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Germany’s Domestic Cannabis Cultivation Market Poised for Significant Growth as 3 New Licences Issued

Germany’s Federal Institute for Drugs and Medical Devices (BfArM) has now issued the first three new licences for domestic cannabis cultivation, expected to see the amount of product grown in the country at least double this year.

Following the passage of CanG on April 01, Germany has made significant amendments to its Medical Cannabis Act, which has been in place since 2017.

This has lifted the severely restrictive cap on those licenced to grow cannabis in the country, done away with the tender process to receive a licence, and will soon see BfArM relinquish its obligations to sell medical cannabis, instead allowing the companies to sell it to local distributors themselves.

Prohibition Partners’ Senior Analyst Alex Khourdaji told Business of Cannabis: “It is expected that we will witness more companies receiving cultivation permits in Germany which in turn will drive a competitive domestic cultivation market and potentially a new international export contender.

“Although it is unclear if domestic producers will be able to compete against cheap imports, patients will certainly benefit from a greater selection of domestically produced products.”

What happened?

Last week, Business of Cannabis reported that US cannabis giant Tilray had received one of the first licences in half a decade to cultivate cannabis in Germany.

These updated licences were also issued to Canada’s Aurora and Germany’s Demecan, all three of which were the initial winners of the tender to cultivate limited amounts of cannabis in 2019.

These licences covered a strict production quota, 10,400 kg over four years, equating to 2,600 kg annually.

Under the original tender, the selected companies sold their products at a fixed average price of roughly €2.20 per gram to the BfArM’s Cannabis Agency, which is sold to pharmacies at a fixed price of €5.80 per gram.

In Q3 2023, domestically produced medical cannabis volumes were approximately set at 650 kilograms, whereas sales in pharmacies reached 4,895 kg; a sevenfold difference between domestic supply and demand needed to cover patients.

The restrictions on domestic production have left a market in need of imports to meet patient demand, however, the amount of medical cannabis imports that enter Germany is almost double the amount (Q3 2023 – 8,355 kg) of what is actually sold in German pharmacies (4,895 kg).

While the German medical cannabis market is still overwhemingly dominated by imports from other countries, the Federal Council called for the removal of these limits ‘in order to appropriately curb the sharp rise in imports of medicinal cannabis in favour of domestic production of the appropriate quality.’

The German government itself expects this will see 100 medical cannabis cultivation facilities set up in the country.

Aurora Europe GmbH

Aurora’s European subsidiary announced last week that it had been granted two licences by BfArM under the newly revised Medical Cannabis Act.

One such licence enables the company to continue its domestic cultivation at its large-scale, GMP-certified cultivation facility in Leuna, Saxony-Anhalt.

This facility has been cultivating roughly 1000kg of medical cannabis a year since 2021 as part of its initial tender agreement with BfArM.

Now that it has its new licence, Aurora says it plans to cultivate ‘an approved additional product, and plans to expand (its) offering to the rapidly growing German patient base’.

Despite this, Aurora told Zeit Online that while it could now ‘grow significantly more’, it does not plan to increase production at its 3600-square-meter facility in Leuna ‘for the time being’.

Instead, the company plans to test new products before gradually expanding production.

Aurora was also granted a new dedicated R&D licence allowing for the trial of up to seven additional novel cultivars at the same facility.

Last month, Aurora said that its medical cannabis revenues for the year to March 31, 2024, rose by 20% to C$45.6m, due largely to increasing sales in Europe, suggesting it is likely to pursue further expansion in the region.

However, this came around a year after it sold its operations in Denmark in order to move production to Canada in an effort to lower costs, but noted that this was ‘not a reflection of its European operations’.

Miguel Martin, Aurora’s CEO, highlighted last month that international expansion was key to Aurora’s future growth.

Demecan

At the same time, Germany’s Demecan announced that it had also received an expanded cultivation permit.

With the strict limits on which strains can be cultivated now greatly expanded, Demecan says it plans to ‘cultivate several different phenotypes’ for the German market.

It added that, with its new permit, it can now ‘double its production capacity and fully utilise existing production capabilities’ and achieve an annual yield of around two tonnes.

Dr. Adrian Fischer, doctor and managing director responsible for cultivation, commented: “This approval is a huge step forward for Demecan and the entire industry. We are proud to be the first German company to take this step and look forward to making our high-quality cannabis varieties available soon. Our goal is to further increase production and thus improve the security of supply, because unfortunately there are currently many bottlenecks in patient care.”

Alongside the announcement, Demecan says it has seen ‘strong sales growth since April’, due to the ‘sharp increase in demand’ for medical cannabis.

Tilray 

Elsewhere, Tilray’s European subsidiary, Aphria RX GmbH, which it acquired in 2021, confirmed that it has also received a new domestic cultivation licence.

Aphria RX’s initial licence was already the most comprehensive, allowing it to cultivate all three strains of medical cannabis approved by BfArM.

Now, with the issuing of its new licence, Aphria RX will be able to cultivate 31 approved strains and is expecting to increase its production by 5x.

Tilray’s Chief Strategy Officer and Head of International, Denise Faltischek, commented: “We are thrilled to receive this licence as it will provide greater access to some of the highest quality medical cannabis produced in Germany and enable us to expand the range of treatment options available to patients.

“We appreciate the trust that the German Government has placed in Tilray, and we are proud of our team for their groundbreaking work in medical cannabis cultivation and patient care.”

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