In November, Germany’s incoming coalition government announced its intention to legalise the sale of cannabis nationwide.
“The legalisation of cannabis, long blocked by the Union, allows us to have a regulated and taxed dispensary, controllable quality and effective youth protection through education,” wrote Lars F. Lindemann, a regional cadre of the Free Democrats.
If the legislation becomes law, it would be colossal, not only because Germany would become the first major European country to legalise the substance but also it would open up a market double the size of Canada, which is already worth $3.25bn in 2021[1]. Though there are likely to be sceptics, the benefits of legalisation will be deeply and widely felt.
Whilst the country is liberalising its stance on cannabis, its approach towards alcohol is very different. Besides the broader drug harm reduction services, the coalition is planning to tighten up advertising of alcohol. There may be several reasons for this – from improving public health to reducing crime rates – but interestingly, this shift away from alcohol and towards cannabis is also felt on a consumer level too.
Over the past decade or so, the amount of alcohol consumed per capita in Germany fell from approximately 140 litres to 124 litres in 2020[2]. The Covid-19 pandemic further accelerated this trend, with per capita consumption of beer, sparkling wine and spirits decreasing 5.4 per cent, 2.1 per cent and 0.9 per cent[3].
Meanwhile, the fledgling cannabis market is only getting stronger and stronger — particularly in Europe where it is expected to be worth as much as €32bn by 2027[4]. As one of the more prominent markets, Germany alone is expected to generate as much as €16.2bn by the same year.
Germany’s announcement comes amid a global shift toward local and nationwide decriminalisation, and in some cases legalisation of cannabis. In October, for example, Luxembourg approved legislation to legalise the home cultivation and consumption of the drug.
In the UK, we are already beginning to see the start of an emerging and flourishing CBD industry. In Jersey, for example, the government is working hard to create an environment that makes it easy and safe for cannabis industry players to operate.
The Cannabis Services Advisory Board, of which Tenacious Labs sits as chair, has been established to promote best industry practices around product development and point of sale. Not only does this create opportunities for the broader industry, but also for Jersey too.
For a population of only 100,000, the impact of a strong cannabis industry would be significant, with one Jersey government official estimating that the initial tax income from CBD products alone could be £30m per year in the future.
However, whilst this is encouraging, the UK and the rest of Europe still lag behind Germany’s ambitions to legalise. Respective national governments would do well to learn from their ambitious German counterparts, and carefully consider legislation in their own jurisdiction that that ensures there is strong regulation in place to safeguard all stakeholders. This will open a significant market for legal cannabis growers and dealers, ushering in jobs and creating a degree of economic prosperity.
The global cannabis industry is fast-growing, and the pandemic has done much to further fuel its growth, with consumers flocking to cannabis and CBD products for a wide range of reasons – from treating physical pain to assisting sleep and improving wellbeing. This has inspired a new wave of consumers to try — and stick by — cannabis, while seemingly veering away from mass-market alcohol.
As this trend continues, it’s important that regulators and legislators in the UK sit up and take note of developments in Germany. Cannabis consumption is not going away. Instead, like in Germany, key decision-makers should look to create a market that genuinely protects consumers by offering safer, regulated products; that generates taxes for wider societal benefits; and for business, who can navigate a proper, grown-up industry.
If the rest of Europe can align the interests of all its currently disparate stakeholders by creating a similar framework, the potential for growth is limitless. Without that, the cannabis industry’s market potential will go up in smoke.
Adrian Clarke
Chief commercial officer and co-founder
Tenacious Labs
[1] https://www.statista.com/statistics/1244942/canada-legal-recreational-cannabis-market-size/
[2] https://www.statista.com/statistics/540481/beer-wine-and-spirits-per-capita-consumption-in-germany/
[3] https://www.destatis.de/EN/Press/2021/03/PE21_148_799.html
[4] https://prohibitionpartners.com/reports/the-european-cannabis-report-6th-edition/
