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Germany’s legalisation push has lit up the European cannabis market

Mike Sassano, CEO of European cannabis manufacturer Somai Pharmaceuticals, offers his perspective on Germany’s accelerated plans for adult-use cannabis legalisation.

Like the United States, Europe has individual countries with very different opinions on how to legalise cannabis. All 27 countries in Europe have embraced medical cannabis, unlike the fractured US market. Like the US, a few countries have either approved or started a pilot program for adult-use cannabis. When Germany’s federal minister of health Karl Lauterbach commented that he had officially reversed course and now endorses adult-use cannabis, it was the shot heard around the global cannabis market. This decision showed Lauterbach’s foresight that the dangers of not legalising cannabis far outweigh the risks of cannabis legalisation.

The regulation-making health minister of the largest European Union country has green-lighted cannabis legalisation. This isn’t comparable to some American democrat or republican politician looking to catch the cannabis vote due to its popularity, nor a politician looking to score social equity points. Lauterbach represents science and medicine. This event is comparable to the Food and Drug Administration’s (FDA) head, Dr Robert Cliff, coming out and saying legalisation of cannabis is better for the US population than otherwise or the Surgeon General endorsing legalisation. In some respect, this endorsement for cannabis will have to be addressed at the WHO level since the UN still hold authority over narcotic distribution.

But for now, the German politicians don’t seem to care. The German Bundestag, the country’s federal parliament, has a budget committee requiring the minister of health to have an adult-use bill with regulations produced for review by the end of 2022 or risk losing part of his budget. This is comparable to Congress requiring the notoriously slow FDA to draw up the regulatory map in the US for national legalisation. Notably, Lauterbach set a summer 2022 target for his proposal, which signals the current party in power, the traffic light coalition, is throwing its weight behind prioritising cannabis legalisation. For now, the cannabis stars of health and politics are aligning.

Which EU countries will win big in the german cannabis crush?

It is not time to celebrate yet, as implementation isn’t expected till mid to late 2023. Still, every country on the fence in Europe – and even the ones that aren’t – are all abuzz with this renewed push for European legalisation. And why shouldn’t they be? Criminalisation has only prevented cannabis users from obtaining high-quality, legally made and taxed products that help them. Malta, Luxembourg, Denmark and Switzerland have legalised or started pilots to legalise cannabis. Portugal, Spain, France and the United Kingdom have either discussed or announced investigations into how to legalise cannabis properly, with Portugal alone trying three times in the last 15 years to legalise.

Germany only has three vertically integrated, licensed companies. So the question is, will Portugal —the largest EU exporter of cannabis — be the leading supplier of Germany? Will it be the current largest overall exporter of cannabis — Canada — that is permitted to pass oversupply to Germany with ease? Will Israel cannabis make it to the market? Maybe Denmark. Or will up-and-coming countries like Greece, Columbia, Uruguay or Lesotho be lower-cost producers to enter the market?

The answer is unclear because the current 1961 and 1971 Narcotics Acts prevent such inter-country sales. Thus the United Nations and World Health Organisation will have to address the issue. Some speculate medical products will go to German distributors who can then pass the product to pharmacies, dispensaries or social clubs. This last speculation amounts to conventional wisdom, considering funding for German distributors has raised valuations to sky-high levels. With approximately 120 German distributors, they surely can use some wind to propel them to the subsequent raises and consolidation with producers in other countries to improve the status and margins.

Place your bets on the European Cannabis Market Before it Explodes”

Whatever the outcome, the expectation is that most countries around Europe will be following the German lead. Early growers and manufacturers could surely use the break after being pioneers and waiting for change to occur. Smart money is already positioned toward the potential that Europe will unlock multiple country markets as it works its way to its rightful position as the second-largest continental cannabis market. Merger fever is gripping the EU cannabis scene, and it’s just the beginning. Stay tuned: Europe is just heating up.

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