Written for Business of Cannabis by Prohibition Partners Senior Analyst Lawrence Purkiss
A series of proposed amendments to the Cannabis Act (CanG) which would further constrain cultivation associations could be brought in before July 1st. According to a neutral assessment from law firm Witzel Erb Backu & Partner, these amendments may be in violation of the German constitution.
The proposed amendments are to be discussed this week, with the first reading due to take place on Friday, May 17, 2024, at 00:45am which will be broadcast live. After a 30-minute debate, they will be referred to the lead health committee for further discussion.
In the days and weeks leading up to the crucial German Federal Council (Bundesrat) vote on the Cannabis Act (CanG), which took place on 22 March 2024, there was widespread apprehension that the result would be the convening of a Mediation Committee. The Mediation Committee procedure would have delayed the new legislation by at least several months, and in a worst-case scenario would have ended the proposed legislation completely.
In order to avert the Mediation Committee procedure, German Health Minister Karl Lauterbach introduced a set of proposed amendments to the Cannabis Act intended to address some concerns of key opponents of the bill. This set of amendments was put forward by way of a ‘protocol statement’, released ahead of the vote, which served as a declaration of intent by the federal government to re-examine (and potentially amend) a number of elements of the new legislation before July 1st, when cultivation associations are permitted to begin operations.
The amendments contained in the protocol statement, which would further tighten the already stringent constraints under which cultivation associations would operate, have predictably received wide criticism from cannabis industry stakeholders. More significantly however, the legal foundations of some of the amendments have also been questioned – with some aspects of the amendments seen as unconstitutional.
The most potent criticism is contained in a legal report by the Munich-based administrative law firm Witzel Erb Backu & Partner. The firm was commissioned by a member company of the German Cannabis Business Association (BvCW) to carry out a review of the protocol statement, with a request for a neutral assessment.
The report contains detailed analysis of the problematic legal implications of two key proposed amendments. The following is a summary of this analysis. The full report can be found here – https://240254.seu2.cleverreach.com/c/94594741/48e966e4410-scutel
Proposed amendment 1 – Proximity of Cultivation Associations
A permit may be refused (at the authority’s discretion) if the cultivation area or greenhouse is structurally linked to, or in the immediate vicinity of, the cultivation areas or greenhouses of other cultivation associations
Reason given
Allows for scope to prevent large-scale cannabis cultivation areas, in order to prevent commercial activity arising.
Why it is problematic
Firstly, this violates the constitutionally protected private autonomy of growers’ associations. This is because the stipulation that permission to cultivate can be denied on the basis of proximity to other associations, or on the existence of a structural network, constitutes inadmissible interference in the internal affairs of the associations and violates their right to self-determination.
Secondly, this violates the constitutionally protected principle of equal treatment. This is because the stipulation discriminates against cultivation associations that are located in the vicinity of others or are structurally connected, without providing objective reasons for this. Such an arbitrary distinction between the associations is incompatible with the constitutional principle of equal treatment and is therefore unlawful.
Thirdly, this violates the principle of proportionality. The regulation is neither suitable nor necessary to prevent the creation of “commercial plantations” or “large-scale cultivation areas” and is therefore disproportionate. The exclusion of “commercial” cultivation resulting from European and international law is already sufficiently taken into account by the fact that the cultivation associations may only be operated in the form of registered non-profit associations or registered cooperatives. Limitations already exist on membership (maximum 500 members) and membership fees (enough to cover running costs only), in order to ensure the non-economic character of the cultivation association. Consequently, a milder means of preventing commercial cultivation already exists. The regulation is therefore not necessary.
Finally, the fact that several cultivation associations may cultivate areas jointly is provided for in the CanG – as well as in the explanatory memorandum to the draft law which was released by the cabinet in August 2023. The law explicitly permits this as long as they are clearly delimited from one another, that an unambiguous allocation of the plants and yields is ensured, and that each association fulfils their respective obligations under CanG and its corresponding regulations. Based on the existence of this law, a large number of associations have already begun planning cultivation areas and procuring equipment. Those associations that would be denied permits based on this amendment would have their right to undisturbed possession and use of their property violated.
BvCW veröffentlicht Rechtsgutachten – Verschärfung des Cannabisgesetzes verfassungswidrig?
🚫 Stärkung der Organisierten Kriminalität durch Verbot von “Grow-Hubs” befürchtet https://t.co/7DaY5l3pSi pic.twitter.com/p3pZUNUVAO
— Branchenverband Cannabiswirtschaft e.V. (@BvCW_de) May 2, 2024
Proposed amendment 2: Use of the same commercial provider for multiple services (excluding cannabis cultivation and distribution) is prohibited.
Reason given
To prevent commercial business models that are based on bundled package services for cultivation associations.
Why it is problematic
Firstly, this again violates the principle of private autonomy, a central aspect of which is the ability for organisations to decide for themselves who they hire or contract and under what conditions.
Secondly, this violates the professional freedom of those companies that have specialised in the professional support of cultivation associations. Freedom to choose an occupation encompasses the right of every individual to freely choose and pursue their profession or activity. This right applies not only to natural persons, but also to legal entities. By preventing cultivation associations from obtaining bundled package services from a service provider, the planned amendment restricts the free exercise of this company’s profession. This restriction of professional freedom is neither justified by a legitimate objective nor proportionate.
Furthermore, aside from companies with tailored services for cultivation associations, this also affects the usual participants in other legal transactions. This is because the services referred to in the amendment also cover “any services provided in return for payment”, i.e. also the renting/leasing of space, the supply of electricity, heating energy etc.. According to the official explanatory memorandum, the aim of this regulation is to avoid “that any contractual partners in the rental of properties for the purpose of cultivation can simultaneously be the landlord, energy supplier or the persons responsible for property security, for example in the form of the provision of cultivation areas fully equipped with heating, lighting, irrigation and camera technology for a large number of cultivation associations in the same property”. However, the bundling of several such services corresponds to the typical nature of a lease agreement, which is also common in legal transactions in other areas (e.g. lease agreement for a restaurant with corresponding gastronomic equipment and maintenance, allocation of consumption costs via utility bills, etc.). The freedom of occupation and ownership of the leasing entity would therefore also be infringed.
Not only unconstitutional, but also counterproductive
Apart from the argument that the amendments are unconstitutional, both the law firm and the BvCW have voiced concerns that they would be counterproductive, serving to undermine the objectives of the CanG, strengthen the black market, and place a burden on administrative courts and processes.
In the case of prohibition of multiple services from one commercial provider for example, the need to assign different activities to different employees/contractors leads to a fragmentation of work processes and reduces the effectiveness of internal controls and security measures. This increases the workload of the competent authorities in monitoring cultivation associations, as well as creating potential gaps in the system that could be exploited by unethical actors.
If these amendments are passed, a wave of lawsuits from the cultivation associations and their service providers is to be expected, which is likely to lead to a burden on the administrative courts and a lack of legal certainty for all actors.
For more info see here: https://www.bundestag.de/dokumente/textarchiv/2024/kw20-de-cannabis-999684
