July saw entrepreneurs, politicians, cannabis companies, and policy experts from all over the world come together in Berlin to discuss the future of cannabis liberalization in Germany. The German ‘stoplight’ coalition, elected last year, has pledged to liberalize cannabis laws and create Europe’s first major adult recreational cannabis market. With 86 million people and the largest economy in Europe, legalization would create a tidal wave of reform throughout the 27 member states in the EU and beyond. Current projections discussed at the conference believe Germany’s adult recreational cannabis market will be a $5 to 6 billion dollar market by 2030, the same size as today’s California market.
Here are some of the key takeaways from the two-day conference.
Roadmap to German cannabis liberalization: The coalition government has appointed Drug Commissioner Burkhard Blienart and his office is leading a consultation process with 100s of policy experts, industry stakeholders, and members of the German parliament (Bundesrag and Bundestag) to craft model legislation that is slated to be released in late 2022 or early 2023. Because the governing coalition has a majority of votes in both chambers of the parliament, final passage is more likely than in the US. However, the legislation needs to make its way through a series of committee hearings, debates, and votes before final passage and being enacted into law. Consensus opinion believes the earliest passage would happen would be the 2nd half of 2023 or early 2024 with implementation and the start of sales in late 2024 or early 2025.
Key differences in the US approach and the German approach
In the US cannabis reform has been largely driven by and for voters. Advocacy groups have written ballot initiatives to appeal to voters and overcome the reluctance of legislators to enact policies that are overwhelmingly supported by the population. The reform process in Germany is very different. There isn’t overwhelming support to legalize cannabis. Instead, the roadmap to creating the rules and regulations will be aimed toward pleasing and directed by the technocratic elite. Public health officials, members of parliament, and their staff and bureaucrats in consultation with cannabis and other industry leaders will drive this process. The model Germany appears to be looking at most closely is not US state markets but Canada. Expect a German market to resemble Canada’s rules and regulations more than California.
One thing that stays the same between crafting and passing cannabis legislation in the US and Germany is prioritizing public health and safety and preventing access to children and teens. Members of the Bundestag from each of the three parties in the governing coalition had a roundtable discussion and these concerns kept being brought up. Another concern for cannabis companies was a real skepticism voiced by these politicians about how much advertising and branding should be allowed. There was also an awareness that in order for cannabis liberalization to be a success that access and price will be a key determinants in the illicit to licit market conversion. Indeed the goal of curtailing the illicit market was mentioned by speaker after speaker as being a key goal of cannabis policy.
Where is the consumer?
There is very little data on who the German consumer is. What products do they want? Who are they? How and where do they want to consume cannabis? While projections on market size can be derived from statistics on rates of current usage, very little is known beyond this. Policymakers and industry stakeholders at the conference had very little to say about the consumer. Instead, they were focused on tackling a complex supply chain, GMP vs non-GMP compliant cultivation, and other non-consumer facing challenges. Survey and sales data and analysis will be key for companies looking to enter a new market that does not exist yet. There is also a real need and opportunity for consumer education. Dosage and effects, product formats, strains, and terpenes are all lacking or non-existent for the average German cannabis consumer.
Pitfalls within the European Union
When Uruguay and Canada liberalized their cannabis laws much attention and concern was placed on international UN anti-drug Conventions and whether they would face sanctions and other penalties for being in violation. We’ve seen since that the UN Conventions can be ignored without fear of consequences from the UN. The Schengen Convention within the EU is another matter entirely. Schengen is known primarily for allowing free, borderless travel between member states by EU citizens, but it also has provisions to prevent the supply of recreational cannabis. Unlike international treaties, there are concrete enforcement mechanisms within Schengen that Germany and other EU states need to take seriously and address. In July we saw Germany enter into preliminary discussions with Holland, Luxembourg, and Malta to address this very issue. A change in the Schengen Convention or how it is enforced or interpreted would be a major victory for cannabis liberalization in Europe.
The journey has just begun
The entire legal EU cannabis market is less than 1% of the legal global market. The conference featured a diverse mixture of voices from within and outside the cannabis industry. A sense of optimism was the currency that ran throughout the attendees. The very real possibility of a multi-billion dollar annual market in less than ten years with thousands of plant-touching and ancillary companies with millions of legal consumers is an opportunity worth following closely.
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