LATEST ALERTS
Upcoming developments in the legalisation of recreational cannabis in both Germany and the Czech Republic are anticipated with some eagerness – and some concern – by the industry across Europe and beyond.
The two countries are so far the most advanced in the EU in their legalisation plans and are coordinating efforts on the road to decriminalisation, which could set an example for other governments in Europe to follow and impact international business exchanges between countries in the region and elsewhere.
Germany has unveiled an ambitious new timeline for its plan which will see it push ahead this year with its first step in creating a framework for recreational cannabis – outpacing expert estimates which did not anticipate any definite movement before 2024 at the earliest.
However, much remains unclear even with a draft bill proposal published. Work is still ongoing – including in cooperation with Czech officials.
Legalisation plans for Germany and their potential business consequences were the main topics of conversation for industry representatives and experts who gathered in Berlin at the end of June for the International Cannabis Business Conference (ICBC).
Peter Homberg, head of the European cannabis group at business law firm Dentons said he did not expect the first pillar of the German recreational framework to be implemented in Germany before 2024. “Will Germany make it happen? Yes, it will, the question is only when,” he said.
The elephant in the room
However, days after Homberg spoke the German government released an ambitious timeline in which that first pillar – enabling adults to grow cannabis for their own consumption as well as communal, non-commercial cultivation – was to be passed by the Cabinet before the summer break. It is then expected to be introduced in the federal parliament, the Bundestag, and discussed in the autumn in both the Bundestag and the Bundesrat, which represents the 16 provinces at federal level – though it will not need approval by the Bundesrat.
This would put it on the path to being in effect by the end of the year.
But according to Homberg there is still room for changes in the draft, which contains what he called “inaccurate or imprudent” aspects, especially the “unrealistic” THC limits for users aged between 18 and 21.
Currently the draft law stipulates lower THC content and a smaller maximum 30 g monthly limit allowed from associations.
“It is still a draft,” Homberg said. “whether it will go through the Bundestag in this form is still a question.”
The other elephant in the room is when or indeed whether the second pillar – which would create a commercial cannabis market in Germany – will come to be passed. CannIntelligence anticipates it will be many years before this is implemented. And any progress is reliant on significant foundational preparations being made beforehand.
No guarantees
However, the government’s newly released plan suggests work on the second pillar would begin this year once the first pillar has been passed, and be submitted to the European Commission for review as soon as possible afterwards.
Georg Wurth, leader of the German Hemp Association (DHV), was less optimistic about the chances of the plan being fully implemented, especially its second pillar. “Is it probable? Will Germany get this done? I’m not sure,” he said.
There is no guarantee either that future federal governments will want to continue with the plan. “The Bundestag can still stop the full process, even the decriminalisation, and the current government is only there until 2025, if it stays,” Wurth added.
But assuming the plan continues as currently outlined, its implementation remains subject to approval by local as well as national authorities. “It’s the regional administrations that have to approve it, not the federal one,” Wurth said.
In other words, regional administrators will have to approve permits for cannabis clubs. They do not have to approve the legislation but they will have to participate in pilots for the second pillar.
This limits the number of places where the project could be carried out, as the administrations of large states including Bavaria have already expressed their opposition to legalisation.
Where Pilsner led, will cannabis follow?
If it was to be achieved in any great degree, it would be a significant milestone for both Germany and the EU as a whole.
“In Germany entire regions of the country could enjoy the new regulation,” Wurth said. “This will be new for the EU too as it will involve hundreds of thousands of consumers living in those regions.”
There is some competition to be the first to that milestone. Wurth said he believed the Czech Republic could be the first EU country to legalise recreational cannabis. But even if that was the case, the pilot project in Germany would involve an unprecedented number of people, he added.
“Germany and the Czech Republic could prove to be the domino that accelerates cannabis legalisation and normalisation,” said US business consultant Beau Whitney.
The two countries have so far appeared to be working in coordination to find a way through the restrictions imposed by international laws to a legal cannabis market.
According to Whitney, this is not the first time in history that the two regions – under different names and in different political contexts – have collaborated to set up a standard rule for the market of a recreational product. “In 1830 they defined the standards for the world production of Pilsner beer,” he said. “They are poised to do the same for cannabis in the EU.”
The Californian question
Whitney believes that, while many countries were looking to the US to establish the standards of a legal cannabis market, Germany and the Czech Republic are now likely to lead this process from within the EU.
“The European market could flip this around and actually become the big driver in cannabis reform around the world,” he said.
The Berlin conference was attended largely by US companies, some from states where cannabis is legal for adult use.
“It is weird no one is looking at California,” Luna Stower, chief impact officer at cannabis vaping hardware brand Ispire, told CannIntelligence. “We have 30 years of experience. They play around in a sandbox when there’s a beach out there and we’ve been to the beach.”
CannIntelligence has spoken to European stakeholders who have studied the Californian model in some depth and found it not to be a good fit for Europe.
EU member states have to overcome an international legal obstacle beyond what other countries face on the road towards legalisation. Based on Council Framework Decision 2004/757/JHA, as implemented by the European Commision, which can apply sanctions to non-compliant countries, cannabis is considered as a drug under the 1961 UN Single Convention on Narcotic Drugs.
Scientific trial of the market
If it is to comply with the UN convention, Germany – which currently imports more medical cannabis than any European country – may not be able to import cannabis products from abroad.
The convention does allow import and export for medical or scientific purposes. However, it is unclear how this will play as part of the second German pillar.
The whole trial of a commercial market could theoretically be considered scientific research – potentially allowing imports – though the UN may take a different view. Alternatively, Germany could allow domestic licensees to supply the pilot programme and use imports to fulfil its medical cannabis demands.
But concerns remain for companies currently importing into the market, such as Australian medical cannabis company Little Green Pharma.
“If they continue to allow imported medical products that would be very lucrative,” Green Pharma CEO Fleta Solomon told CannIntelligence. “But if they don’t, we have no facilities to grow in Germany.”
This would be an issue for Little Green Pharma, whose main European market is Germany; some others are already taking steps to address this possibility.
Recreational impact on medical market
In many US states there have been processes to allow existing medical cannabis or even hemp licensees to convert their licences to quickly supply the recreational market. At least one Germany medical cannabis licensee – Demecan – is advocating this same system for the future German market and says it can scale up quickly to supply recreational demand.
Another concern affecting the medical sector in particular would be a loss of clients due to cheaper and easier access to cannabis products in the recreational market, should it be legalised.
“Prices in the medical cannabis market are now below the illegal market price,” said Lisa Haag, German cannabis entrepreneur and board member of Germany’s cannabis industry association BVCW.
Once prices are levelled due to a legal recreational market, though, bureaucratic obstacles to free access in the medical sector may push some patients towards the adult segment.
In Canada, as Peter Homberg pointed out, medicinal cannabis sales have largely stagnated since the opening of the recreational market in 2018.
It remains to be seen how Germany, the Czech Republic and other EU countries considering legalisation will decide to play their cards in order to avoid sanctions while developing a market for their cannabis industries.
– Tiziana Cauli CannIntelligence staff
Photos: Albrecht Fietz, simonkontakt
