Europe’s entire legal cannabis market is smaller than Missouri’s. Not Germany’s market. The whole continent.
That is the math according to investor Aaron Edelheit, and it has not 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 percent in the first quarter of 2026. German flower averages 4.52 euros 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 percent 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.
Both men make a living in this business, which is worth knowing. 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 does not 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 is roughly $10 billion. Bring several major economies into adult use and the ceiling rises to $20 billion or more. The paper does not 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 exporting “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, sometimes made up by the analyst, and always present the rosiest scenario.
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 does not get off easy either. Osak calls him too conservative about the revenue opportunity and too hands off about the difficult 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 U.S. markets, his analysis shows prices start declining and market growth begins to slow significantly around month 15 after legalization. In Germany, prices have already dropped at least 50 percent 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 is the grunt work. Most American operators are not 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 two to three years. His preferred way in is partnering with a licensed producer, “probably the best option,” though there are not 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. The same price pressure shaping decisions abroad is already reshaping markets at home, as the recent coverage of Michigan’s $60 ounce paradox shows.
Frequently Asked Questions
How big is Europe’s legal cannabis market?
By investor Aaron Edelheit’s numbers, well under $1.5 billion in 2025, smaller than Missouri’s market alone. German flower averages 4.52 euros a gram, VAT included, and prices dropped 13 percent in the first quarter of 2026.
What is the TAM trap?
Mitchell Osak’s name for raising money against a giant market size forecast and building capacity for demand that never shows up. His fix is TAP, total available profit: what a market actually pays out once prices, taxes, and costs take their cut.
How long is the window for U.S. operators to enter Europe?
Osak figures the window stays open for most companies for the next 2 to 3 years, with partnering with a licensed producer the preferred way in. Yakatan takes the longer view, valuing Europe as a collection of regulatory call options that could reach $20 billion or more if several major economies allow adult use.
Source: IgniteIt, Europe’s Cannabis Market Is Smaller Than Missouri’s. So Why Are U.S. Operators Still Looking?