notes. Australia posted its first market contraction in 2025. Israel is again weighing anti-dumping penalties against Canadian producers. Germany will likely tighten quality rules on drying, trimming and manufacturing.

His line on all of it: “Being late to the party often means there isn’t any food left for you.”

Then there’s the grunt work. Most American operators aren’t EU-GMP compliant, Osak writes, and buying that capability, as Curaleaf and Aurora did, runs many millions of dollars. Exporting from the U.S. also requires DEA approval. And Europe has suppliers. Low-cost competitors from Colombia, Thailand, South Africa, Morocco and Lesotho have already arrived in the EU, he writes, and Canadian producers will fight on price.

“U.S. exporters need to be prepared for a market share knife fight,” he warns.

The Window

Yakatan’s bottom line fits in one sentence: “Europe is early and can only grow.”

Osak sees an opening too. His comes with an expiration date. Demand is growing, European prices remain well above North American levels, and there are still resellers to work with. He figures the window stays open “for most companies for the next 2-3 years.” His preferred way in is partnering with a licensed producer, “probably the best option,” though there aren’t many to go around, especially with EU-GMP capability.

And on the big question, he hands one to Edelheit. For many U.S. and Canadian operators, Osak writes, “the export juice will not be worth the squeeze.”

The debate over Europe’s cannabis market reflects a broader challenge for investors and operators: distinguishing regulatory opportunities from commercially sustainable businesses. Capital allocation, international expansion and the changing economics of cannabis will also be part of the discussion at IgniteIt’s Capital & Policy Summit in Washington, D.C. on November 18, bringing together industry executives, investors and policymakers to examine where the next opportunities may emerge.