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The world’s cannabis growers are ‘euphoric’ about Germany’s plans to legalize pot. But sparking up the market is proving to be a real buzzkill

February 26, 2022, 10:00 AM UTC

When the parties in Germany’s center-left coalition were negotiating their partnership after last September’s federal election, pretty much the first thing they agreed on was the need to legalize cannabis. The junior parties in the pact—the environmentalist Greens and the liberal Free Democrats—had long been pushing for legal weed, and the coalition-leading Social Democrats also campaigned on a softening of cannabis laws. Now, full-scale legalization seems inevitable, potentially bringing with it $5.3 billion in tax revenues and savings each year.

This will be a seismic move for Europe. Tiny Luxembourg and Malta have already given the go-ahead for people to grow, carry and consume cannabis, and Switzerland also has cautious plans to legalize the plant, but Germany is the continent’s biggest market, and the country is highly influential in the development of EU policy. “With the anticipated legalization of recreational cannabis in Germany, we believe other EU countries will follow suit,” Carl Merton, the chief financial officer of Canadian pot producer Tilray, enthused last month.

However, inevitable does not mean immediate. While many companies are already sizing up their opportunities in Germany’s nascent cannabis industry, it will probably still be years before the law changes—and many key details are yet to be worked out, leaving it difficult for companies to make definitive plans.

One thing is for sure, though: Germany’s recreational marijuana industry will likely include not only local companies but also some big players from North America, where legalization in many places has given them a head-start.

No timetable

“It’s quite euphoric,” says Jürgen Neumeyer, head of Germany’s Cannabis Business Industry Association (BVCW), of the current mood. “There are a lot of people and companies who are looking forward to legalization…Sometimes I have up to 30 people per day who are in touch with us, asking ‘Where can I get a license?’ or ‘How can I grow it?'”

“There’s a lot of excitement and the people are waiting to get ready,” agrees Lisa Haag, a cannabis industry consultant and board member of the BVCW. But “we still don’t know how the legalization will really look, because there’s a lot of uncertainty at this point.”

Neumeyer estimates it will take two or three years before the government provides a “legal starting mark” for the recreational cannabis market—laws in Germany typically take up to a year and a half to go from idea to implementation, and in this case “we have to build up a totally new market, transferred from illegal to legal.”

Many details need thrashing out, such as who gets to grow the cannabis and how tight their security will have to be, what the quality controls will be, who gets to sell it, where it can be consumed, what the age restrictions will be, and—perhaps most importantly—the price.

“We have to offer legal cannabis for less than black market prices,” insists Neumeyer, who suggests a graded scale of taxation that makes it possible to sell cannabis with lower levels of tetrahydrocannabinol (THC)—the psychoactive component that gets users high—at lower prices than those for stronger products.

“Although all partners agree on the legalization of cannabis, details have yet to be discussed,” says Green lawmaker Kirsten Kappert-Gonther, a key figure in the coalition’s deliberations. “As this is going to be a major reform affecting multiple departments, it is important to get it started as soon as possible.”

Kristine Lütke, the liberal Free Democrats’ (FDP) lead on drug policy, says there is as yet no timetable for the legal shift, as “it is a complex project and the legalization process has to be done in the best possible way.” Lütke hopes the change will come quickly enough to also “start an evaluation process” before the next election in late 2025—the coalition agreement only talked about evaluating the law four years after it comes into effect.

What not to do

While recreational cannabis remains illegal in Germany, seriously ill people have been allowed to get medical marijuana for several years now—in theory, at least. In practice, high prices and pushback from doctors have led many patients to turn to illegal drug dealers instead.

From the perspective of Germany’s cannabis industry, this experience provides a model of what not to do when penning regulations for wider use.

“When we look back at the regulation of medical cannabis here in Germany, they built up a really complicated high-level license system for medical cannabis growing, and you had up to 600 pages for the proposal to be allowed to grow,” says Neumeyer. “In the end only three companies were allowed to grow medical cannabis in Germany. That is not practical.”

Limiting license numbers for the recreational cannabis sector would “hinder the transfer to legal markets” as would other restrictions such as limiting THC levels, says Haag. “Harm reduction should play a role” in the new rulebook, the consultant says, but she “would like to see policy put in place that enables an educated decision.”

While much of the industry’s attention is focused on the possibilities for the recreational sector, some also hope to soon see policy changes on the medical cannabis front.

“The German [medical cannabis] market is the most important one in Europe but there’s room for growth,” says Alfredo Pascual, head of investment analysis at the Guernsey-based venture capital outfit Seed Innovations. “Many more patients could benefit from cannabis-based therapy but don’t have access to it, either because they couldn’t find a doctor willing to prescribe it, or they could find a doctor but couldn’t get insurance coverage for it…This government’s attitude is more friendly towards cannabis in general. It could be that we also have a better medical cannabis program, with broader access for patients for example.”


One company that’s been involved in Germany’s medical cannabis sector for a few years is Canada’s Canopy Growth, one of the biggest global players in these turbulent early stages of the legitimate weed sector.

Canopy bought local cannabinoid pharma firm C3 in 2019 and then sold it a couple months ago at a considerable loss, due to the pandemic, but it stayed active in Germany’s medical market. Now, according to David Culver, its global head of government relations, the Canadian outfit is “identifying opportunities to leverage our global experience to further the development of a responsible recreational cannabis market” in Germany.

“We are highly encouraged by the German government’s recognition of the need for a legal, regulated market for recreational cannabis,” Culver says.

Haag says Canopy and Aurora, another large Canadian cannabis firm that’s already active in Germany’s medical market, certainly have an advantage due to their relative experience, but that “doesn’t guarantee you success” in a European recreational cannabis market. That’s partly because international drug laws stymie exports of recreational product, and partly because of the need to adapt to local tastes and regulations. “If any North American companies want to have their foot here in the market, it’s all about finding the right partners,” Haag says.

“If there are local players that are able to create a compelling case for North American companies that they would save time and money buying something that exists and is working without building their own, without boots on the ground, it may be better for North American companies to just buy them,” posits Pascual.

The fact that Germany’s recreational cannabis will need to be grown in Germany provides “a big opportunity for small farmers and for mid-sized companies” in the country, says the BVCW’s Neumeyer. “But I think it is good and also needed to have some companies who are already experienced in this cannabis market, in the recreational market.”

“We have to build up a complete market. We need probably at least 400 tons of recreational cannabis per year. It won’t start in one or three months—we have to build up the market step by step,” adds Neumeyer, whose trade group has a Canopy representative on its executive board. “I think there is enough space for all of that: the small farmer here in Germany and the big company coming from Canada and the U.S., or Israel for example.”

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