[Le trois-feuilles] How French cannabis companies see the future

«We're groping our way forward. This sentence, uttered by Léa Ruellan, founder of the Équilibre CBD brand, could have been said by any of the people interviewed for this article, so vague does the future seem to be for French companies investing in Cannabis. Despite this, everyone is trying their best to anticipate the years to come.

What will the market look like? What will the law say? What will the new technologies be? It's not easy to answer all these questions when you're preoccupied with the present, as is the case for many cannabis entrepreneurs. «Since we consume a lot of CBD, our endo-cannabinoid system is on top, so we're well relaxed.», laughs Léa Ruellan.

For an entrepreneur, anticipating the future is crucial. « It's very important to know the direction to take and the investments to make», explains Raphaël De Pablo, owner of La Ferme médicale and hemp grower in Bordeaux. In the CBD sector in particular, companies are waiting for the decree authorizing the molecule be published.

«Want to invest but can't».»

«We want to invest, but we can't until the decree authorizing CBD is signed. We have investors ready to follow us, but the problem is telling them: ‘If you put a million euros on the table, we're not sure we'll be able to use it tomorrow»".», continues the Bordeaux winemaker.

Others have a few techniques to help them wait. At Equilibre CBD, for example, Léa Ruellan relies heavily on cosmetics, because they are « already authorized at European level« . This way, the entrepreneur knows she won't have to worry about «no problem».

Another way to wait is to manufacture as much as possible, then stockpile until the decree is published. This is the gamble of Jérémy Lagrue, founder of SFE Process. His company manufactures machines for extracting various molecules from plants, notably CBD. «To manufacture one machine, we need 6 to 8 months. So the idea is to make several, and keep them in stock. That way, the day the decree comes into force, we'll be able to meet demand. We know that the first to arrive will be the first to be served.»

But there's a problem: «it's a big cash outflow».» to manufacture in advance. «We try to anticipate as best we can, but we know we won't be able to serve a hundred customers».», regrets the engineer.

Lower prices

As far as in-store sales are concerned, CBD professionals have one major fear for the future: falling prices. «When I arrived on the market in 2018, retailers were selling CBD flowers at 20 euros a gram. Today, even 10 euros a gram is unthinkable! It's more like 6 to 8 euros», observes Mao Aoust, President of High Society, a chain of 180 CBD stores.

«It's a fairly normal result of competition: as soon as there are more stores, prices come down because consumers have a choice., explains economist Pierre-Yves Geoffard, co-author of the note Cannabis: how to regain control, by the Conseil d'Analyse Économique. From the stores» point of view, price cuts are painful, because they reduce margins. But it's a perfectly normal process.» High Society's boss nods in agreement: «We're simply losing sales.»

And prices could rise even further, due to a possible tax. Until now, CBD has been taxed at between 5 and 20 %, like all common consumer goods, and often classified as «herbal teas and infusions». «We'll be hearing about a tax soon, the economist predicts. Once the government realizes that banning CBD doesn't work, I'm willing to bet that discussions will open up about the amount of the tax.»

«It would be a lie to tell you that we're not afraid of this tax., says Mao Aoust. We chose to sell with a tax of 5.5 %. If it goes up tomorrow, I'll lose a big chunk of my sales. We have to fight to make our voice heard. In Luxembourg, for example, they chose to impose a high level of taxation, and killed the market.»

Consumers expect a «clean product»

Another issue: ecology. All those interviewed for this article have understood that consumers are waiting for them. «I think there's a big need for transparency: knowing where hemp is produced, where it's extracted.», notes Léa Ruellan, from Équilibre CBD.

CBD must also be extracted as naturally as possible. «We're trying to green this production line. The industry uses a lot of petroleum solvents, which are sometimes carcinogenic. The best is to use alcohol, but it's often produced with pesticides. We use a CO2-based extraction process, which means we don't use alcohol or solvents.», says Jérémy Lagrue of SFE Process.

Proof of consumers' expectations: his company, which specializes in extraction machines, is experiencing a boom. «triple-digit growth« which «doubles every year» sales.

Once CBD has been extracted, it's time for analysis. And in this sector too, professionals feel the need for a healthy product. «Some people ask me to measure out heavy metals and pesticides, to ensure that the product is as clean as possible. I've been getting a bit more of that in recent months».», notes Elie Doppelt, President of the Leaf analysis laboratory.

To guarantee quality for consumers, it is rumored that a label certifying quality will be introduced. «Early 2023», continues Doppelt. «Because we find it hard to prove the quality of our product, especially in relation to foreign hemp.»

Other cannabinoids on the way

To guarantee consumers - and the authorities - a non-psychotropic product, the historic hemp growers are working on a variety with 0 % THC. «We've just set up a scientific advisory board to ensure we're as efficient as possible. When we need to obtain such and such a characteristic, for example 0 % of THC and high doses of other cannabinoids, we'll be able to make a variety».», explains Nathalie Fichaux, Director of Interchanvre, the hemp growers' interprofessional organization. The company Hemp It has created Santhica, «a dedicated variety for seed with 0 % THC».», she continues.

Another market trend is the arrival of other non-psychotropic cannabinoids. Many believe that France has come a long way with CBD, and that it's time for something new. «You only have to look at the U.S. market to see that CBC, CBG and CBN are all very popular. present, observes Laure Bouguen, founder of Ho Karan and former spokesperson for the Syndicat Professionnel du Chanvre. I imagine that French consumers will ask for it, as brands will highlight it.»

In addition to new molecules, the way they are consumed could soon change. In France, the most widely consumed products are CBD-dominant flowers and oils. Problem: the government wants to ban the sale of raw flower. And oils «are not the most user-friendly format, jokes Ludovic Rachou, founder of the Rainbow brand, and President of UIVEC, a union that defends only the use of CBD in derived products.

«I don't know about you, but I don't have the reflex to put a pipette in my mouth! Abroad, particularly in the United States, the ‘edibles’ are developing rapidly. I'm thinking in particular of gummies and other edible products». Products that already exist on French shelves and that consumers are beginning to demand.

Authorization of medical cannabis in 2023?

Aside from CBD, the nearest horizon is undoubtedly the authorization of cannabis for medical purposes. Like Newsweed has been covering it for several months, France is currently experimenting with cannabis-based treatments on several patients. Visit 1000th has just been reached. This full-scale test will run until 2023. What happens after that?

«I want to work in medical cannabis, but I don't know when. I just know that in 2023, there will surely be a sector. We have to be ready.», anticipates Elie Doppelt, who runs the LEAF laboratory.

The same goes for Raphaël De Pablo, from La Ferme Médicale. «I'd like to distribute medical cannabis from Canada to France. We have everything we need to be in place, but we don't know the contours. We don't know if we'll need a license, for example.»

All the more so as the investments required to produce medical cannabis in France are staggering. «I'd put it at 20 or 30 million euros. We need to set up laboratory production, in compliance with very strict standards, including Good Medical Practice. »

Finally, when it comes to recreational cannabis, there are virtually no economic players seriously preparing for it. France seems to be sticking firmly to its guns, particularly since the election of Emmanuel Macron. For many observers, if France ever gets around to it, it will be Quebec-style.

«It's the cultural model that's closest to ours, says economist Pierre-Yves Geoffard. In other words, we'll surely have state-regulated production, and stores that are state-run.»

In the meantime, everyone will be watching Germany's next move with interest. The country, which is France's main political and economic partner, last week announced to set up a legal cannabis market.